Hello everyone, I'm one of those who sort of got into this accidentally but I'm enjoying it so far. If it's OK, I'm going to mix a question or three in with my intro.
Wanting more room with one kid and hopefully some more soon, my wife and I just bought and moved into a new house last summer. All of the reasons that made it such a good time to buy were reasons that I didn't want to sell my old place, so we turned it into a rental (about 20 min from new place). Conshohocken is a quite popular area for young professionals, as it is residential but still has a solid bar scene is convenient to all of the greater Philadelphia area - easy access to all regional highways, < 30 minutes to downtown Philly on train.
In response to my craigslist post, I had over 20 e-mails within 24 hours asking to see the place. I invited everyone to a 2 hour window the next day and had 8 groups come through, 4 of whom put in applications. All were qualified, so I selected those who offerred the earliest lease date, a nice polite young couple. Things are going well so far, tenants are great and I'm cash flowing $500/month. This success is causing me to consider purchasing another rental property once I can rebuild greater cash reserves (the "honey do" list for the new house is expensive, lol).
The high demand in Conshy coupled with the "buy what you know" make me want to buy another place there. However, home prices stayed pretty high in this area. The majority of places are 3 bed / 1.5 bath twins, almost all older places that have been upgraded to varying degrees. Mostly out-dated places are asking 170-240k, whereas places with central A/C, new kitchens, refinished floors, finished basements, etc. are fetching 270-320k. Rents typically for these houses are in the range of 1300-2000 range.
Questions I have, in no particular order...
- Do you typically raise rents on good tenants? My inclination is to leave their rent the same for the 2nd year as they cause no drama at all. If they elect to move after their lease, I could probably fetch another $100-150 / month.
- I am extremely jealous, reading posts here about areas where $1000/month rents are acheivable on properties costing < 100k. Am I nuts for wanting to buy another place in this high-priced town? Given the demographic of young, not-ready-to-buy people, it seems the demand should remain steady for quality places. How much projected immediate cash flow would you require to make a new purchase?
- If anyone would care to share thoughts / experience / stories with the rehab vs turn-key rentals. Example, supposing that I could probably get $1700/month in two scenarios here... (1) if I bought a place for 180k (15% - 24k down), then dropped 40k adding central air and updating the interior. (2) Buy a place for $240k (15% - 36k down) and spend 5k on cosmetic updates. In the first, my total return is better in the long run, but my cash on cash would be better in the second example.
That was likely a longer intro post than most, but I've had a lot of coffee today. Thank you to anyone who managed to read through it all. Extra thanks to anyone who takes the time to share their thoughts in reply to my questions. - Fran
