Rental Property Question
 

I have been house hunting quite a bit in the past few weeks (mainly because mine flooded before the Atlanta forum, and it's been torn up this whole time in some way, shape, or form) and I have noticed a lot of low cost houses on the market, among others.

I'll cut to the chase here in a second.

Where I live, they have some 2-3 bedroom, 1-2 bathroom, 900-1400 (avg 1200) sq foot houses for sale. Especially in the town just south of me. So it had got me thinking...

If you were to buy rental property. Would you spend $100,000.00 on a 2-4 unit building. Or buy 2 of these 1200 sq foot small houses, fix em up, and rent them?

While some are completely destroyed. There are others that need some appliances, paint, and minor shit. Those are mainly what I am looking at. Not complete rehabs.

Experience? Suggestions? How did YOU get started?
:helpme

so youre looking to invest in rentals AND live in one and manage it? Or purely a flip?

I have a house and my dad has an apartment and a house... we both want to dump our houses. I would prefer an apartment... it's more consolidated and in theory should be less work.

Note: your local market would play a factor in this as well. I know some people that rent out houses and the landlord takes care of the yard... I know others where the tenant takes care of the yard. If the landlord takes care of the yard, that is a lot of extra work you need to deal with particularly when you talk about multiple houses. It really depends on what you can do in your market.

My sister is loosing her ass on her rentals in Michigan right now. She just applied for a short sell to get rid of one of them, because due to the crash, it's now valued at 60% of the purchase price from 7 years ago.

I am thinking like this...

I will buy the first one. Fix it up, homestead, and the in 3-6 months move out and rent it to my sister. She needs a house, and will never be able to afford one herself. The good thing in doing this is,...

1. She works part time for me doing forum posts, and other shit. She would get to live there for a few hundred bucks, and I would apply what I pay her to the rent. So she would get a nice upgrade for her and the kiddo.

2. I would somewhere in there, buy another property, fix it up, then rent it out. May live in it, may not. If I do not, then I would just drop the 10-20%, and then non-homestead it.

3. Pick up 1-2 houses every few months over the next 6-12 months depending on the market, and how the first rentals go.

This gives me some diversity, builds up capital, and gives me some 'hard assets' that the banks are always interested in. Especially when self employed, full time, online, and have no tangibles for them to seize.

In our market, the rentals for a house like I am looking at, USED to run around $750.00 a month. It was kinda capped around that (or so some said). Now the rents for similar, and a little bigger, are running as high as $1200.00 a month!

That is quite a fucking jump!

But even more, a $25,000.00 fixer upper. Even if you rent for 10 years, wait for economy to rebound, you should be able to get a decent return. Plus, you do not have a huge mortgage payment in the short term.

Well - yea - local home econmoy has a lot to do with it and since you will be managing them - thats a lot of other responsibilities you will be taking on. As soon as you have tenants (that arent your sister) you will have to deal with their shit if and when it arises.

if they are in bad shape like you say - there will be constant attention. Unless you get a tenant that helps or just dosnt care which are far and few between

Yep. Business partner (in porn company) is in the same boat.

He owns something like 30+ properties, rentals anyways (has car washes, and other shit), and he maxed out all their value/equity when the times were good.

So now, he has a bunch of property that has dropped in value, and he owes more then they are worth.

True.

Business partner, before his accident, had offered to maintain or run them for me. As he does for his old college roommate, for a 10% cut. He would deal with all aspects of management for a 10% on the rent.

I told him I would consider it.

good point, tell them you're in online porn too

LOL... family tenants suck. I think I would rather deal with flaky nonfamily then flaky family. Actually, I know I would.

stick with multi units if you can, you pay less property tax per unit than you do with a single home. if you're paying $250-300 a month in taxes for 1 unit compared to 150-200 its a lot more profit, thats only if you're doing it long term. single units have a better resale value than multi units.

I think I'll pass.

My family is a little different.

If I had a traditional family, like ALL of my friends, and people I know. Then yes. I would completely agree with you 110%.

Good point.

Business partner only has 1 multi-unit. His thinking is this.

He has said that he does not want to get phone calls all the time like you get in a complex. Noise, parking places, parties, etc. So he would rather have houses.

When you get a tenant in a house. They pay. You rarely get a complaint. Less grief.

He's been in real estate, I wanna say, like 20 years now.

Family and business can be a really bad mix.

Buy paint clean and either rent or resell.

i screen good and my contract is strict, if they are noisey then they are not the kind of people i would want in my house to begin with, i would evict them if i warn them and it doesnt stop. i really dont see it being that big of a deal though. besides, its 100-150 a month against some possible phone calls with people complaining. if you arent prepared to deal with that stuff in the first place renting homes is definitely not for you.

Houses command great rent in any area... If you can get them at a low enough purchase price and have the cash, then by all means try to get one. Nothing wrong with your idea of fixing it up, finding a renter, buying another, and repeating.

The good thing about a rental house is that the tenant usually does the yard maintenance, and in some cases actually improves the yard with a garden and such. Apartment complexes require you to provide the yard maintenance (in most cases).

Also, in most cases, a better quality of tenant rents a house.

That's my thoughts.

With property, you have a few options. Flip, rent, hold and sell later. But to the bank and you are trying to borrow money, buy more toys, or whatever. They always wanna see some 'hard asset' when you make your money in the online world.

While my CU loan officer, and branch manager, pretty much has the understanding now. Not all banks are as understanding. The more assets you have they can take. The more willing they are to lend.

Yep. Business partner had said that as well.

Those who can afford, and rent houses, are typically families or those with more to lose. So they take better care of things all the way around. Which is why he only deals in houses. Not multi units.

Agreed.

I would rather make $2000.00+ off a 4 unit property, then trying to knock back $100 per for each house (remember in his situation, he is maxed out in equity).

Yep.

I have heard many of the 'family' stories from friends, gf's, and around. If I lived in some of these families. I would never loan them a dime, and most of the time not help.

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