Where can I find a 3br rental property meeting 1% rule for $150k

[Anthony Rosalia]

I am new to REI and am looking to spend $150k or below on a rental property that satisfies the 1% rule. I am flexible on location and would love to stay in a c or better neighborhood. I’ve been looking in the surrounding areas of Charleston SC but having trouble finding a property that meets the 1% criteria. I am flexible on location so any advice would help. Thanks!

[Ross Denman]

I have clients pick them up in the Indianapolis Suburbs throughout the year. You may have to negotiate the price a little some times, but finding 1% isn't that hard... I actually look for somewhat better than 1% for our clients.

I just spent about 2 minutes on Zillow and found one pretty quickly. Now, I'm not sure of the condition and if there needs to be more money put in to get it rent ready, but it is a great area in Indianapolis.

https://www.zillow.com/homedetails/3203-W-82nd-St-...

It's a 4 / 1.5 split level home with a garage. Just hit the market 6 days ago (according to Zillow.) This house rent for around $1,350/mo or more depending on condition, amenities, and time of year.  We are a week from Thanksgiving, so I would probably expect around $1,300/mo this time of year and maybe as high as $1,395 early-mid summer.

Also, Indiana has very business friendly tenant-landlord laws... especially compared to many of the coastal markets. I would recommend finding a midwest market that you like. Common ones are

• Indianapolis
• Columbus OH
• NW Indiana (Crown Point, Hammond, Valparaiso, etc.)
• Fort Wayne, IN (I expect Ft Wayne to explode over the next couple of years)
• Kansas City, MO (not quite midwest, but similar)
• Memphis, TN
• Lexington, KY

Every market is a little bit different, so you will have to study the nuances of each. For instance, much of Lexington is a big college town. Memphis and Indy are solid, growing markets with quite a bit of tourism (you may be able to mix in STR opportunities as well.)

Things to research about the different markets are:

• State and local regulations on investment properties
• Property taxes for each market
• Trending areas or common problems with neighborhoods, ages/styles of homes, etc. For instance, I am not a fan of most small multi-family investments in Indianapolis because it is more of a detached lifestyle city whereas markets with higher populations and less land mass have to build up and multi-family living becomes the norm. Think NYC, Chicago, or DC.
• Understand the trim level for the different markets. Most areas in Indianapolis not only do not demand stone countertops, but the rental market won't bear the investment in many of the areas around town. No since in adding a $25k kitchen if it won't increase the rents more than $35/mo. Other markets may really devalue your rental if you don't have adequate amenities and trim. You can get an idea by surfing rental on Zillow and Trulia and browsing pictures and rates of homes in different parts of different towns.
• Lastly, and most importantly, be comfortable with the providers on your team in your market. I had an associate tell me a story about being all but held hostage by a less than average property manager because they were the only property manager in the small town that they purchased an 30 unit apartment building in. Yuck.