All Forum Posts by: Anthony Gayden

I still don't think it's worth it. The problem is if he relocates in a few years it will be difficult to self-manage these rural properties long distance. He already stated there are no PMs out there. His best option after relocating would be to sell. It may be a longer and harder process selling this type of property as there are fewer buyers for cheap rural properties.

Also I wouldn't place any bets on appreciation, so it is likely that if he decides to sell in a few years, he will only get back his initial investment plus any debt pay down. This is a pure cash flow investment. I generally don't like the idea of investing in real estate solely for cash flow as it is a much slower path to building wealth than investing for both cash flow and appreciation.

In terms of risk, I actually believe it is more risky to buy real estate in a very rural area that might be very difficult to sell. He may even have to sell at a loss. The fact that the properties are inexpensive means that the tenant class may be relatively low and has the resulting wear and tear. One major problem on an inexpensive house costs the same to repair as a major problem on a more expensive one. Its hard to justify spending $6000 replacing the roof on a $15,000 house when you know that if you sell, you won't recover that expense.

My listing is pretty simple. I just bought this house last Monday. No pics right now because I am doing work on the inside. 

https://www.zillow.com/homes/6602-Emmet-St-Omaha,-NE,-68104_rb/75785306_zpid/

Let's do some rough math if you buy the home cash for $20,000 and it rents for $650/month. I am going to assume that expenses like maintenance, capital expenditures, insurance, and taxes will take approximately 40% of that rental income. That will leave $390 a month of cash flow. That means it will take a little over 51 months (4.27 years) to recover your initial investment. 

You said the area is very rural, so I am going to assume very little (if any) appreciation. Also I am going to assume it will be difficult to sell these properties in a few years if you decide to relocate. 

In my opinion it just isn't worth the hassle.

I get a ton of interest merely by listing on Zillow. Probably 20+ inquiries the first day it was posted. 5+ applications completed.

I believe it highly depends on location and price. I generally price my rentals using Rentometer slightly below the average for the surrounding area.

I own a single family home in Gretna, Nebraska. The town has a population of around 5000, but it is on the edge of the Omaha area so it does quite well.  

The hardest part of the equation is finding a good duplex every single year. My plan starting out was similar, but I wanted to do it with 4-plex properties. After I bought my first one the market conditions changed dramatically with prices shooting up. Also there suddenly were a ton of people starting to invest, so it became very competitive in the small multi-family market. 

You will probably only be able to use the FHA one time. Any duplex property after that will require at least 20% down payment even if it is a primary residence. That is a pretty big hurdle to jump if you plan on buying a new one every year with an average salary. I got around this by switching from 2-4 unit properties to buying single family homes. Almost every lender will finance a single family for 5% (sometimes lower) if it is owner occupied. You live in it for a year, then rent it out.

Hello, I'm a small landlord here in Omaha. I'm not selling though.

I have always hated programs like the one you describe. A lot can happen in 5 years and no one should be locked into a location like that. 

There are other options of course. For example tapping into the equity in the home that you bought and getting a HELOC. You then use the HELOC for the down payment on the next property. You will have to put down 15% for a non-owner occupied single family rental.

Recently I was contacted by my property manager about the roof on my property possibly needing replacement. The roofing contractor saw a lot of storm damage and suggested I call my insurance company to file a claim. 

A little background on this property, I bought it in July 2014 when I lived in Arizona with an FHA loan and 3.5% down. It is a 4-plex, but has two separate buildings, each with two units. There are four different street addresses on two different streets, but it is just a single parcel.

I filed the claim and the claims specialist gave me an estimate for just one of the buildings. I asked if she had the opportunity to look at the other building and she told me that it wasn't covered under the policy. I was confused, but I assumed that she was mistaken and that is when several weeks of back and forth between myself and the insurance company began.

The insurance company insists that the policy only covers one of the buildings. My arguments was that it is a single property. They kept insisting that it was two different properties. Finally I literally had to show them the county plat map and give them the legal description because they could not understand it.

When I purchased the property, I explained the unique situation with the addresses to my insurance agent and he assured me that everything was good. Fortunately I have not had any major issues because apparently half my property has been uninsured for OVER 5 YEARS.

I lost the battle with the insurance company and I immediately signed up for a second policy (that's right, I am paying double) until I find a new insurer. 

The whole situation has had me pretty stressed out. Has anyone else experienced this kind of thing before?

 Welcome to BiggerPockets.  I invest here in Omaha so reach out if you have any questions.