Best Locations for Buy-and-Hold Rental Properties
I own two townhouse rentals (Colorado and Wyoming) and am thinking about my next property. I have a number of questions:
- What are considered some of the best locations long-term for such properties? Criteria would include good tenants, property manager, cash flow, and appreciation. With respect to these criteria, I've had a good experience with the Colorado property (East Commerce City near Reunion) and a bad experience in Wyoming (Rock Springs). Should I invest in northern Colorado again?
- Is the best approach a conventional 30-year fixed mortgage with 20% down? If yes, my price range is around $200-400K based on availability of down payment.
- When should I consider a 1031 exchange of the existing Colorado townhouse (3/2.5)? (Note: The Wyoming property is far upside down, which is why I don't consider selling it now.) I'm reluctant to let this one go since it's been such a steady cash flow, but am also open minded to better opportunities (perhaps single family or duplex/fourplex).
- Is the 2% rule possible? My existing Colorado townhouse would yield a rent:home value ratio of ~0.7%, far off the 2% mark, yet it's still been a successful rental.
While I own two rental properties, I'm still a real estate novice and look forward to learning more from all of you! Thanks in advance for your advice...
Aaron