Historical Rental Rates

[Lee S.]

I've been assessing the risks to my buy and hold plan knowing I can't predict the future of the market. I discussed "dollar cost averaging" in a thread a week or so ago and most people seemed to agree. I listened to a podcast shortly after I started that thread and the hosts were even debating what to do with a property in a down market, but one agreed with the"dollar cost averaging" idea.

Anyways, it's been discussed that rents do not follow home values necessarily and this data backs that theory: http://www.deptofnumbers.com/rent/us/ . You can check individual markets.

Even in the worst of the melt down the rents did not drop significantly and only those that were balancing on a razor's edge financially should have had issues if they were holding for the long term. I would like to hear others opinion's on this? It seems that those that had major issues were doing low to zero down and hoping and praying for appreciation...oops.

I've mentioned before that my plan is to start acquiring rentals, targeting B range properties doing conventional financing (20-25% down) until that option runs dry then figure it out from there. My wife and I have a high combined income and I also plan to put a heloc in place on my primary residence as a "backup to the backup" or "break glass in case of emergency" fund.

It seems that all things being equal, the risk would decrease as you acquire more properties since you have the combined income to help carry you through any issues with a particular property. This would be comparable to owning a mutual fund vs putting everything you have in 1 stock.

Any long term buy and hold types want to comment on how they did during the melt down with properties purchased within the 1-3 years prior to the melt down? 

[Franklin Romine]

@Lee S. Have you bought a rental yet?  I'm curious what the heck would drive you to do all that researching and thinking prior to pulling the trigger?  Get into a rental... something that pencils out to leave you with a monthly cashflow.  The risk associated with owning property is minimal, personal opinion.  You have BP, my phone #, property insurance, a spouse, a job, etc.... just do it.

Frank