In Canton, Ohio where the majority of my rentals are now located, one in 3 houses are vacant or for sle. Many houses are offered for zero down payment. My one house has a replacement value of $160,000.00 but the market value is currently $21,000.00 and I have spent about $110,000.00 to buy, restore then repair it time and again. Ninety percent of the people living in Canton rent the places they live. They are the majority and the courts sympathize with them. A few years ago, a school levy passed and in return, the government rebuilt every public school in the city. They are beautiful! I hoped that it would make a difference. Now 3 of the brand new schools are being closed. I guess what they always said about realty is true: The three most important things are location, location and location.
I am looking to buy a place closer to work and found a nice place, but the second time I went to look at it, I would have needed a boat to get within a mile of it!
Maybe our friend in Akron who is looking into buying rental property should buy one in Chicago!
Maybe you can get $1200.00 a month rental income in some areas of Akron, but many people could buy in this area for $600.00 a month if they chose to do so ... and when faced with paying $1200.00 to rent or $600.00 to buy .... I'm just saying that the higher rents make it harder to find people that will rent for you. Especially when you are competing with the people that are willing to rent for much less and paid off their mortgages years ago.
Going with a Section 8 renter guarantees you a portion of the rent each month even if the renter stops paying, but they don't do much to protect you from a bad renter. The security deposit dioes not go far when someone simply leaving a faucett on when they leave the property can generate a $600.00 water bill which the landlord is responsible for. How much do you value your time? When a tenant plasters stickers all over the doors and walls for their child's enjoyment, it is a time consuming prospect to remove the all and remove the sticky residue so you can prep and re-paint.
Also, if you use your gut instinct about who to rent to, better have some other reason to not rent to someone. "Without reason" translates as discrimination. If you do go through Akron Metropolitan Housing Authority to get renters, specify that your house is for a specified number of occupants and for a specific amount. Families that have 6 kids tend to wear the property down more than a family of 5 or less.
Rental property is about the ability to collect rent more than anything else.
IF you are talking about a single family home, then you want to get the not so nice house in a decent area and clean it up.
If you are talking about multiple units then it is purely an income minus expenses divided by sales price. I added a link that explains income property. I have an updated spreadsheet that has not been uploaded. I will do that in a couple of days.
I can't speak for Akron but can for Hilton Head Island, SC - have you thought about resort rental property? That way you can rent it out and still vacation in it two weeks out of the year.
If you want to stay local, your best bet is to hire a buyers agent who knows rental property in your area - if you want to explore resort rental property, call me and I will try to help as best I can.
In other areas of the country you may want to buy low and sell high later. In depressed areas, such as Ohio East Ohio, this is silly. It is going to sell what it sells for later, if this is higher great, but you should not plan on making money on the sell later. After all, this is what got this country in trouble to begin with.
So the primary issue is the amount of cash flow versus the amount of headache you want with the property. My suggestion is to make money on the buy and get the highest cash flow with the least amount of headache. Whether single family or multifamily is the better option depends on your situation.
I own several rentals in the area. You want to work with an agent who actually owns rental property as we have the actual experience regarding who to call and what to do, once you own rentals. Best Wishes,
It Appears that you own rentals in an area that does not make since to have rentals when you can buy for the same amount. My rentals are in high rental area like Chicago and CA where people can't afford the down payment on a home and are stuck renting.
As for the gut feeling, I hope you didn't think that I turn down possible renters based on that. I always fall back on the old "Your credit worthiness does not meet my criteria". The only legal way I know to turn down a rental application is by discriminating on the financial's provided by the renter.
What I meant was don't just follow the credit check to make your decision...use common sense (Gut feeling).
Again, sorry to hear about your rental situation. I guess I am lucky that the high rents and high deposits have protected my investments.
I too, have several rentals and have had success on all of them. Oh, I have had some crazy renters that have left the place a mess but that's what the security deposit is all about.
Most importantly Robin, is to run a complete credit and background check on any potential renter. Credit history will tell you a lot about an individual. Reports don't tell you 100% about all potential renters so that's where a gut check comes in. I have had renters with great credit but I had a bad gut feeling about them and sure as heck they were always late payers. Not to say I'm an expert on picking out good renters from bad renters but body language usually give away nervous potential renters.
Finding a good renter can prove challenging at times. I have found that the higher rental markets tend to keep the common problem renters away since they can't afford the higher rents. This is generally rental properties that are $1200 (Give or take) and above.
As for finding a rental property, well that's where you will probably will get a lot of different opinions here on Trulia. But here is what has been successful for me. Buy a rental that you would move into if you had to rent. The cheap places are not always a great deal if you can't get the rental amount that you need to be profitable.
Lastly, educate your renters what is acceptable and what is not i.e. No, you will not come over at 2 am to unplug a toilet. That can wait until morning. If a water pipe burst then yes, CALL.
Good luck on your first investment rental. It can be rewarding!