Va Mortage/Newbie needs advice

[Drew McCrory]

Hello everyone, 

I'm a newbie here on BP and just created my accounty today! I am currently in the military and will be getting my VA home loan benefits in a year when I get back from my deployment. I have a plan in place to buy a 4-plex and live in one of the units for a year and also negotiate closing costs to minimalize my out of pocket investment. However, I am conflicted on whether to invest in a college town where properties are a bit more expensive but will for sure be rented out by students with parents on the line as co lease, or in Toledo where property prices are a bit cheaper but finding tennants may be a bit tougher with more expenses. On the other hand I have a thought that in Toledo the chances of tennants staying longer are greater than in a college town which will lower expenses.. If you could could all give me your great input I would really appreciate it. Once again I have never invested before so any advice will help. Thanks!

[Daniel Kramer]

That's true, I'm just being obnoxious. In all seriousness, this is my two cents on your first post:

There are pros and cons to college rentals. You know the pros and cons. Some people specialize in that arena and they do very well at it because they thoughtfully design their business operations around those pros and cons. 

There are pros and cons to low-cost areas of Toledo. You know the pros and cons. My biggest caution is to challenge the % rules for expenses. A roof on a 1200 sqft 3/2 costs what a roof on a 1200 sqft 3/2 costs. That cost does not adjust to your rental rates, whether that's $2,400 in Austin or $800 in Toledo. (maybe a little bit, but you get the illustration). So don't plug in 10% for maintenance & capex in Toledo if it needs to be more. You mentioned low-cost Toledo / family rentals sticking around longer... that can be good or bad, depending on the family!

In conclusion, it sounds like you have weighed the pros and cons. They're certainly that. My personal suggestion is going with the area where you feel more comfortable. Then design your business, policies, leases, etc around those pros and cons. Do you feel more comfortable dealing with college students or dealing with C neighborhood Toledo families? You'll be doing a lot of whichever you choose. What are your goals, where do you want to be in 5-10 years, are you working full time or investing full time and will the property of your choosing support that vision? 

Best of luck and let me know if you need any help navigating Toledo neighborhoods. 

Dan