Somerset, NJ · Member since 2016 · 33 posts · 13 votes
Hey BP Community!
I'm a new investor from NJ looking to invest out of state in a small town in Ohio where I have some friends/family in the area. I've analyzed about 15-20 properties and have found one that would be a deal worth making an offer on (duplex that cash flows ~$320 giving me an approximately 14% ROI). I know the neighborhood pretty well, approx 50% of the town rents, and it is primarily populated with blue-collar workers. The one thing thats holding me back is that when I did a bit more research the overall population (~16,000) is decreasing over the last decade or so-down about 3%. Is this something that would be worth my reconsidering the location of this investment even though the numbers make sense for this specific property? Any feedback would be greatly appreciated. Thanks in advance!
I’d rather buy a house for 50 grand and make 800-1000 a month in rent equating to 300$ Positive cash flow per month in my pocket and have the tenant pay it off free and clear for me regardless of the economy ...then to spend 300-400 grand on the same size house in a hot market , have negative cash flow each and cross my fingers it’s still worth 400 grand or able to be renting when the economy is in a crisis. Speculation /appreciation is nice but never paid my bills .when the economy is down its easier to keep a modest house renting for 700-1000 then needing to get 3,000+ in rent to keep above water . Those hot markets were the ones who get Hammered in a recession . No one ever talks about that . Seems They all look at potential appreciation.
Leave it to the accountant to point out the turd in the punch bowl, LOL.
I see many newbies on BP investing in rust belt states without any concept of inflation adjusted returns. All they care about is cash on cash.
That’s not a prudent nor pragmatic way of investing.
Please elaborate as to why ?
in short, if you buy a property in ohio for $40k and it doesn't appreciate at all, and in 10 years you sell it for $40k, you made zero money on the appreciation (easy math). let's say you made 10% CoC each year so you made $40k cash over 10 years. that's great. but when you pull out your $40k equity at the sale, that $40k is worth less 10 years down the road vs. how much it's worth the day you invested it. so that delta eats away at that cumulative 10% coc. others might be able to explain it better bc i'm used to seeing it through spreadsheets, bc as @lee bell said, i'm an accountant.
@Daniel Rivera If you're investing primarily for cash flow I wouldn't sweat it. Rust belt areas are perfect for that. It's decreasing here in Pittsburgh too statistically but plenty of us are making money here.
I’d rather buy a house for 50 grand and make 800-1000 a month in rent equating to 300$ Positive cash flow per month in my pocket and have the tenant pay it off free and clear for me regardless of the economy ...then to spend 300-400 grand on the same size house in a hot market , have negative cash flow each and cross my fingers it’s still worth 400 grand or able to be renting when the economy is in a crisis. Speculation /appreciation is nice but never paid my bills .when the economy is down its easier to keep a modest house renting for 700-1000 then needing to get 3,000+ in rent to keep above water . Those hot markets were the ones who get Hammered in a recession . No one ever talks about that . Seems They all look at potential appreciation.