February 5, 2013 at 4:38 PM #758870spdrunParticipant
Which is why I picked a property that’s unlikely to have mechanical failures. Metal (not PEX-crap) plumbing. Common laundry and hot water appliances. Ground floor unit, so no risk of flooding out a unit below it. Electric self-contained wall heaters.
And as for anything, tenants will be screened VERY carefully, though perhaps in an unconventional manner.
This isn’t all that unusual. A client who works in the construction business in NYC owns two properties in Denver that he rents out, with a view to moving to one eventually after he retires. A lady whom I rented to (short term) now lives in the city, but still owns a place in Nevada from when she lived there. Renting it quite successfully.February 5, 2013 at 4:39 PM #758871anParticipant
[quote=spdrun]Which is why I picked a property that’s unlikely to have mechanical failures. Metal (not PEX-crap) plumbing. Common laundry and hot water appliances. Ground floor unit, so no risk of flooding out a unit below it. Electric self-contained wall heaters.
And as for anything, tenants will be screened VERY carefully, though perhaps in an unconventional manner.[/quote]
You still have toilet, sink, bath tub, oven, dishwasher, etc. All of those will break/leak/etc. But you seem to have it all planned out. For me, that’s just too much potential problem to deal with for so little profit and high risk of having net loss if you have to fly out to handle things. If I was in your position and NJ have better yield, I’d buy in NJ and not SD.February 5, 2013 at 4:59 PM #758873spdrunParticipant
None of these have broken in my apartment in NYC in the almost 3.5 years that I’ve been there. Why would I have to fly out anyway if I can call a local plumber or appliance mechanic? Stove/fridge are electric and cheapies — in the worst case, I’d have a new unit delivered and arrange for delivery online or over the phone. This isn’t rocket science.
Anyway, the purpose of the apartment is to hold it for my own future use while turning a small profit. As far as cap rate, 7.5% seems to be the minimum considering my research on going rents. May be 8 or 8.5 if I get lucky.
Lastly, my offer is for a pretty average price for a short sale in that complex. However, I’ve seen regular sales go for 10-20% more (yeah, blah, blah, no short-sale discount). I probably could do some minor repairs and flip for $20-30k profit, worst case.
I know a good deal when I see one, and I have been able to profitably re-sell most expensive things that I’ve bought so far. Goes for cars, motorcycles, stocks, furniture. I fail to imagine that real estate will be any different.
- You must be logged in to reply to this topic.