The current prices are squeezing me out

[George P.]

During the short time that this housing crisis lasted, i was able to obtain 6 rentals. they were all between 55-80k, SFH's, which currently rent for between $1k-$1,275. all but one have a mortgage, so i had to come up with a significant down payment for each one + rehab costs.

the cost of bring them up to rental condition was between 5k and $25k. (it's amazing that the more experienced i became, the more i put into a house to fix it up, but that's another topic).

anyway, the current market for the same type houses are 80k and above. the filters that i have for the MLS alerts have dried up and they were set for 3 bedroom homes under 90k. I can go into lower income area, but that's not an option for my wife, so we are sticking with the same 2 sq. mile area.

at 80k purchase price i will make some money, but not as much as an investor would want. i do not want to buy more houses just to say i have more houses. at $100k (total, purchase and rehab costs), i'd net around $250/month and that's if it's rented quickly. One major repair and my yearly profit is gone.

I have two short sale offers that have been accepted by the homeowners and have no idea if they will actually happen.

if these two potential deals do not happen, this was the last of my involvement with the rental business.

i need to find other avenues to invest in since i need to do something with my money. I have a (very good) full time job and my contractors are not like J Scott's to get into the flip business. I'd lose money if i do that in a hurry.

I am considering lending money for investment purposes, but have zero experience in that field..

are you experiencing similar issues? feedback/suggestions are welcome.

[Account Closed]

George: I have sold properties to one landlord buyer for the past 12 years. I remember selling him a small fixer house for $65k in 2006. At the time he was in the same quandary as you. He had never paid over $50K for a house (he had about 25 doors at the time). $65K plus rehab for an $800 rent was truly his max. He didn't start buying again until the REOs started coming back on the market a few years later. He bought a lot between 2009 and the beginning of 2012 and he's not bought again since. I haven't had anything that would work for him for over a year, but there are plenty of landlords with different criteria so there is no shortage of buyers for me.

I think you're right not to buy just to add inventory. If you are buy and hold and the rents aren't on the rise, your choices are don't buy or change your bottom line. From what you describe about your current rentals, I would not change your bottom line. You might want to look at how to find deals to buy directly from the sellers. That's how it used to be done. The MLS is just one tool and right now it's just too competitive in some markets.