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For the little this is worth... I rented a house in VT (when I could find a renter...). Eventually, I rented it out just to keep someone there and report problems to me. It just barely paid for taxes. If there are too many problems with the lovely-fixed up house, you lose. If you raise the rent to make up for taxes and maintenance, the renters will probably move.
The U.S. market us also changing. Old formulas and paradigms no longer apply. Everything is riskier because "old formulas and paradigms no longer apply." If you have the money and are a risk taker, go for it. The odds are good that in this market - with foreclosure up on foreclosure people will have to live somewhere (with parents, with children) but if they don't have a job how are they going to pay you... Don't rent to them - they have assets and run out ... Who knows.
There are pockets of areas here where 'retail' homes aren't selling, but the refurbished foreclosures up for rental are flying off the market. Just depends on the area, homes, prices, what the market is 'calling for', etc.
It's a Good idea if you can get a good tennant It can be your biggest nightmare if you get a bad one.. I have 5 now, I've been fortunate enough to get good tennants, but I know someone who got a bad tennant in their first house.. It's a gamble,, you have to weigh out your own tolerance for "pain"..
Isn't that the truth! Another interpretation of the above is: it all depends. Depends upon several factors including what & where you're talking.
I'd suggest you start by looking at rental occupancy rates in your target market as well as the average rents said properties fetch. You can then begin to calculate simple P/E ratios for the properties you're interested in as well as ROI's (essentially the inverse of the P/E ratio).
At that point you'll be able to judge whether "Purchasing homes cheap, clean em up, rent em out. Run the other way? or It's a good living."
Obviously seek out properties that provide a positive cash flow from the start- which usually means putting enough cash down up front to achieve this.
Perhaps you've already done this homework. If so, I'll get out of the way here.
I'd suggest finding a real estate agent who also works with a property management company. I am currently looking for foreclosures to rent out. My agent is a realtor who works for a firm that does both house sales and property management for landlords. So she is really familiar with the local rental market and how much homes can rent for in the different areas around Raleigh, NC.
The old rule-of-thumb was if you can get 1% of the value
of the property then you are getting a decent return.
That is, a $100k property should rent for $1,000/month.
That's not profit, it's gross rent.
When housing/property values were increasing a lot, you could settle for
less gross rent since your capital gains would make up for the rental loss.
Also, the $100k mentioned above is the value of the property.
Buying a $100k property and putting $15k into it to make it
rentable doesn't sound like a good deal to me.
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