Realtor · Shoreham, NY · Member since 2019 · 9 posts · 2 votes
I live on Long Island, NY where life is great and taxes are high... REAL high. My personal property taxes are about 13k a year. They say that if there are houses being flipped then there is opportunity for a rental. However, when analyzing deals everything seems to be going well until I beging calculating taxes which range anywhere between $850- $1,100 a month on a decent 350k-400k house and rental income will be about 2600-2800 a month.
I guess my question is, how should I go about approaching a deal to buy my first rental property? This is all new to me and I need help weeding through to find the best deal possible. Thanks in advance for all the help.
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
7y
I would definitely not listen to that theory-- just because houses are being flipped doesn't mean anything about rental property opportunities. I'm in LA and houses are flipped profitably here all the time but there's not a rental under the sun that will cash flow. Sounds like your area is the same (holy property taxes! Plus those rents won't cash flow with those purchase prices anyway). Have you thought about investing non-locally?
Realtor · Shoreham, NY · Member since 2019 · 9 posts · 2 votes
7y
@Ali Boone that's what I thought! I even thought about BRRRR investing but still... The purchase price has to be REAL good (virtually impossible in this market) to be able to cash flow.
I have thought about long distance investing, however, I do find it difficult to do given I've never tried it before. I'd like to do more research and find a good market to invest in. Any recommendations? Tips? Advice?
@Ali Boone that's what I thought! I even thought about BRRRR investing but still... The purchase price has to be REAL good (virtually impossible in this market) to be able to cash flow.
I have thought about long distance investing, however, I do find it difficult to do given I've never tried it before. I'd like to do more research and find a good market to invest in. Any recommendations? Tips? Advice?
Once you get into it, it's not that hard. Or I should say, it can be as hard or as easy as you want it to be. Just depends on what you're looking for.
I live on Long Island, NY where life is great and taxes are high... REAL high. My personal property taxes are about 13k a year. They say that if there are houses being flipped then there is opportunity for a rental. However, when analyzing deals everything seems to be going well until I beging calculating taxes which range anywhere between $850- $1,100 a month on a decent 350k-400k house and rental income will be about 2600-2800 a month.
I guess my question is, how should I go about approaching a deal to buy my first rental property? This is all new to me and I need help weeding through to find the best deal possible. Thanks in advance for all the help.
You've got to calculate your NET return when analyzing rentals. So take your gross scheduled income (in this case $2.6k-$2.8k) and then deduct your fixed and variable expense estimates such as
Turnkey Investment Provider · Columbus/Dayton/Cincinnati, OH · Member since 2018 · 79 posts · 41 votes
7y
As @James Wise said, it's all about analyzing the net. Even in my market, taxes are relatively high compared to purchase prices. However, because of the purchase prices, and high rental demand, they still cash flow really well and we're seeing returns from 8%-15% depending on the property and whether you're looking at a cap rate or cash on cash (COC) number. COC can be much higher than 15%. If you don't find anything local, consider investing outside your market. I always tell investors to follow the adage - "Live where you want. Invest where it's smart." Like @Ali Boone said, rentals don't always work in your back yard. I know multiple investors from CA and NY investing out of state (specifically the midwest) because the numbers actually work in those markets versus their home market. Something to consider if you're really wanting to get some rental properties.