BiggerPockets

Lots of upside in rentals now, because of demand. Article I read yesterday sid it is now cheaper to rent than own(with no downpayment outlay!) in 72% of main markets.

A 5-6% increase expected in the U.S. over next 12 months. If property is purchased for rock bottom price, based on rental increase of 5-6% for next 12 months, value should increase 5-6%. If you can buy the property on owner finance with 10% down, you would show a 50-60% return "on paper" for your 10% down. Not bad.

Home ownership has now decreased to lowest % since 1998.

Good upside, hot rental market, and many motivated sellers, this seems like a good opportunity. This would NOT normally work in NY, CAL, etc due to the high prices and relatively low rents. You'll know if you are in a good rent/cost ratio. There are many states and areas that would work well with this program.

This is NOT an EASY fix. Must find:
low priced areas
motivated seller offering owner finance

and have:
some funds
cajones attitude
time to shop
holding power
reserves

I'll be attempting to do some of these myself upon re-locating soon.

Suggestions or devils' advocate input? Rich

Rich,

What type of neighborhoods? Low income, middle income? Urban, suburban, exurban? This will determine the type of tenant you end up with. And tenants can make or break you. They can dry up your cash flow for months on end.

Thanks,

PG

While we have been flipping houses to raise capital, we are getting ready to start purchasing rental properties for this very reason. I believe the rental market in most US markets will be strong for the foreseeable future. We are actually looking now for our first and will be putting in offers over the next couple weeks.

I look forward to the challenges of owning rental property, but I really look forward to building wealth through rentals.

I have other posts and threads on areas that I don't like. I have 2 simple rules.
1.I can collect the rent after dark, without a sidearm.
2.My wife feels safe driving through that area during the daytime.

Rich,

Good rules. Problem is, I have rentals in Memphis that meet those two rules, plus some, but the tenants still suck. One is being evicted in a rental that rents for 1200, which is on the high side in Memphis. I've had three PMs there who have told me the renters (over a wide income range) live pay check to pay check, and that you'd be hard pressed to find a renter in Memphis who doesn't have at least one judgment against them. I'm sure Detroit, Cleveland, Akron and other large cities are the same. So I have a third rule:

3. Stick to middle class suburbs with demographics that match the national average. Don't buy within the city limits of large cities like Detroit, Cleveland, Memphis, Birmingham, Atlanta...etc. Unless you actually LIKE going to eviction court all the time to get the tenants to pay the rent.

The underlying culture of the city and it's demographics actually matters. If the culture is such that you can't find renters with clean rental histories, STAY AWAY. And remember, as for Memphis, it's PROPERTY MANAGERS who have told me (after the fact!) about the underlying "deadbeat" culture within the city limits of Memphis. My experience CONFIRMS this. Only 2 out of 8 tenants there have been halfway decent.

My renters in Mishawaka IN have been fine. I plan to buy more there and similar places.

Thanks,

PG

Duly noted.

Not all of us have the cash to buy at auction. Not all of us can afford to get burned by buying that one home at auction that ends up needing a new foundation, new plumbing, or both. Not all of us are comfortable buying a home today hoping there'll be a buyer for it several months from now.

Rentals are regarded as "passive" income for a reason. We're hoping one day to be spending our retirement on sailboat in the Caribbean with our portfolio of paid-off rentals paying for our gas, dockage fees, and rum supply. Hopefully you're successful enough at what you're doing so you'll be anchored adjacent to us instead of sitting on the courthouse steps in the Arizona sun chasing the next deal.

BTW, our last rental is earning us nearly 30% WITHOUT counting appreciation and tax savings.

I'm curious, those of you that have multiple rentals and are quickly acquiring more, are they seller financed? Or is there another means of financing rapidly acquired properties?

You may hear from him shortly, Rich!

I did about 10 minutes of "digging" and discovered Ron is in the process of forming a bidding service. So his post was actually a thinly veiled pitch for business.

Ron, I don't really care if somebody wants to come on BP and advertise their services/business, so long as they adhere to the forum rules. But to drop a post in a thread shooting down everyone else's investing approach because it won't make YOU any money is petty and vexatious.

All Inland Empire. Average purchase under 70k with just under 1,250 in avg rents. They all need some repairs though.