What do you look for when...

[Jeremiah Kovarik]

I have recently been looking locally at multi-family rental properties and the area where they are hot is expensive, to the point where cash flow appears to be between $50 and $150/month on initial investment not including repairs and updates. In neighboring towns (within 15 minutes) there is property that is much less expensive comparatively. These towns have a bad name for rentals and the property usually needs quite a bit more rehab work. Does anyone have similar situations where they are tempted by these neighboring towns to purchase dirt cheap and rehab? How did it work out for you? What didn't work? 

Part two: The "hot" town has had quite a bit of growth from major rental complexes coming in. What do people look at for dynamics of a town to determine if the location is going to stay steady or if the newly developed apartment complexes will create a "renters market" and in turn decline rent? With such a low cash flow there isn't a lot of room for error, this concerns me.

Any help is appreciated!

Kind Regards,

Jeremiah