Buying rental properties out of state

[Cesar Coronado]

Hi everyone! 

I was wondering if I could get some guidance or pointers here. My father and I are looking to get into a venture in real estate, and have been looking at buying and renting properties out of state. We live in California and prices here are a bit too much to comfortably take the risk. We are looking at states like Ohio and Illinois and planning to either do section 8 rentals or just general renting. Is section 8 still a viable option, and if so, what should I be aware of? Other than the fact that you're taking a risk with renters if you don't do your due diligence.

The numbers add up, the property we are looking at is 70k, and would take a 25% down payment of 17.5k. It's 3 bed and 1.5 bath and is fully renovated. The loan may be about 733 a month, and we can hopefully expect a rent of ~1400 a month from section 8. Assuming a property manager charges us 10% of that, that brings us to a total monthly cost of ~900 a month given small repairs and such.

The numbers feel good, but I'm just afraid they feel too good to be true. Has anyone here entered this type of market and can provide some wisdom and knowledge for us? I would greatly appreciate it!

[Jason Wray]

Cesar,

Good luck finding a property that is $70K or even under $90K and is not "Subject To" that you can get financing on unless you plan to buy it paying "All Cash" if that is the case be prepared to put in another $30 to $40K. If that fits the budget I would recommend looking into Detroit and not in a great neighborhood. Make sure you did all of your homework on section 8 because there are some big Pro's & Con's.

I know a few friends/inventors that purchased 3-4 homes all around $75K to $100K and lost money by "not" being able to find renters due to the neighborhood and how bad the school district is locally.