Adding Rentals in a Competitive Market

[Satyam Mistry]

Hello, I am curious to know how investors are continuing to grow their rental portfolio in a very competitive market. I am in the Omaha market. I have recently started to get more active in networking with other agents, investors, and the real estate community in general and am sure over time this will help bring more leads and off market properties to attention that are worthwhile. The properties that I currently have were obtained while they were on market. I am not currently doing any paid marketing.

- For buy & hold investors are you willing to get less initial value add return on a property? For reference I recently made offers on a couple of dated properties that needed to be cleaned out and updated but the numbers got to a point to where after I did the $25-30k in updates the additional value add equity would have only been around $10-15k. These would be long term rentals for me and I am thinking that in 10-15 years as the property continues to appreciate would I have minded the lower value add equity that I initially earned? Do you go after those properties where you do a rehab for minimal return, but you know it is going to be a safe solid rental for many years and you add it to continue to be able to build your portfolio in a neighborhood you are comfortable with and are paying down an appreciating asset while creating cash flow. I am currently looking for properties that do have around a 12% cash on cash return and provide around $350 in monthly cash flow after all expenses/maintenance/capex/vacancy.

- I usually look for properties that have value add potential, but also competing with flippers who have a paid staff that need projects to keep busy with and are ok taking lower profit margins as they need to continue to have revenue as well as contractors buying doing rehab themselves do you also look at some more turn key properties that you would not get initial value from, but that is meeting your other requirements such as a 1% rent to value position, good neighborhood with appreciation upside, and again adding an asset is going to appreciate and cash flow for you.

- As a newer investor that is not at the level yet where many deals are being brought to them, but is eager to continue to build their portfolio with long term rentals what would you recommend their strategy be? I do not currently have any experience with short sales/foreclosure/auction type properties, but am eager to learn more about these opportunities as well.

Thank you for your input!