Where do you find properties

Question

I have been lurking for a long time time and just decided to post. I lived in the same area for 31 years and just moved to Northern Wisconsin two years ago. I have owned, built, flipped many houses but never held any as rentals. I am wondering where you guys find properties for so cheap. I would never have found a property that could hold up to the 50% expenses or 2% rule in my last area. Where I live now most properties seem to sell for around 100 times the fair monthly market rent to a shade below that (example- 100k duplex with 500 per side monthly market rents). These seem cheap to me compared to the last area I lived in. However none of these ever stand up to either of these rules. I am obsessed with finding properties and renting them out for long term growth. I do not need to cash flow just break even for the time being and hold on for rent increases for later cashflow. So where do I find a deal?

Matthew Gil · Answer

Having lived in Wisconsin for a few years, I know one thing you may want to think about.
            
            Wisconsin has the 5th highest tax burden in the Union and property taxes ain't cheap.  Right off the bat you will have forces that you can't control, nipping at your NOI.  Funny stuff.

Ken Hicks · Answer

I agree with Mike on how to locate properties. If this was easy then everyone would be doing it.

As far as my strategy, I never touch my profits. I just keep the money in a money market account at 2% interest then when my funds get to a certain amount I call my PM to see about repairs or if she knows of anyone selling a property, I then I take the rest of the funds to pay down the principle. Seems to be doing ok but I dont' have lots of properties.

Timothy W. · Answer

Have you started with what's listed for sale?  On realtor.com I see a couple 2 beds in Eau Claire that look to be in decent condition listed for 39k-49k and from looking at the craigslist Rental section, a cursory view looks like rent on 2 bed houses in your town can run about $600 a month.  If you can be out the door near at or at 30k and renting them for $600 a month, you're in business.

Watch it when you evaluate any rehab costs.  You're just rehabbing for a rental.

Tim

Clayton Burgett · Answer

*bump*

Jason Cooper · Answer

Thanks for your input.

Ryan- I am enjoying it here, a different pace then what I was use to. I was originally from your neck of the woods. (McHenry County)

Mike- Forgive me if I seem naive but my strategy is on a more long term level. I make enough to support myself now. The way I see it, if I can break even and pay down the debt service. I should build equity, appreciation should increase the rentals rates and the value of the property long term. Which is my true goal. More a backup retirement plan. I wouldn't count out on all three but 1 or 2 would be fine. However I would like to stay away from single family as they seem harder and more costly to manage.

Thanks again for all the wonderful posts and help you folks provide every poster.

Michael Rossi · Answer

Unfortunately, that doesn't happen in the real world.  Rents can go up and they can also go down.  However, regardless of what rents are doing, EXPENSES only go one way - UP!  So, buying a "break even" property in hopes of rents increasing is a losing strategy.

You can find great deals in a lot of ways.  I find most of my deals through personal contacts.  In other words, get out of the house and tell everyone you know and meet that you are buying houses (at a big discount).  As more and more people know that you buy houses, people will start to call you when they (or a friend) MUST sell their house.  You can also find great deals at foreclosure sales, estate sales, auctions, from disgruntled landlords, with REOs, from classified ads you put in the local paper, etc.  The main point is get out of the house and meet people.  That's where the great deals are!

Good Luck,

Mike

Account Closed · Answer

There are many many ways to find properties. Everyone has rules, but you have to find a rule that works for you when it comes to investing. What level of risk are you comfortable taking on properties?

Do you want to make 150.00/month in positive cashflow per unit, or do you require 200?

Does this happen on smaller properties in your area, or larger multi-units?

So you are in Eau Claire? How are you liking it up there?

Glen Andrews · Answer

Jason, you can find them by aquiring a list of absentee owners. Those are in most cases landlords. You can also get a list of all individuals who own more than 2, 4, 8 or twenty unit apartments depending on what you're looking for. 
            
            You're going to have to market to find good deals. Whether it's direct mail, newspaper ads or signs. 
            
            go to www.dunhills .com they should be able to provide this list of absentee owners (Landlords) or any list broker can get it for you. There are plenty of other lists like...
                                    
                                    Pre-foreclosure
                                    Expired listings
                                    Probate properties
                                    and the list goes on and on.
                                    
                                    Hope this helped!