All Forum Posts by: Patsy Waldron

Well, there's really no right answer to this question! Some people succeed very well with partners, others on their own. Some have an excellent experience with partners, others have horror stories to tell.

I think the key to success in a partnership is finding the right partner, as Bradley mentioned above. Ideally, your partner is someone with whom you work well (NOT the same thing as "get along with", although that is important too and helps tremendously), brings something to the table that you don't have (specific skills, great connections, the ability to spot or negotiate great deals, thorough knowledge of an area, etc.), and has the same short- and long-term goals as you do. If you meet someone who fits that description, by all means, partner with them! But take the time to discuss with anyone who wants to partner so you can make sure (as much as possible) that they are a good fit. 

In any case, make sure you draw up a water-tight partnership agreement that details exactly what the contributions/ responsibilities and rights/benefits of each partner are (i.e. don't assume that you are on the same page and that this or that is understood) and that provides for exit strategies from the partnership if it doesn't work out or if one partner just wants out. Get a good lawyer to draw up your partnership agreement; this is one area where you don't want to skimp.

Since it's an investment property, make sure your lender factors in the income from the property when calculating how much you can borrow. They can include up to a certain percentage of the rents to boost your income and increase the amount you qualify for. 

It is unlikely that you will be able to get out of putting 20-25% down if this will be an investment property. Putting it in her name instead of yours won't help if she can't show income. The only way to put less down is to plan on moving into one unit ("house hack").

@Will Poon

This isn't as black-and-white as you seem to think it is. Think of risk as a scale- very safe on one end and very risky on the other. In-between, there are various points that are higher or lower risk/return. You can invest in a B-/C class neighborhood that is nothing like a war zone and where the chances of your losing everything are very slim. It might be slightly higher risk than A, but will provide much higher returns. So instead of thinking two mutually exclusive categories, think scale, and choose a point that you are comfortable with. Good luck!

Ask around at different banks if they offer Fannie Mae Home Style loans. These are purchase + rehab loans that can be used for investment properties. It allows you to save on closing costs since you would only have one loan. 

@Jason Barr

I have bought in Cleveland Heights and Garfield Heights. Not horrible neighborhoods (B). One was $35K and in need of about $10K cosmetic repairs, another was $20K and needs a new roof and exterior paint, for $12-15K total repairs. The $60K with $1,300 rents are for a duplex in GH, $650 per side for a 2 bed, 2 bath. Pretty standard, actually, in any suburb of Cleveland. If you look hard enough, there are deals like this everywhere. It kills me that I need to wain until I have stabilized these properties before I can buy more.

@Engelo Rumora

I have not yet started looking for properties in South Africa, but have traveled there several times for both business and pleasure (but let's be honest- business IS pleasure in South Africa!). I also have family right outside Cape Town. I have road tripped around South Africa and really like the PE area (less developed and touristy than nearer Cape Town, so less expensive and more natural). When I am ready to buy, I figure I will take a trip there. Sorry I don't have more info right now!

Thanks for the tip RE: Bahamas. I will definitely look into it! 

@Ryan Arth

HOLY COW. Almost 10% a year?!?

I haven't used HW, but I can give you my thoughts on your other questions.

I moved to the Cleveland area this past summer from a pretty expensive part of the country (Triangle area of North Carolina, and before that Virginia), and was shocked at investment property prices here. I, too, wondered if the numbers were for real... So I spent a couple of months looking at properties, driving around, reading and talking to people. 

What I found was that yes, the numbers are for real- properties are ridiculously cheap, you can get rents of $1,000 for a $50K house or $1,300 for a $60K duplex. There are definitely areas to avoid (lots of info on BP about this) but also great areas. The consensus is that Western suburbs of Cleveland are pretty consistent and safe to invest in (Parma, Lakewood, Brooklyn). I have bought in the east, which is a little more unpredictable, because it is closer to where I live- I have properties in Cleveland Heights and Garfield Heights. I would say the property prices and rents in the safer pockets and suburbs are comparable on both sides of the city. 

Going though the same thought process right now with a SFR in a B neighborhood which I bought on a whim (my plan is to invest in small multis- but this may come in handy as collateral). So now I am trying to decide how much to update it. Just enough to make it a nice rental? Or, like you, update a little more in hopes of getting higher rents or better tenants, and sell down the road... Personally I decided to update throughout. Nothing super fancy, but nice enough that a young family of professionals would buy it as their starter home. That means taking down two walls around the tiny kitchen to open it up to the dining room and living room, tile the floor, put in an island, and redo the bathroom completely (tile for floor and walls). All in all I expect to spend about 10K, and if I can get good tenants who stay for several years, or am able to sell in a few years for a good profit, I consider it a good investment. Good luck!