Being Smart vs Analysis Paralysis
I am having a very tough time finding good rental properties to buy. Not just in my expensive area, but everywhere. It seems like after you do a proper analysis, the potential costs/expenses are so high, almost nothing works unless the rent is 2% of the purchase price (which are hard to find as well).
I personally use the following to evaluate a rental property:
Taxes, insurance
Sewer/garbage/electricity/snow plow/HOA (usually paid by tenant, so not as important)
Maintenance 15%
Vacancy 10%
Capital Expenditures 15%
Property Management 10%
Mortgage/interest
I don't like to factor in appreciation at all to be safe
I am conservative with the % of rental increase per year so I try not to use numbers >2-3%
I like to be conservative with the maintenance and capital expenditures, but I don't think these numbers are that unreasonable, yet seems so difficult to find a deal buying a house around retail price.
Is it only possible to be profitable if I am buying a foreclosure or a distressed property? Can you not be profitable using these numbers just buying retail value?
Am I using too conservative numbers?
I would really appreciate constructive advice from our community, rather than unhelpful comments like "Just look harder." I would really love some of the advice from all you experts and pros who do this stuff in your sleep.
Thanks!