There's a house I'm considering buying with a business partner as an investment rental. It would rent for what I assume $2,500 with one renter or $3,100 if I did rent by the room. It is an old house but has been completely gutted and rennovated in a Midwest state with a flatline population growth. It's near where I live though. Based on its price and rental income do you think it is worth it? It is a considerably good price considering the area, I'm just not sure on whether the rental income is worth paying for.
Apart from about $10,000 it is fully rennovated and ready to be rented out within 2-3 months.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1y
$280k home for $2,500 rent is a personal choice. Is it better than your alternative uses for your money? How bad is the insurance, how high are the property taxes, is there an Hoa, etc etc.
But…There’s ZERO chance I would rent by the room for $600/months more. I ASSUME you’re talking $400+ in extra expenses for providing water, power, sewer, gas, internet, communal area cleaning, and exterior maintenance. So you’d be hoping to make $200/months for dealing with 3 x as many tenants, vacancies, tenant on tenant conflict, late payments, etc etc. .
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1y
$280k home for $2,500 rent is a personal choice. Is it better than your alternative uses for your money? How bad is the insurance, how high are the property taxes, is there an Hoa, etc etc.
But…There’s ZERO chance I would rent by the room for $600/months more. I ASSUME you’re talking $400+ in extra expenses for providing water, power, sewer, gas, internet, communal area cleaning, and exterior maintenance. So you’d be hoping to make $200/months for dealing with 3 x as many tenants, vacancies, tenant on tenant conflict, late payments, etc etc. .
Lender · United States · Member since 2020 · 1k+ posts · 499 votes
1y
In this market, I'd question what's the catch. Unless you're buying it at a deep discount, no $280k home rents for $2,500. You typically need to be in the $400-450k range to see those rents.
There's a house I'm considering buying with a business partner as an investment rental. It would rent for what I assume $2,500 with one renter or $3,100 if I did rent by the room. It is an old house but has been completely gutted and rennovated in a Midwest state with a flatline population growth. It's near where I live though. Based on its price and rental income do you think it is worth it? It is a considerably good price considering the area, I'm just not sure on whether the rental income is worth paying for.
Apart from about $10,000 it is fully rennovated and ready to be rented out within 2-3 months.
Thanks for any advice!
What is the appreciation potential? Flatline population growth is a sign of a poorly managed state and large or soon to be large, government debts (e.g., Illinois). That it is near you is good, but find out how easy it will be to sell.
Finally, what’s the rate of return for alternative investments?
There's a house I'm considering buying with a business partner as an investment rental. It would rent for what I assume $2,500 with one renter or $3,100 if I did rent by the room. It is an old house but has been completely gutted and rennovated in a Midwest state with a flatline population growth. It's near where I live though. Based on its price and rental income do you think it is worth it? It is a considerably good price considering the area, I'm just not sure on whether the rental income is worth paying for.
Apart from about $10,000 it is fully rennovated and ready to be rented out within 2-3 months.
Thanks for any advice!
Do you like people and handling renters and toilets?
Specialist · Long Beach, CA · Member since 2011 · 877 posts · 398 votes
1y
It sounds like there is no upside. If the area is not growing, then appreciation will be flat. Rents could also be flat. What's the projected cash flow?
@John Friendas Without knowing the expenses and costs associated with it I can’t make an educated judgement.
I wouldn’t think if this is your first property that a rent by the room strategy would be the best starting point. There will be more wear and tear and multiple headaches with several different renters.
I would recommend at least $300-$400/month in cash flow after expenses to make this potentially worthwhile on a SFH. Use the BP Calculator to get a better idea on your costs.