Buy & hold rentals – what type of property would you be buying and where?

[NotCranky]

Nothing is a sure thing at this point. I won’t buy outside of the county.

I like SFR’s because rehabbing/adding on and trying to optimize cash flow is something I like to do.Incidental third parties that come with condos are a worry, and I don’t see the sweat equity potential as much, but it is not out of the question. They could certainly be easier to get going both on initial cost, work and maintenance than detached fixers.

I am thinking about one of these scenarios or a combination of them:

1) The next most likely step will be a condo or fixer house with an eye towards renting them out for 15-20 years and then either,letting my kids use it, have it, or buy it from me… or moving into at some distant future time.

2) Also might buy a house closer to town to live in sooner rather than later and rent one of the houses here in the boonies out and keep the smaller one for part-time living.

3)Maybe go in with a partner and build a small collection of rehabs, then hold and split it some years in the future.

[ctr70]

Good point about location svelte. Bad tenants and lot’s of turnover can absolutely destroy real estate as an investment. The hard part is getting the numbers to work in good areas. Nice areas have high prices where rents don’t cover the PITI + maintenance, and then you have negative cash flow.

Yes Russell I agree SFR’s are better overall as an investment. It’s just right now in San Diego you can get condo’s in better areas for lower cost per unit. And I personally like the less maintenance involved with condo’s as I am not very handy with fixing stuff.

But you have to be really careful researching the HOA’s with condo’s. If the owner occupancy % goes down in condo’s, a high % of the HOA dues are delinquent, or reserves get low…no one can get a loan to buy a unit in the condo & value stagnate. Also, if a lot of investors buy units at one time in a condo project and turn them all into rentals, it can have bad effects.

[ctr70]

Good point about location svelte. Bad tenants and lot’s of turnover can absolutely destroy real estate as an investment. The hard part is getting the numbers to work in good areas. Nice areas have high prices where rents don’t cover the PITI + maintenance, and then you have negative cash flow.

Yes Russell I agree SFR’s are better overall as an investment. It’s just right now in San Diego you can get condo’s in better areas for lower cost per unit. And I personally like the less maintenance involved with condo’s as I am not very handy with fixing stuff.

But you have to be really careful researching the HOA’s with condo’s. If the owner occupancy % goes down in condo’s, a high % of the HOA dues are delinquent, or reserves get low…no one can get a loan to buy a unit in the condo & value stagnate. Also, if a lot of investors buy units at one time in a condo project and turn them all into rentals, it can have bad effects.

[ctr70]

Good point about location svelte. Bad tenants and lot’s of turnover can absolutely destroy real estate as an investment. The hard part is getting the numbers to work in good areas. Nice areas have high prices where rents don’t cover the PITI + maintenance, and then you have negative cash flow.

Yes Russell I agree SFR’s are better overall as an investment. It’s just right now in San Diego you can get condo’s in better areas for lower cost per unit. And I personally like the less maintenance involved with condo’s as I am not very handy with fixing stuff.

But you have to be really careful researching the HOA’s with condo’s. If the owner occupancy % goes down in condo’s, a high % of the HOA dues are delinquent, or reserves get low…no one can get a loan to buy a unit in the condo & value stagnate. Also, if a lot of investors buy units at one time in a condo project and turn them all into rentals, it can have bad effects.

[ctr70]

Good point about location svelte. Bad tenants and lot’s of turnover can absolutely destroy real estate as an investment. The hard part is getting the numbers to work in good areas. Nice areas have high prices where rents don’t cover the PITI + maintenance, and then you have negative cash flow.

Yes Russell I agree SFR’s are better overall as an investment. It’s just right now in San Diego you can get condo’s in better areas for lower cost per unit. And I personally like the less maintenance involved with condo’s as I am not very handy with fixing stuff.

