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Topic: Buying rental property in distressed areas (Read 583 times)
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Joined: Oct 2007
Posts: 72
Anyone can get rich
   United States
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 Oct 23, 2007, 04:09:46 PM | #1 |
There are a few distressed or questionable neighborhoods in my area. The property prices are cheap and I'm sure the section 8 tenants are plentious.
As I was looking at 2-4 unit properties yesterday on the MLS, I found quite a few distressed properties for dirt cheap - like anywhere from $5k - $20k. The neighborhoods are pretty rough.My goal is not necessarily to be a landlord, but a handful of good cash flowing properties can't be a bad idea...especially if there is some equity in them.
Here is my thought, if I pick a 2 unit up for $15k, and then I need to put around $20k into it for rehab cost - then ad $2k for miscellaneous and holding costs, and I'm in at $37k total. If I want to put rent these out in this area, I'm pretty sure section 8 is the best route. Then I would personally prefer to have a property management company handle it for me.
How much rent do I need to bring in to make this a profitable, cash flowing rental?
I think rent for a 2 bedroom is reasonably in the $500 range. Taxes and Insurance would be no more than $175 monthly.
I may be off on the rent amounts and taxes, but given the total costs into the property, how much rent would you need to be profitable? |
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Joined: Jan 2006
Posts: 6035
Building a Foundation
 
 United States
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Nov 03, 2007, 04:57:05 PM | #2 |
| I've found that buying distressed property is a very risky business. The only way it's worth it is is the area is going to be bought out for new renovation by a large corporation, a casino, or the government. Otherwise, you'll keep putting money in, if you rent, you'll have tenants you can't control and it will be a drain on your time and pocketbook in the long run. |
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Joined: Oct 2007
Posts: 207
The internet is my playground.
 United States
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Mar 28, 2008, 09:48:02 PM | #3 |
| My sister and brother-in-law tried flipping distressed properties but they must have hit it at the wrong time because they're stuck holding two investment homes right now that they can't sell or rent. |
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Joined: Jan 2006
Posts: 6035
Building a Foundation
United States
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Mar 30, 2008, 06:50:25 PM | #4 |
| They won't lose money in the long run because the real estate market is bound to bounce back. Right now it's a buyers market and actually is a good time to buy investment property if you can afford to do it without financing. |
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Joined: Oct 2007
Posts: 72
Anyone can get rich
United States
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Jun 23, 2008, 08:13:26 PM | #6 |
| Thanks for the responses. After checking it out further, my wife and I decided to put a hold on that idea. |
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