Rental Properties in the 100k range

General Real Estate Investing
13yFollow

Rental Properties in the 100k range

Sandra M
San Jose, CA · Member since 2013 · 1 post · 0 votes

We are looking to invest some money preferably in the 75k - 100k range single family homes to rent. I would be buying the house cash.

I wanted to see what everyone recommends. I recently purchased one in Fresno, CA for around 120k cash and rent it for $1,150 a month.

I wanted to see what other cities to invest would be good. We were looking into cities in or close to Reno, NV with less state taxes to pay. Or possibly just looking for another one in Fresno, CA.

What would you recommend ? And if its more than 100k how easy is it to get financing for a investment property ? In this case would it be better to buy 2 - 3 houses and splitting our cash into a down payment ?

We just applied to buy a home in the bay area and qualified for more than 700k and have excellent credit. However we recently decided to rent and invest somewhere we can maybe buy a property cash and get money flowing in. There is such a big bidding war right now here and we would only be putting 10-15% down so rather invest the money somewhere better.

Any suggestions would be greatly appreciated.

Thanks !

0Reply
59 views

Most Popular Reply

Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
13y
Originally posted by Sandra M:
We were looking into cities in or close to Reno, NV with less state taxes to pay.

This is a little different topic than your post but Marco Santarelli handled all of those questions I think. Just be aware you will still owe state income tax on those properties. I have rentals in FL which has no income tax and I haven't done so yet but I will be paying CA state income tax on my rentals starting this year I believe. The link below has a recent discussion on the issue.

How-does-investing-out-of-state-impact-your-tax-status

1Reply
See this reply in the discussion

12 Replies

Jump to latestLatest
  • Marco Santarelli
    Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
    13y

    Hi Sandra M,

    Welcome to BiggerPockets, (and happy Mother's Day if that applies to you.)

    You bring up some very good questions and concerns here:

    1.) The bay area is nice, but very expensive. We are also seeing a bidding war here in southern California since inventory is so low. It's just crazy. But as I always like to say, "Live where you want. Invest where it makes sense!"

    2.) Congratulations on your first investment. The rent to value ratio is good, but I hope the expenses, particularly the property taxes, aren't eating up most of your cash flow. The issue I have with most of the coastal states are the high property prices.

    3.) I'm a big fan and advocate of buy-and-hold investing. It's all I've focused on since 2004 and it's what I 'preach' to my clients. So, congratulations on your decision there.

    4.) If you have good credit, as you've mentioned, then it shouldn't be hard to get financing. Our investor clients are getting loans on their properties with 20% to 25% down (maximum leverage) and generate very good returns. Therefore, if you have the ability to finance (leverage) your investments, you'd be able to buy and control more real estate, and that should serve you well in the long term as your equity builds across multiple properties.

    5.) As far as your next market, I am not a fan of California. There are many great markets all around the U.S. Many with property prices below their replacement costs. You want to look for a stable or strong housing market, good economics, lower unemployment, and job growth, among other factors. I've posted many of my favorites on my website.

    Feel free to post any other questions you may have.

    Continued success!

    1Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    13y
    Originally posted by Sandra M:
    We were looking into cities in or close to Reno, NV with less state taxes to pay.

    This is a little different topic than your post but Marco Santarelli handled all of those questions I think. Just be aware you will still owe state income tax on those properties. I have rentals in FL which has no income tax and I haven't done so yet but I will be paying CA state income tax on my rentals starting this year I believe. The link below has a recent discussion on the issue.

    How-does-investing-out-of-state-impact-your-tax-status

    1Reply
  • Mehran K.
    Investor · Wichita Falls, TX · Member since 2010 · 3k+ posts · 603 votes
    13y

    Welcome to the site Sandra & congrats on your first property!

    I am a big proponent of the power of leveraging my money via financing. I'm wondering what made you decide to buy properties all cash?

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    Hi Sandra. I live in LA and only invest outside of CA. The two markets I think are the best right now are Houston and Chicago. Houston I'd say is probably one of the #1 markets for rentals right now (depending on the factors you consider) and Chicago has some amazing deals right now and being one of the world's most economically powerful cities, good market for long-term and great cash flow. There are other good smaller markets out there also.

    The thing I look for is where are people moving and wanting to go that the numbers work. That's where I go.

    0Reply
  • Jonathan Luna
    Inland Empire · Member since 2019 · 22 posts · 3 votes
    7y
    Originally posted by @Ali Boone:

    Hi Sandra. I live in LA and only invest outside of CA. The two markets I think are the best right now are Houston and Chicago. Houston I'd say is probably one of the #1 markets for rentals right now (depending on the factors you consider) and Chicago has some amazing deals right now and being one of the world's most economically powerful cities, good market for long-term and great cash flow. There are other good smaller markets out there also.

