Home Buying & Real Estate Thread

appreciate the advice!

a mgmt company i'm looking at charges flat rate of 10% of rent, no additional fees. however, they do charge 1 month's rent for finding, vetting, and placing a tennant. they have solid reviews on google. I'm considering using them once i figure out what the cashflows will be like.
The 1 month's rent for finding/vetting/placing is basically what you would pay a realtor to do that for you, at least here in MD.
 
What rules / formulas do you use to determine if a rental property is worth it or not?
Usually >1% rule. First rental I bought was in Kansas city, Missouri for 100k, rent for 1150$. Mortgage is 650$ (including property taxes and all that).
Will depend on area/risk though. I have a Duplex in Southern California (long beach area) that I bought for 440k (mortgage 2.8k) rent for 1700$/unit=3200$ (doesn't meet 1% rule).
My most recent I bought in C class area in Ohio duplex for 76k. Section 8 tenants, 700-750$/unit=1400$+. Sound great, but I've had a lot of problems.
 
My most recent I bought in C class area in Ohio duplex for 76k. Section 8 tenants, 700-750$/unit=1400$+. Sound great, but I've had a lot of problems.

What kind of problems? Paying on time, complaints, property damage?

I'm very interested in buying a rental (cash flowing), but sitting on the fence wondering if its worth the headache or not. My dad used to have a couple rental houses and eventually sold them because it was too much of a pain in the ****
 
Great advice pdino pdino got a couple of questions...

Are you putting a 20% down payment on these places? When you bought the properties did you do a full renovation or just changed kitchen appliances?
 
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Usually >1% rule. First rental I bought was in Kansas city, Missouri for 100k, rent for 1150$. Mortgage is 650$ (including property taxes and all that).
Will depend on area/risk though. I have a Duplex in Southern California (long beach area) that I bought for 440k (mortgage 2.8k) rent for 1700$/unit=3200$ (doesn't meet 1% rule).
My most recent I bought in C class area in Ohio duplex for 76k. Section 8 tenants, 700-750$/unit=1400$+. Sound great, but I've had a lot of problems.
Can someone explain this 1% rule?
 
What kind of problems? Paying on time, complaints, property damage?

I'm very interested in buying a rental (cash flowing), but sitting on the fence wondering if its worth the headache or not. My dad used to have a couple rental houses and eventually sold them because it was too much of a pain in the ****
same here, my dad rented out one side of his duplex but had ****ty tenants who wrecked the place.

it's all about finding good tenants to avoid any property damage, which is why I am considering hiring a property mgmt company to do all the vetting/screening for good tenants..
 
from your experience, how often do pumbing, electrical, or HVAC issues arise with your properties? and how do you deal with them through the property mgmt co.? i'm concerned of getting bad tenants who will be reckless with my property as far as wear and tear and damage they might cause.
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Plumbing, electrical, HVAC, you should have a good idea depending how old your systems/pipes are. They have lifelines. Water heaters can last 10/15/20 years. Not sure what you have so I Can't tell you. After purchasing the property, I had them inspected and had a good idea of what I'm getting into. Property management will contact me saying there is an issue, and how do I want to proceed with it, often they give me a cheap band aid fix or a luxury item replacement. They hire contractors to take care of it and it's down 100% through email for me. Tenants will depend on your property management vetting process and that should be dependent on your due diligence on the property management company you have hired. They work for YOU.

What kind of problems? Paying on time, complaints, property damage?


Here's my most recent issue from my the property:
"xxxxxx,

The tenant at 12345 xxxxxx called in to report they were startled by a deer while pulling in the driveway and somehow managed to hit the garage door and damage it. The door is destroyed. It will need to be replaced. Additionally the other door is not operating properly and should be replaced as well. " One tenant not paying, had to evict. These are specifically issues with the C- class area property. I have a B+ area property that has had 0 issues.

Great advice pdino pdino got a couple of questions...

Are you putting a 20% down payment on these places? When you bought the properties did you do a full renovation or just changed kitchen appliances?
I put 20% down on all of my rental properties. You can find lenders who can do it for less down but you will most likely incur a higher interest rate and/or additional PMI. My most recent property I did significant renovations (paint, repairs, appliances etc.). I've bought several "rent ready" and in general you'll get more bang for your buck if you buy something that needs work and put the work in rather than buy a rent ready place at a premium. I try to have either a nice place in a lower end area or a lower end place in a nice area.

