Investor · Decatur, GA · Member since 2014 · 56 posts · 16 votes
I just joined Bigger Pockets. I'm a buy and hold landlord with 6 properties in a middle class area of Atlanta. All are rented and rents are all $500 above PITI. So, though there's been some repairs, for the most part they all do okay in my book. Yet, only one met the 1% rule.
I like renting out Middle Class housing where their close to my house, most of the renters are easy to deal with and take good care of the homes. But it's soooo hard finding properties that fit in most of the calculations that I have found on Bigger Pockets.
I don't want to buy bad deals. I don't want to have to go too far out for a deal. And I still want to grow my portfolio, so I'm not sure what to do.
It's funny reading this post. I am actually sitting in Atlanta in the West End.
I am going to tell you this. If it makes financial sense and the properties support themselves then I don't actually see the issue. It may not fit their criteria, but if a property is putting a cushion in your pocket every month then keep doing what you are doing. Your niche makes sense to you. It definately makes sense to me.
If you are cash flowing $500.00 per property which are in better neighborhood and renting to more reliable tenants that take good care of your properties then you should be doing ok. The 2% rule is meant to protect you in the case you have unexpected major repairs to do and maybe higher insurance costs. Sounds to me like you know what you are doing and doing what works for you. Formulas are used to account for contingencies of the unexpected or the probable but if your properties are good quality then you should experience less breakdowns of systems which in effect offset what the formulas are meant to account for. Still it would be a good idea for you to always have a nice cash reserve.
In today's market, I haven't found any 2% deals. You would really have to buy a rat trap in the worst part of town to try and get close to that. Everything seems to equalize over time so what's the opportunity now?
Sounds like you are doing well. Just make sure you are stashing away enough each month to maintain a reserve fund to cover those big and unexpected capex emergencies.