Buy & Holds Out-of-State Portfolios - Who has been holding for 10+ years?

[Account Closed]

I'm working numbers for some out-state buy-and-holds.  As usual, I'm underwhelmed by the numbers, especially in the Midwest and the South.  Man, those are some low rents, even in good areas for good houses.

I'd like to hear from anyone who owns an out-of-area PM managed SFH portfolio and has been holding more than 10 years. By portfolio I don't mean your former residence that is now a rental. What region? Does it meet or surpass income goals? Are you still buying there?

[Jason Miller]

Sorry no 10 years from me just 8 with PM's.  Aurora/Denver(I live here, but haven't been in or at my properties in years) Superior/Duluth, St Louis, and now I'm looking at IN and AL.  My hard learned lessons are probably obvious to others.

-Don't look at big picture prices for markets, I think its misleading.  Gary IN has million dollar homes and $5 homes.  Kinda skews the numbers.  You want good schools and neighborhoods?  Look for those and see what your P/R ratios are. 

-PM's make or break any area.  PM's have cost me well over 20k in the last 8 years on relatively few properties.  You can make money and do well with the right PM.  They must have solid systems in place to get the right tenant and check up on those tenants. A good PM or realtor can be your boots on the ground.  A bad pm can bankrupt you.  My 1st out of state property was rehabbed 3 months after hiring the wrong pm who placed the wrong tenant.  I do not recommend mom and pop PM firms with less than 10 years.

-Know how difficult the market is for landlords.  St Louis is terrible IMO.  They hate landlords and see them a turnip to squeeze, the neighborhood sized cities are like little fiefdoms, and many cities require landlords to pay expenses directly like trash and sewer.  Doesn't help that I have 1 property in Ferguson either.

-I have started putting those capx items into my purchase criteria. Needs new roof, kitchen, water heater etc? Fine. If I can still do those items and see 20% COC on my 20 year notes. It still works for me. It keeps my maintenance costs down, and I can still sell well before any big ticket items come up. I found in some markets multi-unit properties are the way to go in order to hit those income requirements. Example: One of my Superior duplexes I have a 20 yr $62k note at 5% that brings in $1500/mo. 350/mo net positive. 8% vacancy, 8% PM +4% lease up costs, 12% maintenance and capx (yes I know they should be separate). Watch out for taxes though. WI taxes are stupid high, around 1.8% of appraised value. Don't count on appreciation here. Probably a good thing since, it would raise my taxes higher then income will offset. Purely a cashflow play.

The price to rent ratio was good in Denver back then, terrible now.  Market is on fire here.

Just some ramblings, hope some of it helped.   Money can be made in every city in America, but some are easier than others.