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Ramon Vargas
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I have 190 K to purchase a rental home

Ramon Vargas
Posted Nov 8 2023, 09:12

So I have 190 K to purchase a rental property. I need to find a place in the US that can give me at least $2000 in rent so that I can pay for the loan. Any suggestions?

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Sam McCormack
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Replied Nov 9 2023, 07:55
Quote from @Ramon Vargas:

So I have 190 K to purchase a rental property. I need to find a place in the US that can give me at least $2000 in rent so that I can pay for the loan. Any suggestions?


 Cincinnati/NKY duplex can do just that for you

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Replied Nov 9 2023, 11:04

@Ramon Vargas

Would you consider looking into spreading that cash over a few SFRs? I see many people have recommended the Midwest which I would agree with (especially the ohio area). You can buy a few single families in that market which should service your debt well and you could mitigate some of the risk by spreading it over a few properties.

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Julius Clark
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Replied Nov 9 2023, 11:51
Quote from @Tamara Martin:

@Julius Clark How do you solicit for MTR?


 I feel like most use Furnish Finder to list the rentals. Is that what you're asking about?

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Alex Hujdus
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Replied Nov 9 2023, 12:04

Pittsburgh, Columbus, and Kansas City are all affordable and livable areas that are popular with investors, and they're great places to start your search.

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Brandon Goldsmith
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Replied Nov 9 2023, 13:42

There are a handful of markets in the midwest and a few cities in Ohio where that would work. Just depends on your goals for which city fits best @Ramon Vargas

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Replied Nov 9 2023, 14:43

Even if those numbers were possible lets do some math.

2000 Rent- 200 PM Fees- 200 Insurance- 200 taxes- 150 repairs Cap Ex- 100 Vacancies=  1150 per month.

Or a CD at 5.5%= 190000* .05= 10,450 /12= $870 per month.

Is the extra $280 worth the risk and headache of an out of state rental? For me its not. In my area the rental numbers are even worse. I'm sitting on cash right now. 

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Ramon Vargas
Replied Nov 10 2023, 07:26

@Craig Janet

The 2,000 already includes property management fee and taxes. I have a loan in place already with interest of 7.8%. I just need to find the property to cover that so I don’t use my own money to pay for the loan

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Travis Biziorek
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Replied Nov 11 2023, 08:17
Quote from @Craig Janet:

Even if those numbers were possible lets do some math.

2000 Rent- 200 PM Fees- 200 Insurance- 200 taxes- 150 repairs Cap Ex- 100 Vacancies=  1150 per month.

Or a CD at 5.5%= 190000* .05= 10,450 /12= $870 per month.

Is the extra $280 worth the risk and headache of an out of state rental? For me its not. In my area the rental numbers are even worse. I'm sitting on cash right now. 


 That really depends. 

Your CD example is great until you realize there are no tax benefits on that income and zero potential for appreciation.

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Replied Nov 11 2023, 12:19

It's good that you have a healthy amount to invest. Sounds like you're looking for $2k/mo in free cash flow (after expenses). Be careful of the super cheap properties that Realtors on the MLS advertise as "cash cows". Nowadays, almost nothing on the MLS is going to be a cash cow in any market. Figure out what area you want to invest in and start making relationships with people there who can hook you up with off market deals. Participating in REI groups, much of which can be done virtually, will help. You're probably going to neI ed to buy below market with today's interest rates. We like Dayton and Columbus OH but it all depends on what type of property you're looking for, and how hands on you want to be with your property.

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Gary Swank
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Replied Nov 13 2023, 06:59

Most likely yes in Pittsburgh, however I have additional questions that are not covered here.

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Ramon Vargas
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Ramon Vargas
Replied Nov 18 2023, 10:01

@Craig Janet

It’s actually a loan at 7.85 interest 

I have a payment of 1800 a month

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Replied Nov 18 2023, 10:41
Quote from @Taylor A. Harris:

@Ramon Vargas

Would you consider looking into spreading that cash over a few SFRs? I see many people have recommended the Midwest which I would agree with (especially the ohio area). You can buy a few single families in that market which should service your debt well and you could mitigate some of the risk by spreading it over a few properties.

