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baldona
Auburn Fan
Florida
Member since Feb 2016
4398 posts

Owning a 2nd rental right next door to another thoughts?
Seems like a great idea at first because of how easy it would be and I know the neighborhood, but trying to figure out some negatives?

House literally next door to one of my rentals is FSBO $99k and will rent $900- $950/ month. Its been on the market 3-4 months and in need of some minor exterior siding repairs probably $3-4k at most, I'm considering it in the low $80s. Would not be a killer rental return, but there's a new build in the neighborhood listed for $250k so there's some room for appreciation into the mid $100s and it would rent very easy to young military or professionals.

Thoughts?
This post was edited on 8/5 at 11:47 am


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
2130 posts

re: Owning a 2nd rental right next door to another thoughts?
You know the neighborhood better than any of us could. Not trying to be a dick, you just have the best insight.

The only problem I could think of would be if the tenants knew you owned both houses and saw you making improvements to one and expected you to do the same for the other. All other problems that may arise would be time between tenants, neighborhood issues, ect which again you would know better than us.


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hiltacular
Georgia Tech Fan
Member since Jan 2011
13229 posts

re: Owning a 2nd rental right next door to another thoughts?
Only negative is if the neighborhood takes a turn for the worse you are SOL on two houses vs one.


Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
31111 posts

re: Owning a 2nd rental right next door to another thoughts?
DO YOU WANT CASHFLOW OR APPRECIATION??

me? CASHFLOW> appreciation

I do not buy for appreciation.

hell you just as soon fix it and flip it. No way in hell am I holding a non good cashflow property HOPING for appreciation. say market tanks. If you bought for cashflow guess what? you still cashflowing! if you bought for the other? exactly.


baldona
Auburn Fan
Florida
Member since Feb 2016
4398 posts

re: Owning a 2nd rental right next door to another thoughts?
quote:

DO YOU WANT CASHFLOW OR APPRECIATION??


I would generally agree on cashflow, but I also like to buy properties I can sell if necessary. This is a normal neighborhood type of property, compared to something like a duplex or 4-flex that is ONLY cash flow.

Houses are selling for $110-130 move in ready. The new build that is about 1900 sq feet instead of 1000-1200 like most of the neighborhood is listed for $249. So its kinda in that in between area where its not low enough for a flip and boarder line too high for a good cash flowing rental.


Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
31111 posts

re: Owning a 2nd rental right next door to another thoughts?
Nobody said anything about multi family. You are discussing a SFH. that's what I was referencing. Mine have appreciation right now but that is not what I bought for. Oh and they are in normal neighborhoods also. Sounds like a personal issue that only you can answer for yourself. I've given my take. I wouldn't waste my time on it if it doesnt Cashflow enough and can't flip it. Move on.

Remember. Never let emotion dictate. You are only buying the deal. Nothing more. However. If you want to tie up a bunch of money waiting for it to appreciate that is your choice.
This post was edited on 8/5 at 7:52 pm


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bleeng
LSU Fan
Houston
Member since Apr 2013
2152 posts

re: Owning a 2nd rental right next door to another thoughts?
quote:

but there's a new build in the neighborhood listed for $250k so there's some room for appreciation into the mid $100s


1. I would never build a new house in a neighborhood where my house is double the price of the average home unless that neighborhood is undergoing some serious gentrification. If I'm building a new house that costs $250k then I'd rather be in a neighborhood where most of the houses run $300-400k.

2. If it's not a gentrifying area then their house is more likely to drop toward to median price (not necessarily all way to $100K~) than your house appreciate toward their $250,000 new build price.

Like the posters above said I'd buy for cash flow and not appreciation (unless you're in an insanely hot market like Seattle).


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Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
31111 posts

re: Owning a 2nd rental right next door to another thoughts?
quote:

Only negative is if the neighborhood takes a turn for the worse you are SOL on two houses vs one.




silly statement. HE would have years to get out IF need be. Not overnight. HE won't be SOL. I have multiple properties in the same neighborhood. Now do i invest in different areas and neighborhoods? sure. I have had tenants offer to buy my houses and investors and they have not even been put up for sale. If something DID take a turn for the worst he would have time to get out.


hiltacular
Georgia Tech Fan
Member since Jan 2011
13229 posts

re: Owning a 2nd rental right next door to another thoughts?
I mean if a drug dealer moves next door or some white trash family you now have two houses that can be potentially impacted compared to one.

I wouldn't let it hold me back from investing but OP was looking for alternative thoughts. Not sure how that is a silly statement


tigereye58
Louisiana Tech Fan
Member since Jan 2007
1797 posts

re: Owning a 2nd rental right next door to another thoughts?
I don't think there is a problem owning 2 in the neighborhood. 5 in 1 neighborhood and maybe your concerned more. Write down a detailed review of your current property and rental history and maintenance. How long have tenants stayed? If you've done really well then you'll probably be fine owning 2 that both cash flow well. From those numbers it looks like you are at about a 12% yearly return which isn't horrible but not great either. Depends on your market. In my market anything less than 15% isn't a good deal. If it's been on the market that long low ball them. See what they say. Like others have said I'd focus on cash flow almost exclusively.

Things to consider
Cash flow > overall quality of neighborhood > hopeful appreciation > 2 houses in 1 neighborhood


stevengtiger
LSU Fan
Member since Jul 2013
2627 posts

re: Owning a 2nd rental right next door to another thoughts?
quote:

5 in 1 neighborhood and maybe your concerned more


I currently own 4 in one neighborhood and two more in another neighborhood very close to it. Mine are situated very close to an AF base and in a good school district. The AF base will not be closing anytime in the foreseeable future and I don't think it would close in the next 20-25 years. If that is the case, all of them will be paid off and I should have 10-15 years of note free cash flow in that time period. I would buy every house in the neighborhood, if I could.

There is nothing wrong with owning multiple units/homes next-door to each other unless the area is questionable. It is all about location and trying to reasonably determine the future(10-15 years), IMO.


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baldona
Auburn Fan
Florida
Member since Feb 2016
4398 posts

re: Owning a 2nd rental right next door to another thoughts?
quote:

From those numbers it looks like you are at about a 12% yearly return which isn't horrible but not great either. Depends on your market. In my market anything less than 15% isn't a good deal.


This is more of what I was saying. I don't know if appreciation is the right term, but I personally don't have many "amazing" cash flow rentals in my area because anything decently low gets bought as a flip. That's why I compared it to multi families, because flippers leave those alone generally so you can find some better deals. They just don't have the sort of appreciation and stable neighborhoods like you can find in a single family.

I agree cash flow is better, but I don't see many good deals.

Some of the benefits I was thinking about is I should get cheaper Lawn service, guy can cut both at the same time. Very easy to check on both. I usually pick up all my checks in person and change their air filter at the same time. I've only owned the current property 2 years, but when I listed it for rent online I got something like 13 calls in the first 24 hours. So I know this will rent very easily to a good longer term (2+ year) tenant.
This post was edited on 8/7 at 1:21 pm


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