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re: How to get into rental property?
Posted on 3/21/23 at 6:09 pm to GeauxTigers123
Posted on 3/21/23 at 6:09 pm to GeauxTigers123
I’ll let someone comment on construction cost but where you make your money is what you pay for the land.
I’ve honestly seen more people buy b- to c properties like this and do gut Reno’s vs building from ground up as you just can’t build the “bones” for anything decent these days.
Of course you have to budget right because you can overshoot the neighborhood rental comps once you do the rehab. You can probably command a premium market rent since they are renovated but you can’t go from $800 market rent to $2000 as the appraisal just won’t support it.
I’ve honestly seen more people buy b- to c properties like this and do gut Reno’s vs building from ground up as you just can’t build the “bones” for anything decent these days.
Of course you have to budget right because you can overshoot the neighborhood rental comps once you do the rehab. You can probably command a premium market rent since they are renovated but you can’t go from $800 market rent to $2000 as the appraisal just won’t support it.
1
Posted on 3/21/23 at 6:10 pm to Silverback911
quote:
Is there some type of formula or margin when calculating payments and then rent?
I just need a minimum cash flow. My minimum is $350 a month. Ideally 600-1000 a month cash flow.
Everyone is different. What I usually see are people who read a million books, have paralysis of analysis, and never take actual action.
You'll learn more in your first 12 months having a rental than you will reading about getting investment property.
Buy in a good location. Have your rent higher than the most and vet your tenants extremely well.
Posted on 3/21/23 at 6:11 pm to Fat Bastard
quote:
you buy rentals for CASH FLOW. if you want instant capital then get into flipping. never count on appreciation with rentals. never buy for that.
as the old saying goes from many great RE minds
" it's the cash flow stupid"
Posted on 3/21/23 at 6:12 pm to I Love Bama
quote:
Yes, I am almost out of the game entirely.
Why'd you get out of it Bama?
Posted on 3/21/23 at 6:19 pm to Billy Blanks
quote:
Is there some type of formula or margin when calculating payments and then rent?
See my comment on page two about lending. That’s where you should start as one the bank isn’t going to lend on a negative cash flowing property and two why would you want to purchase something that’s negative cash flow about expenses and monthly payments.
I think your question was something else but it was just worded funny
Posted on 3/22/23 at 12:12 pm to bbap
I’ve read some great suggestions on here and some formulas that make perspective sense. I think what you get into and what you attempt to do can really vary from person to person depending on resources and goals.
I personally don’t buy homes that I don’t plan on possibly living in one day. They may be a second home, a primary residence, or a vacation home. I don’t get nearly the rent as some of the formulas suggest, but I usually get more than rent, taxes, insurance, and maintenance. I also get very valuable tax deductions, especially on travel when traveling to those states. I’ve been sort of lucky with prices rising on the property and have done a few 1031 exchanges to reinvest money in other properties. My hope is that I get a property I made more than I paid for it through the rental process.
This might not work for everyone, but it’s helped us quite a bit over the past 13 years.
I personally don’t buy homes that I don’t plan on possibly living in one day. They may be a second home, a primary residence, or a vacation home. I don’t get nearly the rent as some of the formulas suggest, but I usually get more than rent, taxes, insurance, and maintenance. I also get very valuable tax deductions, especially on travel when traveling to those states. I’ve been sort of lucky with prices rising on the property and have done a few 1031 exchanges to reinvest money in other properties. My hope is that I get a property I made more than I paid for it through the rental process.
This might not work for everyone, but it’s helped us quite a bit over the past 13 years.
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