Vandalia, OH · Member since 2013 · 10 posts · 4 votes
Hello,
Probably not looking to buy until 2014, but I want to get an idea of where I need to look to buy my first rental property.
I am in the Dayton, OH area. I live in Montgomery county which seems to have high-ish taxes all around. I was considering something in Miami or Clark county. Is anyone familiar with some good places to start around here? How do I find comparable properties on my own that are actually renting to know what I should charge for rent? Also, How can I tell which areas are in higher demand for more rental properties?
Whether you know it or not you right in the middle of one of the best areas to buy to rent properties. Columbus, Dayton, St.Louis & Kansas City, Mo. all these areas have cheap turn key wholesalers and if you stay in a good to decent local the rents will be in the 1.5% to over 2% rule. I just closed on one of these so I know what the market is in these areas. Get to know a local realtor in the areas where you are interested or even some property management companies and they will tell you everything you need to know about the local rental market and for free, just ask. Hope this helps.
The easiest way to get rent comps is via zillow or trulia search and be sure to filter in rentals. Pick a section or sections of the county that you are interested in buying and holding and the amounts will show on the low to highs(they're purple on zillow).
I typically hear good things about looking at Craigslist for rental comps and comparing like area like features. There are other sites that also market rentals that I would go to before zillows proprietary zestimate.
Whether you know it or not you right in the middle of one of the best areas to buy to rent properties. Columbus, Dayton, St.Louis & Kansas City, Mo. all these areas have cheap turn key wholesalers and if you stay in a good to decent local the rents will be in the 1.5% to over 2% rule. I just closed on one of these so I know what the market is in these areas. Get to know a local realtor in the areas where you are interested or even some property management companies and they will tell you everything you need to know about the local rental market and for free, just ask. Hope this helps.
Fixer Upper <-- basically free and needs everything, Dayton
Turn Key <-- 3 unit, 55k, turnkey, according to the ad, Dayton
No Idea <-- 4 units, 85k, Brick, Dayton
I'd grab a realtor that listens when you tell them "investment property." You should be able to define your criteria and get the actual MLS reports that lists rents, how utilities are paid, the asking price, taxes, HOA fees and everything else you need to run your own set of numbers.
Rent comps come from craigslist, phone calls, REIA meetings and zillow.
Another great resource for looking up rental rates is http://rentometer.com. Be sure to select the number of bedrooms I. Your subject property and you'll get mean and median rents for the area.
I'm a wholesaler in Columbus, so if you have any questions about parts of town when you start looking, feel free to drop me a line.
@jason - I tried looking on Craig's List for some rental info for New Carlisle (one of the places I'm interested in around here) and there was very few to look at and nothing comparable.. It's hard to tell. I will keep my eye out though!
@Chuck - Thank you that is very encouraging!!! I am very new to this and I don't want to be in the worst area of town or one with high taxes. Looking for a middle of the road place to start (who isn't? lol) The realtor that sold us our first home back in June is great and owns a lot of properties in my area. I feel like he would be willing to help when we're really ready to start looking seriously, but I am hesitant to bug him months ahead of a planned purchase like this. Maybe I'm overthinking that? Thank you so much for your advice.
@Aaron - wow! thank you for posting those. Seeing that first property scares the HELL out of me.. lol. I have looked at a lot of properties on Trulia and the ones in the price range I am looking for to make much of a profit are similar to that first one...some better than others. I guess that is what i need to start expecting, but I wouldn't even know where to start!
On the 55k property... according to the 2% rule, I should be looking to collect $1100 rent total from all units. Am I correct in that? If I am reading the listing correctly there are 2 two bedroom units and one 1 bedroom unit. I could charge 400/400/300 and come up with the $1100. Seems like I could even go higher according to the rentometer website. It says the median rent for a 2 bedroom in that area is $613.. not sure how accurate that is though. I could look into it more.
It looks like I would have ~550/mo mortgage payment inc taxes & insurance.
Using $1100 in estimated rent and using the 50% rule, I would only have enough to make the mortgage payment.. this is of course being conservative in the numbers, but it doesn't seem to me like there would be enough of a profit... Am I doing this right?
This is where I seem to be getting stuck in the process. Any advice is appreciated.
As for property #3, I am looking for something a bit cheaper if possible!
@Corey - Thank you for the link! I will be using it. Do you find it to be generally reliable?
I would call a local property manager to find out about rents and what areas are in higher demand for rentals, where they recommend would be the best place to have a rental property, etc. They work in rentals every day so would be an excellent resource.
I'm in a somewhat similar boat as I had to take a crash course in Houston for my out of state investing.
In addition to the suggestions here, is there a way you can use crowdsourcing to get more knowledgeable? Do you know anyone in those counties? I bet if you ask 10 people who live in Miami county you'll probably hear similar trends on "these neighborhoods are great, these are dodgy but cheap, and these you stay away from completely" and unless those people are all exactly in the same circle, it can give you a good idea of where to look / not to look. If you don't know a lot of people maybe you can ask someone to ask their friends, or see if you can find any posts on yelp, city-data, craigslist forums. Will help the most obviously if you can find out from your target market.
Driving around the counties will probably help too - even if the neighborhoods aren't as high-income as where you'd like to live yourself, you can still get an idea of how the neighborhood might be by things like, kids playing outside, building condition, types of cars parked on street, just overall what it feels like.
As a side note, you might want to consider if the tax rate tradeoff is worth the extra inconvenience / cost of not knowing the neighborhoods as well, being farther away if you are going to manage / hiring a PM because you are too far away, and the actual cost/rent ratio.
Take the time and get to know other local investors and professional who provide services for them like property managers and mortgage bankers.
You can meet them at the Dayton REIA, www.gdreia.com. There is also a local event Nov 7-10 2013 that will have a lot of regional investors, (and some from much further) www.oreiaconvention.com
Hope to see you at one of them, come up and say "hi"