I did an informal kind of poll: There’s one particular condo I’m looking at which will be slightly more than break-even; that is, it will cash flow slightly positive if my calculations are correct.
So I went over there, and I fortunately saw one of the neighbors walking around outside. I chatted her up and found out she’s renting for a few hundred dollars more than what I’m targeting. She also said she felt lucky to have gotten this deal on the place and that she shopped around a lot before finding it. She kindly gave me the address of the unit she’s renting, and I looked it up to find what it last sold for. It sold last year for $100k MORE than the asking price of the unit I’m looking at! Those landlords are definitely not flowing positive, even though they’re charging more rent. I also ran into another neighbor, a couple, they weren’t as informative but did tell me they were renters and paying about what I’m going to charge, but they are in a smaller, downstairs unit (I’m looking at an upstairs one).
Another thing I did, of course, was look at craigslist. There is only one other place for rent in that complex and they’re asking for more than what I’d ask for. Their unit is also downstairs and not as nice and in a worse location.
My conclusion from the hunting expedition is that if I can get the sale price I want (which I think is a fair price) then I’m going for it. My only worry is if rents go down, although I have some margin to work with.
Renters: do you prefer upstairs units or downstairs? I know moving furniture is a pain if you’re upstairs, but once you’re in I hope: a) you won’t move out, and b) you enjoy not hearing your neighbors walking around above you.
