How do people profit from REI here in or around Cuba Missouri?

Question

Hello, I am fairly new to REI. I am working on finding my third property at the moment which will happen after my first is sold (hopefully in a few weeks!). I have recently relocated to Cuba MO. I consider myself fairly educated on REI as a whole. I have taken state level property management courses (in Oregon), have been an avid listener to the BP podcast, and have read a fair amount of books on the subject.

The question here is how do people profit from REI in this sort of area. This is a town of around 3k people. This town has very low rents 450-600 average. There are tons of houses for sale but I’m not sure the stuff in town is selling very quickly so this, at least in my mind, rules out buy and hold plus flipping. This goes for the inner town limits. The property outside the limits seem to be worth more but still not that much unless there’s is an immaculate house on it.

So how do people do it here? I don’t want to reinvent the wheel but there really isn’t any REI meet ups within an hour. I was thinking maybe buying and selling with owner finance because I actually think that is a great service to the public but I’d like to hear the communities ideas. And I know Rolla is only 20 min away which has a hospital and college but they seem to suffer from similar issues ( low population, rents, and growth).

Caleb Heimsoth · Answer

@Abby Smithson. I own some rentals with similar rents. You just have to adjust your numbers. Instead of 1 percent rule, I look for 2-3 percent rule deals. Have little debt and only fix what needs to be fixed or is a safety hazard.

Costs are pretty low too. I have a couple rental properties where the taxes are basically 300-500 a year...

You do have to be more hands on though, as that’s just the nature of low income stuff

Abby Smithson · Answer

@Vince Mayer I have thought of doing it although that’s as far as it went. That seems to be a little complicated or maybe more so just out of my sphere of knowledge. Has this worked for you?

Vince Mayer · Answer

@Abby Smithson Have you considered owner financing for both the buy and the sale. In my opinion, most would rather own than rent, especially if the rent and Monthly payment are pretty much the same. As a matter of fact, I have just started doing research on Crawford, Franklin, Washington and St. Francois counties for this strategy.

Sylvia B. · Answer

Average cash flow is about $400/mo per house. We own our rentals outright, so no loan service, and we self-manage.

Hubby and I are in our late 50's and live off our investments, which include more than just our rentals. We have no debt, live where the cost of living is low, and are very modest spenders, so it works for us.

Abby Smithson · Answer

@Sylvia B. Your words make a lot of sense I appreciate your input. My current investments actually reside in Pennsylvania. I wasn’t so interested in buying rentals in Oregon for pretty obvious reasons. If you don’t mind me asking what is your average cash flow and/or IRR for your portfolio?

Sylvia B. · Answer

I invest in a town smaller than Cuba, population 2100, and yes, we make money.

First, you need to get to know the area you will invest in, and find out what is needed. Find a way to fill that need and you will make money.

In my town, the need is quality, well-maintained rental houses. Now this very likely looks very different from the picture you have in your head. I don't mean newly built, or remodeled to HGTV standards. Just updated houses where everything works as it should and doesn't look like something from 1960. We buy old, run-down homes, fix them up, rent them, and maintain them. People want to rent from us because of the reputation we have built.

Second, if your recent relocation to Cuba was from Oregon, you may not have had time to acclimatize yet. Life in MO is very different from life in Oregon, in many ways. In RE, our boom/bust cycles are not as dramatic as those on the west coast, and rents are certainly nowhere near what they get there, but neither are house prices.

We own 13 homes and our rents range from $500-875. We have from $40,000 to $90,000 in each house, which includes purchase price and rehab. These are nice houses in nice neighborhoods. I don't think you can get that kind of percentage on rentals in OR.

Regulations are minimal. MO is very landlord friendly. Unless Cuba is very different from other towns of its size in MO, you don't even have to think about things like rent control, COA, rental inspections, landlord fees, etc. When we rehab, we don't even have to get permits unless we change the footprint of the house.

I would not recommend flipping. In my opinion, houses don't sell fast enough to make flipping work. Buy and hold rentals is the way to go.

How do people profit from REI here in or around Cuba Missouri?

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