[quote=Diego Mamani]Actually, HOA is only $293. Isn’t 70% occupancy too low? If you price it right, and the place is decent, there’s no reason why it shouldn’t by occupied in excess of 80%-85% of the time. What I’m missing here?
An important question is what the demographics are around there. $1000-rent for a 3BD appear reasonable, but are there jobs and incomes to support it?
CA Renter Why would some landlords love a situation with low-income tenants, crime, and high turnover? The only explanation I can think of is that you get a higher rent-to-house-price ratio in bad neighborhoods, but then, it’s also more work to manage and maintain and when prices start picking up in the future, SFRs prices will go up first. Many condos don’t even qualify for FHA-backed loans.[/quote]
The low end of the housing market is the RE investors’ bread and butter. Yes, these properties tend to provide the best cash-on-cash returns. They are also the best bet for capital gains. As you can see from home price appreciation charts, the low end tends to have the greatest volatility. Investors tend to get a better return, cycle after cycle.
As an investor, you don’t have to have a high turnover rate, nor do you have to put a lot of money into maintenance. Just offer the best rental rate in the area, and leave the tenants alone. Lots of LLs have found that being a slumlord can be very profitable, indeed.
BTW, I don’t advocate being a slumlord, etc. Just describing what I know of the rental market. You can see this in almost every low-end neighborhood you see. Lots of rich “investors” who rent to tenants who live in squalor — but have an affordable place to live.
Also, you’re right about condos being a greater risk than SFHs. I was really referring to the low-end SFH market, but have known a number of people who have done quite well with condos. The biggest problem is the HOAs. They tend to keep a lid on the slumlords, to some extent. Also, you get those special assessments that you have absolutely no control over.
