BiggerPockets

Rental properties have always caught my eye as this is where I would like to go later on in my REI career. I do not have too much cash (more than the average college student but I am a college student) but do have perfect credit. I figure now until I am out of Grad school wholesalling is the way to go.

Obviously if I find that right property I will jump on it, but how do you find landlords selling? I don't think it would be smart for me to just buy a condo and start advertising to rent while paying off the mortgage. I know that there are landlords selling out there I just don't know where to look I guess. Any help I could get on this I would really appreciate it. Also, if there would be a better way for a new REI to go about this feel free to share! I am new and I won't be hurt to be told I am wrong. Everything helps, THANKS!

Excellent question indeed....and I'll be happy to respond....in fact, I ONLY buy properties that are cash flow positive from the start. To me, investing is buying a property and getting residual & possibly perpetual income from it. Flipping, etc is speculating IMHO, not investing.

In short here is what I do....

Scenario 1...

a) Contact a few realtors I know who know how to look for good properties.
b) Have them look for " distressed landlords" who just want to get out of the rental business.
c) Buy the home contingent upon acceptance of the current tenants and do your own screening of them. If they pass your criteria and the deal makes financial sense, do the deal.

Scenario 2...

a) Find a great property without tenants.
b) Put an offer in on the home contingent upon the seller finding you a renter before you buy it. If they resist, you sell the deal by saying..." hey, look it's a win win....if you find a good renter for me that I can screen, then I'll buy the home. I get positive cash flow starting day 1, and you get to sell the home....win win!!"

In either of these scenarios, you get to acquire a property with a tenant starting day 1. Just make sure you screen the tenant!!!

It's that simple.

That helps alot! Both of the ideas are very helpful!

I have some more questions again I am new so any answer is helpful!

Is renting a house better than a condo, or does it not really matter income is income? And, is there a certain amount you should aim for of positive cash flow? Obviuosly the higher the better but I didn't know if a certain amount of positive cash flow should be met to cover repairs, etc. Thanks in advance!

Nice job avoiding the soap box grandwally, seems like we all have to tread lightly on that subject.

To answer the question, most experienced investors do shoot for a minimum of $100 per month, per door in cash flow. This is after all operating expenses (taxes, insurance, prop. management, repairs, vacancies, etc.). The mentioned OE are some of them, not all of them, just to be clear.

As for condo vs. sfr or multifamily, cash flow is cash flow. What you do have to consider on the condo is potential association dues, possible rent wars/competition with other landlords in the complex, possibly lower future appreciation values on the condo vs. sfr, etc. (just to name a few).

Ultimately, you need to do your due diligence, study the area, make sure the numbers work for your situation, and always keep reserves (cash, line of credit, etc) for raining days.

Good luck to you.

Get a job at commercial property management company. Try the accounting department doing accounts payable/receivables and work along-side the accountants and learn how to crunch the numbers. After about one year, try to move departments or assist the property management staff for one year.

You're looking at a brief description of my post college experience. I went from property accountant to commercial property manager. I was paid to learn the business this way and it gave me a wealth of confidence in choosing the property to invest in. I've just started putting my own money into things now. Give yourself this time if you have a buy/hold strategy.

Or find a local guru at an REI club to help you with other strategies.

from what I have been taught, it is always good to make sure that you have rent comoing in that is 1% of the purchase price, and this obviosly depends on the area to but sounds like good advice for me

I know of only one market where the 1% rule worked for a while on single family houses. In SW Missouri (Springfield), the tenants covered all expenses and as I remember property taxes ran about 1%. Have a ball finding that again.

Here in Chicago I have not been able to find any properties that you could apply the " 2% rule" because of the high costs. Is there another way you can really look at it? I have used a few of the tools on the site (i.e. rentometer and the cash flow calc.) and this says I would cash flow positive. I didn't exactly know if these are always correct or not.

I think the major battle will be finding a property cheap enough to get a nice cash flow on. I'm sure Tim knows, up in the northern side of Chicago there are not many properties that come with a low price tag. I have had the thought of maybe getting a hard money lender and renting out a foreclosed property, is that a good idea or should I stay away from that thought.

Just trying to see all the ways I could go about this...

Every time I've bought or sold with tenants in the building the security deposit is passed at closing and accounted for by the seller (poc) and the terms of the lease are in effect. The leases are passed to the buyer as well.

If there's a vacancy you probably want to screen tenants yourself. There's a learning curve on these things and you and the prior landlord might not agree on what your standards are. You also might want to review the rent and go up.

I feel like if you can buy a house, live in it, fix it and sell it two years later for a tax free gain..that's the place to start. Take in a roommate and learn all there is about managing property. Then you'll be ready to purchase something a bit more risky.

You need gobs of money. Just roofed a house and a year later the two chimney's leaked. Otherwise the roof is fine. Paid an additional $1500 to bring in another roofer I knew could flash chimneys and take care of that issue because obviously the roofer I used didn't know how to flash one chimney properly much less two. You have to have the cash ready.

Hey I like that rich23s! Are you talking like wisconsin border? Please share any experiences you have. Im in the Northwest burbs but I'm sure you are talking much more Northwest than that...