    The thing I look for is where are people moving and wanting to go that the numbers work. That's where I go.



    @Ali Boone

    CA Investors purchasing properties seems to be the trend these days, does that statement on Houston still hold true today? What markets do you see growing now in 2019 and how do you find these markets? Thank you for any advice/info you can give!

    0Reply
  • Jonathan Luna
    Inland Empire · Member since 2019 · 22 posts · 3 votes
    7y
    Originally posted by @Marco Santarelli:

    Hi Sandra M,

    Welcome to BiggerPockets, (and happy Mother's Day if that applies to you.)

    You bring up some very good questions and concerns here:

    1.) The bay area is nice, but very expensive. We are also seeing a bidding war here in southern California since inventory is so low. It's just crazy. But as I always like to say, "Live where you want. Invest where it makes sense!"

    2.) Congratulations on your first investment. The rent to value ratio is good, but I hope the expenses, particularly the property taxes, aren't eating up most of your cash flow. The issue I have with most of the coastal states are the high property prices.

    3.) I'm a big fan and advocate of buy-and-hold investing. It's all I've focused on since 2004 and it's what I 'preach' to my clients. So, congratulations on your decision there.

    4.) If you have good credit, as you've mentioned, then it shouldn't be hard to get financing. Our investor clients are getting loans on their properties with 20% to 25% down (maximum leverage) and generate very good returns. Therefore, if you have the ability to finance (leverage) your investments, you'd be able to buy and control more real estate, and that should serve you well in the long term as your equity builds across multiple properties.

    5.) As far as your next market, I am not a fan of California. There are many great markets all around the U.S. Many with property prices below their replacement costs. You want to look for a stable or strong housing market, good economics, lower unemployment, and job growth, among other factors. I've posted many of my favorites on my website.

    Feel free to post any other questions you may have.

    Continued success!



    @Marco Santarelli

    Great advice! I'll be sure to check out your website today and learn how you evaluate market trends. I've heard of the investment company you're associated with (Narada Real Estate) on one of the podcasts I listen to. 

    0Reply
  • Marco Santarelli
    Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
    7y

    Thank you @Jonathan Luna.  Please let me know if you have any questions.

    Continued success!

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    7y
    Originally posted by @Jonathan Luna:

    @Ali Boone

    CA Investors purchasing properties seems to be the trend these days, does that statement on Houston still hold true today? What markets do you see growing now in 2019 and how do you find these markets? Thank you for any advice/info you can give!

    Wow, that's quite the old post you're referencing (6 years ago??). Things change a lot in 6 years. No, that statement about Houston certainly isn't true today. As far as what markets are growing today, depends on what you're looking for...?

    0Reply
  • Daniel D.
    Member since 2019 · 4 posts · 1 vote
    7y

    Hi @Ali Boone new BP and REI here. I am currently in process on binge listening to all the podcasts and reading interesting forum posts as much as I can. On that, referencing to your post from 6 years ago, what are your thoughts in the Chicago area for rental/hold long-term/cash flow investments?

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    7y
    Originally posted by @Daniel D.:

    Hi @Ali Boone new BP and REI here. I am currently in process on binge listening to all the podcasts and reading interesting forum posts as much as I can. On that, referencing to your post from 6 years ago, what are your thoughts in the Chicago area for rental/hold long-term/cash flow investments?

    Hi Daniel, I still like it. A lot of people don't...and I agree the market fundamentals there are a little shaky. Property taxes have also knocked a lot of deals out in the more suburban areas of Chicago, so that's an issue. Some people anticipate a Chicago 'crash', but I honestly don't see it happening. The housing prices there are still lower than pre-recession (2008) prices, meaning there's in theory room for them to grow. I just don't see people leaving Chicago, so I personally still like it. Still cash flow in certain areas too.

    1Reply
  • Daniel D.
    Member since 2019 · 4 posts · 1 vote
    7y

    Thanks for sharing your views and experience in this. That makes a lot of sense, like anything else you have build your knowledge in the market you investing and the numbers need to make sense. 

    0Reply
  • Melissa Nash
    Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes
    7y
    Originally posted by @Daniel D.:

    Thanks for sharing your views and experience in this. That makes a lot of sense, like anything else you have build your knowledge in the market you investing and the numbers need to make sense. 

    I agree and think Chicago still has a lot of growth and lots of $ being pumped into revitalization downtown and there is cashflow there. The only thing about Chicago is that it is not landlord friendly, and there is more red tape to evict a tenant and being transparent that is something to watch out for should that issue come up, there is rental demand there and you can consider using HUD- section 8 there for higher rental income. Also when you close, there are more closing fees charged to you because of city transfer fee and lawyer fees, and then property taxes are higher there. So make sure that you are including this in your numbers so there are no surprises. Have you thought about KC or Indy? Both are landlord friendly and have some nice returns/ lower taxes and some growth.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free