I would second this. If you look into the Midwest over a year you could accumulate 7 to 10 properties. With careful management and good debt servicing you could build this into a million plus total value rather quickly.Reach out to either Adam or i if you have any questions.  
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Eric Fernwood
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Replied Dec 8 2023, 15:36

Hello @Ramon Vargas,

You are right to focus on the location. The location is the most important investment decision you will make because financial freedom is more than just replacing your existing income. It's about maintaining your current lifestyle for as long as you live. To achieve this, you need a passive income that meets two requirements:

  • Rents must outpace inflation: If rents do not outpace inflation, no matter how many properties you own, you cannot achieve financial freedom due to inflation continuously eroding purchasing power.
  • Income persistence: Financial freedom requires that your income lasts throughout your life.

Whether rents outpace inflation and how long the income lasts depends on the city where you invest.

Start with an initial list of potential cities and then eliminate any city that does not meet additional criteria. I started with cities with a metro population >1M.

Economic stability. This requires a metro population >1M. Smaller cities tend to be dependent on a single company or market sector. Wikipedia

✅ Significant and sustained population growth. Use Wikipedia for population growth data.

Low overhead costs: The three most apparent costs for investors are income taxes, property taxes, and insurance. Tax Foundation, Insurance - ValuePenguinState Property Tax Rates - Rocket Mortgage This is really important, so I will provide an example below.

Low crime rate: Companies depend on attracting talented workers. Talented workers will not move to a high-crime city. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.

Low risk of a natural disaster: The issue isn't your property. Insurance will cover the cost of rebuilding. The real problem lies in the community: jobs, stores, roads, healthcare services, gas stations - everything has been destroyed. Your previous tenants had no choice but to relocate. Without employment opportunities and essential services, they won't return. Meanwhile, debt service, taxes, insurance, maintenance, and other expenses persist without interruption. The best indicator of the probability of a natural disaster is the relative cost of homeowners insurance. The lower the cost, the less likely a natural disaster. Use this national homeowner insurance cost comparison site to compare insurance costs. Never buy in a state with high-cost homeowners insurance.

Pro-business environment: Google search

No rent control of any kind. Rent control is a strong indicator of an intrusive government: Google search

Overhead Cost Comparison

It's not about how much you gross but how much you net. When choosing an investment city, don't rely solely on simple return calculations; consider all major recurring costs. Property taxes and insurance are typically the two biggest recurring costs. Below is a comparison of three states with no state income tax.

Sources for insurance and property taxes: Insurance - ValuePenguin, State Property Tax Rates - Rocket Mortgage.

To show the impact of taxes and insurance on net rental income, I compared the overhead costs of a $400,000 property. (These averages represent state-level data, and individual cities may levy additional taxes.)

To achieve the same level of cash flow as a property in Nevada, you would need to generate a higher cash flow in Texas and Florida to offset the higher operating costs.

  • Texas: The property must generate $5,700 ($9,194 - $3,494) more cash annually to compensate for the higher operating costs in Texas.
  • Florida: The property must generate $2,123 ($5,617 - $3,494) more cash annually to compensate for the higher operating costs in Florida.

Overhead costs can have a large impact on cash flow.

Next Step - Investment Team

Why is it essential to work with a local investment team? Podcasts, books, seminars, and websites only provide general information. You will purchase a specific property in a specific city with specific local conditions and regulations. Only an experienced local investment team has the local knowledge, processes, resources, and skills you need to be successful. I would consider another city if there is no existing investment team.

Also, working with an investment team usually does not cost more. For instance, we have delivered over 490 investment properties and charged our clients a fee on only four or five, which were exceptional circumstances. In all other cases, our fees were paid by the seller's listing agent, not by our client.

Ramon, I hope this helps.