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Rental properties. How to start
Posted on 6/16/22 at 9:41 am
Posted on 6/16/22 at 9:41 am
For those that have rental properties, how did you start?
Seems that a guy w some cash could take advantage of some buying if properties in the next year or so due to higher interest rates and properties being a touch more affordable.
Does that seem like a reasonable position?
What advice would you give a newb looking at a handful of properties. Would like to turn a small profit but at least not lose my arse.
Seems that a guy w some cash could take advantage of some buying if properties in the next year or so due to higher interest rates and properties being a touch more affordable.
Does that seem like a reasonable position?
What advice would you give a newb looking at a handful of properties. Would like to turn a small profit but at least not lose my arse.
14
Posted on 6/16/22 at 9:45 am to tigerfoot
Why wait? I work for a lot of younger guys in the Lafayette area who are buying up rental property like crazy right now. If you can't do the physical rehab work yourself, you definitely need to find someone that you trust to go in there and get it done.
Posted on 6/16/22 at 9:59 am to Jsand43
I figure that by waiting a few months to a year you will see interest rates climb which limits the number of buyers and a glut of properties due to the same and foreclosures due to the inflation was are seeing. I always thought the buy side was a good way to make sure I would be in better shape, I may be completely incorrect.
Posted on 6/16/22 at 10:01 am to tigerfoot
quote:
Would like to turn a small profit but at least not lose my arse.
I tell everyone starting out, this. You need to know EXACTLY what it will rent for, what your monthly expenses are and how much your rehab will be (if needed).
You can't afford to mess up on these.
The bare minimum should be 1% of your purchase price should be the rental price. My personal goal is 2% but that has become very hard in this market.
In my opinion, your first is your most important as that is the one you learn on.
The creative financing goes deep but these are good rules for someone starting.
Posted on 6/16/22 at 10:03 am to tigerfoot
I always thought the buy side was a good way to make sure I would be in better shape, I may be completely incorrect.
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You're absolutely correct.
Let people know you're looking. Start with one.
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You're absolutely correct.
Let people know you're looking. Start with one.
Posted on 6/16/22 at 10:04 am to tigerfoot
I'd wait a bit before pulling the trigger unless you find a good deal. I have 7 rentals now. Here's a few things I've learned:
(1) The numbers don't lie. Run the numbers on each deal to make sure they make sense.
(2) Try to buy something that needs a good amount of work so you can get the best deal and put in sweat equity to fix it up.
(3) Make the rentals nice enough that you would live there.
(4) Screen tenants thoroughly.
(5) Put as little down as possible. Run the numbers and surprisingly and you'll be amazed to see that you actually make more by putting less money down.
(1) The numbers don't lie. Run the numbers on each deal to make sure they make sense.
(2) Try to buy something that needs a good amount of work so you can get the best deal and put in sweat equity to fix it up.
(3) Make the rentals nice enough that you would live there.
(4) Screen tenants thoroughly.
(5) Put as little down as possible. Run the numbers and surprisingly and you'll be amazed to see that you actually make more by putting less money down.
Posted on 6/16/22 at 10:15 am to TheOcean
quote:Again, I am ignorant here. How do you go about doing that without screams of discrimination.
(4) Screen tenants thoroughly.
Posted on 6/16/22 at 10:16 am to I Love Bama
quote:Do you factor in rehab costs here? I assume yes, as that number can vary greatly.
The bare minimum should be 1% of your purchase price should be the rental price.
Posted on 6/16/22 at 10:17 am to TheOcean
quote:This is my plan if I do it, I would like to attract and maintain good renters. Of course I know this is what the goal is for all that rent. I am not interested in managing these properties if they are getting torn up every time you turn around.
(3) Make the rentals nice enough that you would live there.
Posted on 6/16/22 at 10:17 am to tigerfoot
quote:
How do you go about doing that without screams of discrimination.
Always discriminate. Always. Just don't say anything out loud that gets you in trouble.
Posted on 6/16/22 at 10:18 am to tigerfoot
quote:
Do you factor in rehab costs here? I assume yes, as that number can vary greatly.
Yes. 1% of your all in price.
Posted on 6/16/22 at 10:19 am to I Love Bama
quote:
I tell everyone starting out, this. You need to know EXACTLY what it will rent for, what your monthly expenses are and how much your rehab will be (if needed).
You can't afford to mess up on these.
The bare minimum should be 1% of your purchase price should be the rental price. My personal goal is 2% but that has become very hard in this market.
In my opinion, your first is your most important as that is the one you learn on.
The creative financing goes deep but these are good rules for someone starting.