Can someone explain this 1% rule?
Buy a property for 50k, it rents for 500$. Buy a property for 100k rents for 1000$. Rents for 1% of total purchase price
 
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pdino pdino having a rental out of state seems stressful no?
I had a professor who was doing that but he had a nephew taking care of his stuff in the midwest and florida and he was making a nice return.
 
pdino pdino having a rental out of state seems stressful no?
I had a professor who was doing that but he had a nephew taking care of his stuff in the midwest and florida and he was making a nice return.
I have 5 out of state and all managed by property management. The property management companies have me keep a 1000$ account minimum, send rents monthly to my account and direct deposited to my checking whatever >1000$ on or before the 1st of each month. If there are issues they take out of the 1000$, if something cost more than 200$ they ask for my permission. I'd say if you get a good property in a nice area with a good tenant, solid property management, there are zero issues (and I have a couple of these, where I've been collecting rents with no issues for years).
My most recent one I'm chasing strong returns in a poor area, and it has been more time/effort than I would want. I'm confident that one day I'll get good tenants, things'll settle and it'll be a cash cow though
 
How do you determine the ratings of A, B, C etc?

Thanks for the insight

In general, you know areas around you that are nice from living there. Higher class/income, low crime, good schools etc. there is a wealth of knowledge on BP. Use City-data forums, areavibes.com to get an idea
 
I have 5 out of state and all managed by property management. The property management companies have me keep a 1000$ account minimum, send rents monthly to my account and direct deposited to my checking whatever >1000$ on or before the 1st of each month. If there are issues they take out of the 1000$, if something cost more than 200$ they ask for my permission. I'd say if you get a good property in a nice area with a good tenant, solid property management, there are zero issues (and I have a couple of these, where I've been collecting rents with no issues for years).
My most recent one I'm chasing strong returns in a poor area, and it has been more time/effort than I would want. I'm confident that one day I'll get good tenants, things'll settle and it'll be a cash cow though
where did you learn to pick properties when buying out of state?
did you talk to local real estate agents? i figure they would be a great resource right?
what tools/criteria did you use to figure this area is a good rental area? Im guessing just google searching?
 
where did you learn to pick properties when buying out of state?
did you talk to local real estate agents? i figure they would be a great resource right?
what tools/criteria did you use to figure this area is a good rental area? Im guessing just google searching?

I did a lot of research, mostly biggerpockets.com. Put in a question you have in the search function and it will have been discussed by several experienced people in the field. Biggerpockets also has podcasts, I picked the ones that interested/related to my situation and listened when doing mundane things like grocery shopping or laundry. My first property I bought was "turn-key", rent-ready, recently renovated house that you buy and cash flows day one to get my feet wet. Then I did research on what areas/states I would like to pursue (can target cash flow, appreciation, or both. I target cash flow.) I decided on multi-families over single families, then talked with a real estate agent in the area who works with out of state investors. Cash flow is the main and first criteria, that the property makes $. A few properties are very near schools or desirable amenities, one is near a amazon fulfillment center and so on. My properties in C class areas have section 8 to attract renters and get a guaranteed check from the government.
 
why are so many contractors scammers? any tips on how to find good ones? and how to set up contracts and payments?
 
why are so many contractors scammers? any tips on how to find good ones? and how to set up contracts and payments?

try to manage it yourself

I’m managing mine currently and although I’m months behind, I’m only 60k in vs $160k having a general contractor **** me
 
I bought a duplex in SF that is strictly rental - I do a very thorough background check and have found that is the key
curious
when u say thorough
do u also take into account
how people change
and maybe werent the same person they was 5, 10, 15 years ago
or even 2 years ago
just curious.
cause i know
u know
folks can change
do u ever take those things into account
and just different circumstances and hardships???
 
biggerpockets.com is a thread those seeking rental opportunities should absolutely take a look at

the podcasts usually have good info
 
try to manage it yourself

I’m managing mine currently and although I’m months behind, I’m only 60k in vs $160k having a general contractor **** me

u mean diy even if it takes longer and losing out on rent?
In the case of ur own home, paying for mortgage without living there while u renovate?
 
u mean diy even if it takes longer and losing out on rent?
In the case of ur own home, paying for mortgage without living there while u renovate?

hire trades on your own. That’s all the general contractor is doing.

I look for licensed trades on thumbtack for framing, electrical and plumbing; Craigslist referrals for drywall and finish work
 
surprised we havent created a NT real estate fund. 20 of us with 10K is 200K of funding that could go for a down payment or a big money move

more doors, more profit
 
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