BiggerPockets

Mike,
I think the type and quality of renters is region and specific location dependant. For instance, the midwest has generally lower housing prices which makes the possiblity for a profitable rental business. Within Fort Wayne, You can spend between 15K to 150K for a rental house. The 15K house will rent for $450-$550 while the 150K house will rent for 1k-1.2K. While you will are more likely to get a more reliable tenant for your 150K house, you will be lucky to break even. The profit margins work best for the lower end homes in my experience but you do have more tenant issues. (That is why I find my property manager to be worth every penny that we pay them.)
We do not have any "warzones" in Fort Wayne but most tenants at the low income scale are living paycheck to paycheck and are usually one life event away from not being able to make their rent payment. With that said, they need a place to live as well and many of them are reliable long term renters.
Good luck. If you do not find the right numbers in NJ, there might be some other areas that will make the numbers work out better.

Mike, where are you in NJ? I invest in Trenton. I only have 2 rentals right now, and both tenants receive rental assistance. One is Section 8 and the other is Social Services (although they just cut him off, but that's another thread :)

My rentals aren't in war zones, but they're in low/no income areas.

MikeOh,

I've read alot of your posts as well as your blog and I want to thank you for all the information you give out daily. It's a great help to newbies like myself. I noticed from your blog that you go and pick up the rent checks from your tennants in person. When I rented in college my landlord set up a bank account that we deposited the rent into ourselves, which made it easier for him as there was no hassle to go from house to house. Is there any reason you do not do this? Thanks again for your contribution to the boards.

When I rented in college my landlord set up a bank account that we deposited the rent into ourselves, which made it easier for him as there was no hassle to go from house to house. Is there any reason you do not do this?

Yes, I can think of many reasons not to do that, especially if you have low income rentals.

First, many low income tenants don't have transportation. If you make it hard for them to get the rent to you, you'll have a lesser chance of getting it.

Second, I like talking to each tenant and seeing all my rentals at least once a month. Just having that momentary contact and seeing that property for a short period of time will often clue you in to problems that are developing.

Third, if the tenant has your bank account number, they might steal your money. It's not very likely, but it could happen.

Fourth, many low income tenants will spend their money as soon as their government check arrives. If they can't get you to come get it immediately, it might be gone tomorrow.

I'm sure that I could think of more reasons, but it's too late to tax the brain cells too much.

Mike

Aly,

Have you ever looked into New Brunswick or Perth Amboy?

Originally posted by Aly L

Hi Mike,

I haven't, no. I can check out the prices. Generally, you can get a 3BR/1.5BA SFR rowhouse in Trenton for about $45K, maybe a few thousand in repairs, and get $900 in rent. The market has softened though.

What's going on in Perth Amboy? It's just over the bridge from me.

It's close to me too. I don't really know much about the area itself or the rental market. I know you can't go off of what is listed on sites like realtor.com, but it seems like there could be some potential. There is a house listed at 99k that rents for $2,100 a month. I know that these numbers need to be looked into for accuracy but do you think they deserve a closer look? It also has a crime index of 240 which is considerably lower than the national average of 320, according to city-data.com.

I would imagine that you have renters that are gainfully employed. You might want to consider having their rent automatically deposited out of their check. This will assure that you will get your money and tenant does not have to worry about putting the check "in the mail"