Rental Property Investor · Member since 2018 · 18 posts · 5 votes
Given the growing population shift to suburban America fueled by coronavirus, work-from-home, and other factors, I'm curious how this may (or may not) have impacted your views on urban rental properties. Obviously, if you price your rentals below whatever market is, you're going to have renters...but with that considered, would you still think buying a rental property near downtown is still a good purchase?
I am in the process of buying a triplex located in my downtown area with the intention of house hacking, but I am having second thoughts given the current environment. Any thoughts or insights would be much appreciated. Thanks!
Folsom, CA · Member since 2018 · 134 posts · 100 votes
5y
Hey Paul,
If you didn't purchase the tri plex where would you live? If you can offset your mortgage with the rental income then you most likely will be saving yourself money. If its a location you want to live in and your able to do so cheaper than if you rented or bought a condo than this is a win win. Plus you're getting an asset, so long as the numbers are right, and setting yourself up for the future. I know a lot of people are talking about large numbers moving from these urban areas but I don't foresee landlords having issues renting their places out.. there are always going to be people that want to live in that kind of environment and as some people move out of the city I think others will move in. Also CO seems to be one of the places people are heading to from CA and other cities. Good luck!
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
5y
@Paul Lee I don't see the problem being with duplexes and triplexes, but more-so elevators, subways and traffic jams. So it really depends on your 'inner city' composition. I do not know Denver; inner city NY and San Francisco are good to stay away from.
Folsom, CA · Member since 2018 · 134 posts · 100 votes
5y
Hey Paul,
If you didn't purchase the tri plex where would you live? If you can offset your mortgage with the rental income then you most likely will be saving yourself money. If its a location you want to live in and your able to do so cheaper than if you rented or bought a condo than this is a win win. Plus you're getting an asset, so long as the numbers are right, and setting yourself up for the future. I know a lot of people are talking about large numbers moving from these urban areas but I don't foresee landlords having issues renting their places out.. there are always going to be people that want to live in that kind of environment and as some people move out of the city I think others will move in. Also CO seems to be one of the places people are heading to from CA and other cities. Good luck!
Property Manager · Bonita Springs · Member since 2020 · 32 posts · 16 votes
5y
Hi, Paul! First, you need to look at your investment strategy. If your investment strategy is buying hold and the numbers look good to your cap rate or whatever rate of return you're calculating on, then you might try to be conservative and consider what a 25% reduction in that would mean. So, if you were to reduce the income produced by the triplex by 25%, would the numbers still work for you to get you through a recession? That's what I do. I look at the population shift and other factors in the US, and I am careful not just to not overpay but I also try to make sure that my returns are going to be conservative.
Investor · Bay Area, CA · Member since 2017 · 85 posts · 35 votes
5y
I think it is THE time to buy urban condo, especially in SF and NYC. Just snap one in SF with 20% more off last year price. Don't expect with cash flow in 1-2 years though. It would have good return in 5-10 years horizon, IMO.