What are realistically the best rents you can get -

Question

in a stable B class or gentrifying C class neighborhood for purchase and rehab price of around 80-120k? For this question I am limited to considering Houston, Dallas, Chicago, and basically the entire states of FL and GA, although I would lean towards the large markets of Tampa, Orlando, South Florida and Atlanta.

Thanks!!

Justin Jocewicz · Answer

@Maxwell Lee yes.  Here are the numbers on my one 2/2.

Acqusition: $53,900Rehab: $18,000Rent: $1,200HOA (insurance): $325Mortgage (PIT): $396Net: $479

I keep a general pool of $15K for any maintenance, repairs, vacancies, litigation, etc for the 6 properties I have.  Since I plan on acquiring 6 this year, this will be increased.  I also replace appliances, toilets, clean dryer vents, snake lines, change shut-off valves, etc etc so that the long-term maintenance is a lot less.

Timothy W. · Answer

Here's a few things I learned from landlording for 14 years.  I only landlord local.  I read the law to figure out where or what type of landlording favors me vs tenants.  I find the highest ratio of rent vs.  property price AND maintenance (ghetto is a maintenance nightmare).  When I find this I don't do anything outside of it in regards to landlording.  Beeen in Florida a couple years and I don't think that's in standard landlording.  I think it's in vacation rentals.  That being said I think the market's inflated right now for buying to hold.  Need a good downturn to fix that and based on what I've been seeing the new generation of gurus selling, it's coming.

Anthony Dooley · Answer

I don't think you are missing anything. Maybe I misunderstood the original question without the additional information.  "The best rent" is very subjective, so the answer is, "It depends."  Rent can vary from one house to the next on the same street depending on the condition of the property, square footage, etc. It sounds like you have it under control.

Michael Haynes · Answer

@Maxwell Lee, Hello from Tampa. Traditionally, the average Rent you can figure to get is 1% per month of the cost of the property. $80K x 1% = $800 per month. All the talk about "stable" "B class" "gentrified" "C Class" is like projecting the direction of the Market this morning. Information overload. You just need to put in the zip code on Zillow.com and look at the value of the houses in that neighborhood and do your average projection. Or go to their Rent site and you should find what you need to know. My girlfriend has her house for sale Seminole Heights. Zillow says that 3/2's with a lot less square footage are renting for $1500/month. So, her house is 2700 sq. feet, 4/2.5 with plenty of extras. It is a great rental as Tampa does not have a lot of four bedroom houses near downtown and I say she can get $2000 per month to rent with no problem. The owner of a new restaurant I know, on Kennedy was renting a smaller house near the Stadium for $2400 a month. The other idea that you can raise the start with a discount and raise the rent each year at a fixed value, like 5% or more, is not such a good idea. I find that Tenants want to live in a house or especially apartment and not do a thing to clean and maintain the place, until it is so dirty that they can't stand living there and then just move. That fits the one year lease with most, small rentals. They don't change the AC filter or mow the lawn or rake the leaves in this season of falling leaves. Take out the garbage? What for? I like feeding the cochroaches. Sink overflowing with dishes? Big deal. The sink is leaking under the cabinet for two months? Not my problem. Pay the rent on time? Good luck. The JOB Market is stagnating and the cost of Utilities continues to go up? See how long the Tenant will last without gas and food money. Your looking to maximize your Free Cash Flow from the Rental and that puts a Squeeze on your Tenant who has millions of cheaper places to choose to rent. In S. Tampa, my old tenant who owes me a ton of rent, says that the guys at his roofing company are not able to pay $280 a Week at the local Motels that they stay in. He wants me to fix up the 3/1 house I have near the Base with three apartments and he can get me $200 a Week for each one. That would be $2400 a Month and they would be happy to save $80 a Week over the Motels. I  have rented that house for $1000 a Month for ten years. They would have a six month Lease with a Weekly payment. He would live there and manage the place and start to pay me back for the help I gave him three years ago. I have talked with ladies at Subway and Target in S. Tampa who are looking for Affordable places to live. Affordable Housing is a huge problem for the $10 an hour or less, Service Workers in S. Tampa. I know of a few houses that they have as single men's apartments that charge about $140 a Week for bug infested, drug dealing, drunken roofer type guys. Rooming Houses are a way to have a Hotel type income stream from a lot less square footage and maintenance headaches, with one guy as the Manager. Downtown St. Petersburg has all kinds of them. Near any City Center you can find a need for Affordable Housing. One lady here in Tampa, started converting Warehouses downtown and going North on Florida Ave. into "Lofts." Wonderful way to do a conversion and offer Affordable, new, apartments to rent or buy.

Justin Jocewicz · Answer

Depends on the size.  For me, 1/1s are between $900-$1000.  2/2s are between $1000-$1200.  This is in Palm Beach County.

Maxwell Lee · Answer

@Mitchell Jaworski Yep. And it seems the HOA fees down there can vary drastically. Yes, Jacksonville is pretty good. We've invested heavily in Jax and are very happy. I'm just at the capacity now where I can't find enough of what I want in Jax. And we're wanting to diversify geographically.  Also for good measure, we will be moving to Miami later this year so Jax won't exactly be backyard anymore, though I plan to be up there frequently and of course we do have many teams in place.

@David Faulkner Sure an answer to the more complex question would be great...but anytime I ask a complicated question about different markets nobody responds. So now I try to keep it simple and then I can do my research from there. Re: Jax, see my response to Mitchell above.

David Faulkner · Answer

I don't understand the point of this question ... or to put more precisely, I think the OP may be a bit confused. A more reasonable question may be how to maximize profits taking a moderate risk investing around 80-120k?

Here's the confusion I feel: rents do not equal cash flow, cash flow does not equal profits, and none of those accounts for risk. Risk adjusted profits for a given level of investment you can afford are what you should care about IMO ... from there you reverse engineer an investment strategy, neighborhood, and finally property that meets those criteria.

Also, does nothing in Jacksonville meet those criteria?!? The easiest and safest place to start looking is in your own backyard.

Mitchell Jaworski · Answer

@Maxwell Lee - yes in SoFla nearly everything is in an HOA communities.  Like @Justin Jocewicz I own condos and townhomes in Palm Beach County.  However, the rents can even be higher than he mentioned.

Closed last week on a small 2/2 townhome in a low B to high C neighborhood for 107K. This one needed little if any rehab (spent 2k for repaint, new toilets and range micro). Rents are going for 1250-1300 in the community.

I've actually started researching Jacksonville in past couple months and planned to go up there before I stumbled on my latest property.  Surprised you are not focusing on that area, those I know investing there are local to me so must be a few deal around.

Maxwell Lee · Answer

@Justin Jocewicz Those are pretty good numbers for Palm Beach I would think. Thanks for sharing! (I don't really like condos but seems hard to get around that in South Florida for these prices)

@Jarrod Benson Yeah, I was saying that I'd expect a little more than 1% for Orlando. And it sounds like that's what you're doing. Sounds good!

I'm really hoping to find a market that's somewhat consistently all-in ~120k renting around $1500. Anywhere in the cities I've listed??

Jarrod Benson · Answer

@Maxwell Lee If you are getting a property and doing a rehab, I would expect at least the 1% rule in Orlando. Rents are high here so doing anything under the 1% rule wouldn't be in your best interest, being you could just find another property that grosses higher.

What are realistically the best rents you can get -

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