All Forum Posts by: Bob Hines

Be careful and do your homework. It's a great place to invest and it's a great place to lose your *** as an out of state investor. Even Josh Dorkin had a bad experience in this market.

Buy and hold is one thing, but buy and hold is different in the County vs. the City. North City is Different from South City. North County, West County and South County are vastly different from each other. Municipalities in the County are different and have their own rules than the 90+ other municipalities in the County. High end rentals are different than Section 8. Section 8 is different than market rate rent. Etc. So you have to do more homework to narrow things down than just deciding buy and hold. St. Louis is a big area and things can change from one side of the street to the other.

I started in South City when I lived there and I continue to purchase there even though I have since moved to St. Charles. I know the area and have contractors that work in the area. It's worth the drive to me instead of starting over learning new areas, vetting new contractors and learning new inspection standards even though I drive through several prime rental areas to get there. 

Find some zip codes you're interested in and start following the market there. You can sign up with Zillow to get daily rental updates. If you have an agent, they can send you daily MLS updates. See how that market is working, run some numbers and see if it will work for you. If not, try another area until you find one that will meet your needs. There is every type of neighborhood to choose from.

I have 13 rentals in South City and they have been going great. Rents have been rising nicely and the demand is there to find good tenants. 

There are many different areas with their own rules to investing in the St. Louis area. The best way is to pick what fits you best and focus on that specialty.

@Will H. Reserves are tricky to nail down exactly. Part of it will be how much your monthly expenses are: mortgage payment, water, sewer and trash bills (typical in St. Louis), insurance if you pay monthly etc. You have to be able to stay afloat during vacancies and other times rent may not be coming in: no or late pay. 

It will also depend on the condition of the property you buy, type of property you buy (brick or frame, pitched or flat roof), how handy you are and how much work you are willing & able to do yourself. If you will be calling a handyman for everything, you will need more cash reserves to pay for their time. If you can do some work yourself, you really only need to be able to cover the materials for those jobs.

I aim to keep around $20k-$25k in cash on hand for unexpected repairs on 9 houses and two 2 families. It's just a round number that I like to see, not really based on any formula although it is about a year of mortgage payments. I can do most of the work on the properties myself so I can cover most expenses or I can hire them out. That amount will cover a couple roofs and HVAC replacements all hitting at once. Banks also like to see large reserves. 

You're in great shape financially. Not so great shape for getting started in real estate. To be a landlord, you need to have reserves. Reserves will get you through the times with the rent isn't coming in and when repairs are needed. Reserves can be in the form of savings or excess monthly income to cover things as they pop up. Savings is best. It doesn't sound like you have either. You should boost your savings before you get started in real estate. You don't have specifics, but it seems that savings could come quickly if you put off paying off debt and focus on savings. That is a personal decision for you and your new wife to make together though.

You do have the availability of the HELOC option to get started in real estate when you are ready. Buying is easy. Staying in the game is hard.

Peter is correct about the economies of scale with multi-families. The math favors them. I just want to point out that when buying a 4-family, you gain 4 tenants to manage. That is a big jump for a first timer. I prefer SFHs. I enjoy the higher quality tenants I have apply for my houses verses my 2-families. I haven't ventured into 4-families because of that. This is my personal preference and your mileage may vary.

I also want to say, from my personal experience, I never felt like I was making any money in rentals until number 6 came along (although I basically jumped from 3 to 6). Rent came in, expenses went out and the bank account never changed until #6. Don't jump into rentals expecting to be living large right away. It takes time and work.

I don't know what market this house is in in the St. Louis area, but there are plenty of tenants that would love to have that kitchen as-is. If you're going for a high end/ish market, update it. But if you're going for mid-market or lower, keep it. 

Here is one to prove all the $30k nay-sayers wrong. $30k and not in the hood! 6107 Alaska, Saint Louis, MO 63111. Property is 2 blocks north of Carondelet Park (one of the good parks). Easily walk to the new YMCA and the park. Alaska is only 2 blocks long in this section so it is a quiet area. Easy access to Grand Blvd, Highway 55 and the shopping at Loughborough Commons. Many long term residents that care about the neighborhood. Tax records indicate 700 sqft but that doesn't include the addition, which brings the house to 900 sqft.

House has 2 bedrooms but is technically considered a 1 bedroom because one of the bedrooms is a walk-through to the bathroom. Room is plenty big enough to still use as a bedroom though. Main bedroom is large with a large living room as well. Eat in kitchen. Cement patio offers a shaded area for outdoor relaxing. The lot is small as it doesn't reach the alley but that has always been a selling point (renting point?) for the house as that offers safety and privacy. House sits on a crawl space.

This house rents great. The hardest part about renting it is sifting through the stacks of applications that come in. Only 3 tenants since 2010. Previous tenants just moved out because their jobs moved out to Wentzville (GM supplier), a 1+ hour drive each way. It was rented for $600/month but they moved in 2015 and I didn't raise the rent on them so I'm going to start advertising at $650. I've had lots of inquires about Section 8 for this house. I have not done Sect 8 on any of my properties personally but it could be a strategy if the rents would be higher. Taxes for 2016 were $515, less than 1 month rent. The numbers work great with this one.

New roof and AC in 2010. New gutters last year. I'm going to replace the caulk in the bathtub (results are better than trying to just scrub it) and it will be ready to rent. 

Why am I selling? This was the second rental I purchased while still living in the City. Since then I moved to St. Charles and my properties have been focused in a different area and this one is an outlier. The tenants just moved out and I can't show the property to tenants yet as I'm busy finishing up coaching my daughters' basketball teams so I thought I would see if now is a good time to sell and consolidate geographically. 

Where is this located? $100k for a duplex could be dirt cheap or way over priced depending on location.

There is some mixed advice in this post. Some good, some ok and some bad. 

The first thing to know about St. Louis is that there are actually two St. Louis'-St. Louis City and St. Louis County. Because of laws from a century ago, they are separate. There are actually 90+ different municipalities within those two as well. There is a North City and a South City. There is also a North County, South County and a West County. Each is very different from the others. Municipalities within those areas can be very different from others as well. Even neighboring ones. That contributes to the block by block nature of the region. It looks like there was some confusion about this above.

If I were to boil everything down to just one piece of advice for investing in St. Louis for those not living in the area, it would be this:

St. Louis investors aren't dumb.

Keeping this in mind will serve you well.

@David Coombes    The biggest "pitfalls" around Tower Grove Park are location and tenant screening. Yes the areas you think of as 'Tower Grove'-Tower Grove South (near the park), Shaw, Tower Grove East (right by Grand) are all great areas and you won't find too many properties to buy based on returns as most of those sell based on owner occupied. If you go a bit further away, especially TGS or TGE, some people still call it by that neighborhood name but it's a completely different world. There are lots of properties, especially multis, that offer great returns on paper but the areas are sketchy so you won't find good tenants willing to rent there and you will suffer from high vacancies and repairs.

The other thing in that area is that, even if you are in the good areas, you are close enough to some bad areas to get plenty of bad tenants applying to rent your property so you have to have a good system to pick the best prospects.

@David Coombes