*Very general* rental investment advice (tenant, 1%, insurance, landlords)

[Lopeses]

Hi all,

I am considering purchasing some rental real estate in the next 1-2 years. I will not be mortgaging it and, of course, will start slow to see if it's really for me (i.e. I'lls tart with a single, small, sfh).

So, let me preface the following questions by saying that I realize that there are no hard-fast numbers to be had here, and most of what I am asking varies a lot from area to area. Yes, I will consult realtors in the area (probably for many months) first. I am just looking for VERY general thoughts ...

1 - What is a BALLPARK ratio should one look for as far as rent/purchase price? I have heard that a very rough idea is 1% per month (12% annually). So, for example, a rental investment that costs $50k might/should rent for about $500/month.

I know this ignores many intangibles, tax, maintenance, etc., etc. I am just looking for a rough idea here.

2 - I have heard from multiple people that IN GENERAL, you can get a better return on your rental investment in rural areas. So, although the rents are far less, the purchase prices are even a little farther less. Comments?

3 - Inspections. For those of you who do not use a property management company, what do you put into your contract about inspections? I assume that you state that you can inspect anytime, with notice - correct?

4 - Insurance. What kind of insurance to get? I would think that you just need to insure your property, and, have liability coverage (i.e. in case the roof decides to fall on somebody). Anything else?

I know I'll have more questions later, but that's all I can think of for the moment.

Thanks for any and all input!

EDIT - ACK! - PLEASE MOVE TO THE RENTING SUB-FORUM.

[Brandon Hoffman]

1-Varies by area. Check with a local property manager and Realtor.
2-I don't know about that. Rural is relative but I would think it would be easier to rent something in town.
3-Most standard rental agreements allow landlord walkthroughs w/ 24 hour notice.
4-Landlord policy w/ theft and vandalism coverage added.

[bentlebee]

Most State laws allow Landlords to inspect the house but you have to give notice.
I do have rental insurance in case the tenant hurts them self...so I will be protected. For the rest the tenant is responsible for their own stuff to be insured and of course I have Home owner insurance.
Don't forget to get a security deposit...some Landlords have not done it and it will bite you in the...

[2bindenver]

Read the Millionaire Real Estate Investor by Gary Keller.
Depends on what you put in the lease.
ROI depends on what is reasonable for the area.

Hazard & liability (umbrella) policy - check with your insuance person. You can use a home warranty company for needed property fixes. Or hire a handyman/licensed trade as needed.