All Forum Posts by: Peter G.

and what is the main thing you would say you look at to determine if it would make you good money?

I know its just a rule of thumb but in my area out of over 50 houses I have looked at 1 of them meet the 1% rule... 99.99% of the houses are selling for 110k-120k and doing 900-1k in rent monthly. I am starting to get frustrated with constantly looking for any that meet or get close to the 1% rule no luck...

Originally posted by @James C.:

Peter,

On the surface, properties with a 180 to 200K price tag and 1400 income, won't make much, if any money. You might get some on appreciation, but that's a big gamble.

Banonsic rules of thumb:

1% rule: The monthly gross rental income should be 1% of the price of the property... so on a 180K property, your monthly gross rental should be 1800 per month. 1400<1800 so, no, it doesn't make the 1% rule test. To make the rule, the price needs to be at 140K or less.

50% rule: 1/2 of the gross yearly rents divided by the cap rate should be equal to or greater than the price of the property. 1400/2 = 700812=8400/0.08 = 105K. That says that the value of the property that generates 1400 per month needs to be right around 100K. The 180-200K price range lies outside, so this test fails as well.

These are only screening tests... but they are a pretty good indicator of potential success.

Things to do:

1) Keep an eye out for properties that you can buy below the current market level. Any repairs must be subtracted from the price.

2) Find a close by market where the rents and house prices match more closely.

3) Buy multi-unit properties.

Searching BP will help you come up with a whole list of other strategies.

Good Luck!

Jim

 Thank you none of the houses at all in my area are getting close to the 1% rule you stated. 140k houses are getting 1k-1100 in rent...

Do you all have any feedback about buying newer homes like year 2000+ in a great school district? I have found quite a few houses I really like condition wise and such they are selling for 180k-200k and the rent on them would be about $1400 a month do you think it would be worth it to buy nicer newer homes and rent them out vs older homes? I know for in this area homes are in great demand and the school district is the best in the area. 

im not sure if i should go after newer homes like this that cost more or go after the older ones.


thoughts?

I am new to this financing world and would love to get your alls options on the pluses and minuses of 15 yr and 30 year mortgages. 

@Brandon Turner It must be destiny my one rental I have now is on Brandon Place :P 

Originally posted by @John Mathewson:

@Peter G. Welcome to the site! Congrats on your success this far. There is a ton of information on this site as well as connections. 

 yep im ready to soak it up. 

I am in love with the tip Brandon had on 2 bed 2 bath I used to pass those up completely but now ill keep my eyes open for a possible extra room. 


I am going to throw out an offer for the house i think for 120k 20% -30% down and we will see what happens its valued at 137k based on the comps in the area.

Brandon Turner I almost finished the first one the book on rental property investing. It's amazing thanks so much for writing it! I wanted to point out one error you may or may not be aware in the 16 tips for getting your offer accepted at the very start of that chapter it says 18 instead of 16. Not a big deal at all just thought I'd let you know it's there!

Buy 2 rentals

Hi, I have owned a single family rent house for the past 6 years and haven't done much more with real estate over those 6 years, and now I am looking to start to do build up my rental portfolio. My focus is single family 3 bed 2 bath. I just looked at a property today with my real estate agent that has a lot of potential. I am going to class later this month to get my real estate license. I also have 7 books on real estate I plan on finishing up this year for a refersher.  2 of which are @Brandon Turner 's books! which have been amazing! Super easy to read over lots of the othes that are somewhat wordy. 

Anyways just wanted to interduce myself.