Hello all, first post here so be gentle haha.
I just retired from 20 years in the military and I'm looking at buying a property as a rental. I live in las cruces NM.
I currently have 4 houses. 3 rentals, plus the one I live in. My problem is I have always bought my houses to live in them first. They just turned into rentals after I got orders to move.
Now I am new to buying one as an investment. Investment properties seem to have higher loan rates etc... so they are more expensive. But everywhere I read, including here says to live by this rule. As a general rule of thumb, use the 1% rule as an investment strategy. The 1% rule states that the income property should rent for at least 1% of the purchase price to yield positive cash flow.
So a $100,000 house should rent for $1,000 a month. And that seems to be after loan costs and repairs are added in. I have been looking for houses for 3 months and I haven't found 1 that meets this criteria. The houses that cheap here are usually dumps or in bad areas. And they would only rent for $800 or so. The ones that would rent for 1200-1500 are $150-200k.
I mean, some articles said to be safe use a 2% rule. I wish!
So I am getting a little discouraged.
Is my market just weird? I mean the houses aren't that expensive here but the rents don't seem to match up.
Are these only foreclosures or auctions? Am I looking in the wrong place? Does this 1% rule only apply to fixer uppers?
Anyway, thanks for the help and I look forward to learning alot from all of you.
