Houston, TX · Member since 2013 · 23 posts · 5 votes
Hi BP-ers, as a buy and hold, should I buy into an area (within a mile) with 50% renter? One can argue strong competition, but another can say people just cannot afford a home so they stay renters. What else should I also look into for consideration? Waiting for your advice with much thanks!
Investor · Everett, WA · Member since 2014 · 180 posts · 76 votes
10y
50% is a perfectly normal percentage of renters. This really shouldn't matter as long as the neighborhood and property fits your goals.
Are you buying it as a rental? If you plan to rent it out, you should find out how high the demand is for rentals that size in that neighborhood. Then pull up city data and see where the trend is going to head in the next 10-30 years if you plan to hold.
If you are buying to live in, then make sure you can afford the payments and the price is historically low for that area. If you buy at a high point, it is all about timing your exit. You can do everything else right but if you don't hold it long enough you might not make a dollar. If you buy at a low point, just make sure there are reasons for that property to increase in value. Some places may never appreciate and you should know this is you are buying.
Hope this helps!
Houston, TX · Member since 2013 · 23 posts · 5 votes
10y
Thanks Roger! We are now under contract for a property which will be a second buy and hold for us. We are now in day 1 within option period. The market now is high, but we figure out a few months rent will offset the higher purchase price. Appreciation for the area is not high, but not many rentals available and new lease listing sold for within a month of 6 weeks. We will have the inspector coming out this Thursday.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
10y
I think such areas are fine. I would look for areas with at least decent schools, relatively low crime, unemployment and vacancy rates that look decent (not much blight) and also have a strong rent to cost ratio and cash flow well.