Agree with all of this. There are a few things you need to consider in the big picture. Are you able to manage? If so, this helps with cash flow tremendously but it's not for everyone. A good Property Management company can go a long way for those that aren't able to invest time into it but it cuts A LOT into your return. Depending on the type of property and how old/new it is, you need to keep in mind big ticket items breaking and having enough cash to cover.
Posted on 6/16/22 at 10:22 am to TheOcean
Slum lords make a higher percent on their invested money..but more headaches.
Young professional or serious students ( not the party complexes) have less headaches in general…( I have this after trying the above once)
Get a simple book that explains write offs and depreciation etc…this is where you can up the profit margin.
If going into condos etc make sure the complex is well maintained and you did not have a lot of people get them a while back at a low price.. when investors get tired of headaches and they bought a bunch at a low prices and want to dump them they will reset the comps and impact your rent or resale.
They make a good asset to have when retired for supplemental income and a job you can mange when older.
Screen your tenant closely for financial and back check where they lived before.
One bad tenant can wipe out a lot of profit margin.
Young professional or serious students ( not the party complexes) have less headaches in general…( I have this after trying the above once)
Get a simple book that explains write offs and depreciation etc…this is where you can up the profit margin.
If going into condos etc make sure the complex is well maintained and you did not have a lot of people get them a while back at a low price.. when investors get tired of headaches and they bought a bunch at a low prices and want to dump them they will reset the comps and impact your rent or resale.
They make a good asset to have when retired for supplemental income and a job you can mange when older.
Screen your tenant closely for financial and back check where they lived before.
One bad tenant can wipe out a lot of profit margin.
Posted on 6/16/22 at 10:24 am to I Love Bama
quote:Does this ever change. Lets say you buy a 350k home. I see some in this town that are renting for 2700 a month that are similar. I am looking at the 150k to 200k homes. I can see getting 1500 for the lower end ones, but on the surface it looks like once you pass that point in our market you wont get to 1%.
Yes. 1% of your all in price.
Just avoid those is the iron clad rule, correct?
Posted on 6/16/22 at 10:31 am to Thecoz
“Again, I am ignorant here. How do you go about doing that without screams of discrimination.”
This is the main reason I use a property manager.. she knows how to and keep me out of legal issues… she makes them give info where they rented and checks with previous landlords… she makes them disclose income and financials ( not sure how)… she makes them give references and checks them.. whoever signs the lease needs to show income .. even if parents..
I have turned down possible tenants because of hidden issues… spend time learning this aspect.. finding the right tenant is the most important aspect imo ..
I have been lucky and had excellent tenants.. and still keep in touch even though they have moved on in life or purchased homes…
This is the main reason I use a property manager.. she knows how to and keep me out of legal issues… she makes them give info where they rented and checks with previous landlords… she makes them disclose income and financials ( not sure how)… she makes them give references and checks them.. whoever signs the lease needs to show income .. even if parents..
I have turned down possible tenants because of hidden issues… spend time learning this aspect.. finding the right tenant is the most important aspect imo ..
I have been lucky and had excellent tenants.. and still keep in touch even though they have moved on in life or purchased homes…
Posted on 6/16/22 at 11:11 am to tigerfoot
Posted on 6/16/22 at 11:17 am to Thecoz
quote:
have turned down possible tenants because of hidden issues… spend time learning this aspect.. finding the right tenant is the most important aspect imo ..
yup. my team does background checks. credit checks. job checks. we have a team of lawyers also with my PM. have not had to evict many but i have won in court on past claims. did not cost much either. we get judgments fast also in landlord friendly states.
Posted on 6/16/22 at 11:18 am to tigerfoot
quote:
Does this ever change. Lets say you buy a 350k home. I see some in this town that are renting for 2700 a month that are similar. I am looking at the 150k to 200k homes. I can see getting 1500 for the lower end ones, but on the surface it looks like once you pass that point in our market you wont get to 1%.
Just avoid those is the iron clad rule, correct?
This conversation could go on for months. There are exceptions to the rule.
For your first rental you don't want a $350,000 home in my opinion. Find something cheap where even if you frick up its not going to be a big problem.
Posted on 6/16/22 at 11:18 am to Fat Bastard
Listen to fat bastard, he knows this stuff.
I’d wait at least 6 months before jumping into the market, but plenty of very smart people are trying to avoid the current inflation situation using real estate so you have to decide for yourself.
I’d wait at least 6 months before jumping into the market, but plenty of very smart people are trying to avoid the current inflation situation using real estate so you have to decide for yourself.
Posted on 6/16/22 at 11:19 am to I Love Bama
quote:
For your first rental you don't want a $350,000 home in my opinion
f no. he needs something with great RTV (minimum 1%)
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