I'm curious in hearing everyone's criteria when selecting buy and hold properties. Is it purely a mathematical equation? How do you know what neighborhoods are good? What do you look for specifically in the properties? Do you lean towards older homes that need fixing up? How much renovating do you do? Just trying to get started and get a feel what types of properties people lean to. Thanks
Getting Started - Single Family Homes in a B to C area. for me have done the best in terms of cash flow and fixing and flipping.
2 to 3 bedroom homes with minimal work.
Look for properties you can buy 70% Loan to Value and Below. The cheaper the better. Not too old. I don't really focus on age, i focus on upkeep. Some sellers have a newer home but haven't kept it up. I have been to some homes that have been built in the 1920's that are incredible in terms of condition.
Here is a link to help you get started. You have everything you need in terms of information right here on Bigger Pockets.
You'll probably get some great mathematical equations that are better than the way I do it. But in all honesty I have the amount I'm willing to spin total (purchase and rehab) that start me on my way.
I look at the homes starting at 10k more than that (thinking I can negotiate the price) are nearest to me (you should know which are good and bad in your area). Every neighborhood in Chicago attracts renters good or bad.
Of course the better the area the more rent you can collect but that's not always the most convenient that would be a personal decision. I'm not highly worried about how long it will take to get my money back but it's usually 3-5 years.
NOTE: I'm a cash buyer of SFH's only - which makes a huge difference in my reasoning.
Good Luck and keep us informed of your journey.
I have always like the 1% rent-to-price ratio. If a house is $100,000 it needs to get at least $1,000 in rent. Whenever I stayed within that rule I have had great cash flow. I think any neighborhood that is not a war zone type is OK. Of course the best neighborhood and best school district you can find and make the numbers work the better. A good school district is a gold mine for a rental. You will get families that will stay for a long time. I'm a contrarian in that I like condos (& most seem to not like condos). Of course I bought my condos after the market crash in 2008 in SoCal when you could get them for STEEP discounts when they were out of favor. But I have loved my condos as they rent really well, are in great locations that SFR's would be cost prohibitive as rentals, and they are so low maintenance (smaller, hoa takes care of roof, exterior, landscaping, a lot of pest, garage doors, etc...). I have had zero issues with the HOA, all these warnings people told me about HOA's none turned out to be true, mostly BS by people who never owned condos. Also, in more expensive coastal areas of the U.S., condos appreciate really well. My older SFR rentals on the other hand have been MONEY PIT's with never ending maintenance and updating.
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