But you have to be really careful researching the HOA’s with condo’s. If the owner occupancy % goes down in condo’s, a high % of the HOA dues are delinquent, or reserves get low…no one can get a loan to buy a unit in the condo & value stagnate. Also, if a lot of investors buy units at one time in a condo project and turn them all into rentals, it can have bad effects.

[ctr70]

Good point about location svelte. Bad tenants and lot’s of turnover can absolutely destroy real estate as an investment. The hard part is getting the numbers to work in good areas. Nice areas have high prices where rents don’t cover the PITI + maintenance, and then you have negative cash flow.

Yes Russell I agree SFR’s are better overall as an investment. It’s just right now in San Diego you can get condo’s in better areas for lower cost per unit. And I personally like the less maintenance involved with condo’s as I am not very handy with fixing stuff.

But you have to be really careful researching the HOA’s with condo’s. If the owner occupancy % goes down in condo’s, a high % of the HOA dues are delinquent, or reserves get low…no one can get a loan to buy a unit in the condo & value stagnate. Also, if a lot of investors buy units at one time in a condo project and turn them all into rentals, it can have bad effects.

[UCGal]

We seriously considered buying a 2-4 unit rental. Our criteria was as follows:

* Less than 30 minute drive from our house. Since we would be doing maintenance and management ourselves it needed to be local.
* It needed to cashflow with a 25% downpayment. In other words – the rent needed to cover the mortgage of 75% of the purchase price, taxes, insurance, maintenance. We were not interested in making up for cash flow deficiencies on appreciation when we sold. I can’t predict when we’ll come out of this housing correction and get bubblicious again. So I didn’t want to factor appreciation in.

We found several short sales that were listed that penciled out. But all of them were bid to higher than the amount that penciled.

I’m still monitoring trustee sales – with a “what if” mindset. Very few trustee sales of 2-4 units have penciled out in the areas we’re looking at.

We’ve done the long distance landlord thing – we kept my husbands home from before we met as a rental for several years after we moved to CA. It’s a total PITA to be an absentee landlord – even with a management company.

[UCGal]

We seriously considered buying a 2-4 unit rental. Our criteria was as follows:

* Less than 30 minute drive from our house. Since we would be doing maintenance and management ourselves it needed to be local.
* It needed to cashflow with a 25% downpayment. In other words – the rent needed to cover the mortgage of 75% of the purchase price, taxes, insurance, maintenance. We were not interested in making up for cash flow deficiencies on appreciation when we sold. I can’t predict when we’ll come out of this housing correction and get bubblicious again. So I didn’t want to factor appreciation in.

We found several short sales that were listed that penciled out. But all of them were bid to higher than the amount that penciled.

I’m still monitoring trustee sales – with a “what if” mindset. Very few trustee sales of 2-4 units have penciled out in the areas we’re looking at.

We’ve done the long distance landlord thing – we kept my husbands home from before we met as a rental for several years after we moved to CA. It’s a total PITA to be an absentee landlord – even with a management company.

[UCGal]

We seriously considered buying a 2-4 unit rental. Our criteria was as follows:

* Less than 30 minute drive from our house. Since we would be doing maintenance and management ourselves it needed to be local.
* It needed to cashflow with a 25% downpayment. In other words – the rent needed to cover the mortgage of 75% of the purchase price, taxes, insurance, maintenance. We were not interested in making up for cash flow deficiencies on appreciation when we sold. I can’t predict when we’ll come out of this housing correction and get bubblicious again. So I didn’t want to factor appreciation in.

We found several short sales that were listed that penciled out. But all of them were bid to higher than the amount that penciled.

I’m still monitoring trustee sales – with a “what if” mindset. Very few trustee sales of 2-4 units have penciled out in the areas we’re looking at.

We’ve done the long distance landlord thing – we kept my husbands home from before we met as a rental for several years after we moved to CA. It’s a total PITA to be an absentee landlord – even with a management company.

