A Lot Of Questions
When you are looking for a potential rental property, do you seek wholesalers? MLS? Newspaper ads? Or do you do your own marketing to motivated sellers?
Eventually I want to be in a postion with a lot of postive income from rentals coming in. I am starting out with wholesaling.
Do you recomend using property management companies? Or do you prefer to manage the property yourself?
That's all for now, Thanks.
JB
For your property management companies question personally I would say if you dont have that many properties I would just do it myself to save money. Once you get to many rental units to cover yourself then I would look into getting someone to help you. Maybe give one of your tenants thats a handyman free rent to take care of the other units you own. Just an idea that i've seen work for alot of people.
You need to either be a complete slum lord, or have a ton of rentals for a long time to make a lot of positive income from rentals. Realize that you will probably only get about $200 per month per rental and that does not include vacancies and repairs. It will take 30 years to pay off the mortgage. Rents appreciate at a very low rate - guessing at 4% annually. You do the math.
And before you get to the long time, you will probably have to supplement your rentals with something that does make income, like rehab or wholesaleing.
I thought I'd add my two cents...
We sort of fell into the landlord business because we found a very cheap property that we just couldn't pass up. It's a 7 unit building...got it for less than $160K, and the owner carried all but $30K!!!
We run it ourselves because we're too cheap to pay someone 8% of our rents every month when it's just a couple of hours of work per month. Don't get me wrong, there are ups and downs. It can definitely turn into a full time job if you're not selective about the tenants you allow.
Our bottom line: we see about $600 positive cash flow every month. We can have one or two empty (depending on the unit) and still break even...a very sweet deal.
I think properties like these are rare, but they DO EXIST. Check the numbers VERY carefully and be patient.
I've never dealt with wholesaling so can't say much on that topic.
Good luck
Quote:When you are looking for a potential rental property, do you seek wholesalers? MLS? Newspaper ads? Or do you do your own marketing to motivated sellers?Why limit yourself to only one source of leads. Use them all.
Quote:Do you recomend using property management companies? Or do you prefer to manage the property yourself?Depends upon your experience, knowledge of your landlord tenant laws, and your tolerance for landlording. I personally prefer to outsource the management to professional management companies. I would rather spend my time in leisure pursuits instead of day to day property management functions.
I have a total of 6 tenants on 4 "leases". I have been a landlord for less than 2 years. Doing a little better than breaking even, depending on what part of my books you look at, my 3 year proforma looks very good. The best book I have read on the exact issue we're talking about... well one of many kick-a** books is:
Managing Rental Properties for Maximum Profit, Revised 3rd Edition
by Greg Perry
I only read the 2nd edition but I am ordering the 3rd. $17 bucks from "you-know-where"
Landlording can be a part-time labor of love that can be very rewarding personally, and in the long run, financially.
Well I currently am looking at about 24 properties, single family homes, all HUD section 8 rentals. There are 8 that I have decided we're pretty good deals.
There is one owner for all of them, he is wanting to get into commercial property so he is selling them all. They are priced on avg. 49k-55k and appraised at 75k to 85k. He gave me the numbers, showed me how I would make pos. cashflow.
If I do go through with this deal, I am going to be looking at a section 8 management company.
What rate (rent percentage) should I look to pay for a management company? I have heard as low as 5% and up to as high as 15%. So this is going to affect how much...if any (and this will be the determining factor) positive cashflow I will revieve every month.
JB
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