[UCGal]

We seriously considered buying a 2-4 unit rental. Our criteria was as follows:

* Less than 30 minute drive from our house. Since we would be doing maintenance and management ourselves it needed to be local.
* It needed to cashflow with a 25% downpayment. In other words – the rent needed to cover the mortgage of 75% of the purchase price, taxes, insurance, maintenance. We were not interested in making up for cash flow deficiencies on appreciation when we sold. I can’t predict when we’ll come out of this housing correction and get bubblicious again. So I didn’t want to factor appreciation in.

We found several short sales that were listed that penciled out. But all of them were bid to higher than the amount that penciled.

I’m still monitoring trustee sales – with a “what if” mindset. Very few trustee sales of 2-4 units have penciled out in the areas we’re looking at.

We’ve done the long distance landlord thing – we kept my husbands home from before we met as a rental for several years after we moved to CA. It’s a total PITA to be an absentee landlord – even with a management company.

[UCGal]

We seriously considered buying a 2-4 unit rental. Our criteria was as follows:

* Less than 30 minute drive from our house. Since we would be doing maintenance and management ourselves it needed to be local.
* It needed to cashflow with a 25% downpayment. In other words – the rent needed to cover the mortgage of 75% of the purchase price, taxes, insurance, maintenance. We were not interested in making up for cash flow deficiencies on appreciation when we sold. I can’t predict when we’ll come out of this housing correction and get bubblicious again. So I didn’t want to factor appreciation in.

We found several short sales that were listed that penciled out. But all of them were bid to higher than the amount that penciled.

I’m still monitoring trustee sales – with a “what if” mindset. Very few trustee sales of 2-4 units have penciled out in the areas we’re looking at.

We’ve done the long distance landlord thing – we kept my husbands home from before we met as a rental for several years after we moved to CA. It’s a total PITA to be an absentee landlord – even with a management company.

[EconProf]

One observation:
If possible, buy for all cash and get several advantages:
1. Better price because you can close fast & sellers want assurance you can perform. Cash is king.
2. Avoids all the junk fees associated with the purchase (and the eventual sale), the discriminatory interest rate charged to investors, impounds, appraisals, etc. etc.
Also on a strict cash-on-cash basis, this compares well with your puny 1 – 3% you may be earning on a pile of liquidity you are waiting to invest. A $100k condo or a $200k house will get your cash earning 5 – 7% plus any appreciation (or depreciation!).

[EconProf]

One observation:
If possible, buy for all cash and get several advantages:
1. Better price because you can close fast & sellers want assurance you can perform. Cash is king.
2. Avoids all the junk fees associated with the purchase (and the eventual sale), the discriminatory interest rate charged to investors, impounds, appraisals, etc. etc.
Also on a strict cash-on-cash basis, this compares well with your puny 1 – 3% you may be earning on a pile of liquidity you are waiting to invest. A $100k condo or a $200k house will get your cash earning 5 – 7% plus any appreciation (or depreciation!).

[EconProf]

One observation:
If possible, buy for all cash and get several advantages:
1. Better price because you can close fast & sellers want assurance you can perform. Cash is king.
2. Avoids all the junk fees associated with the purchase (and the eventual sale), the discriminatory interest rate charged to investors, impounds, appraisals, etc. etc.
Also on a strict cash-on-cash basis, this compares well with your puny 1 – 3% you may be earning on a pile of liquidity you are waiting to invest. A $100k condo or a $200k house will get your cash earning 5 – 7% plus any appreciation (or depreciation!).

[EconProf]

One observation:
If possible, buy for all cash and get several advantages:
1. Better price because you can close fast & sellers want assurance you can perform. Cash is king.
2. Avoids all the junk fees associated with the purchase (and the eventual sale), the discriminatory interest rate charged to investors, impounds, appraisals, etc. etc.
Also on a strict cash-on-cash basis, this compares well with your puny 1 – 3% you may be earning on a pile of liquidity you are waiting to invest. A $100k condo or a $200k house will get your cash earning 5 – 7% plus any appreciation (or depreciation!).

[Author]

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