Couple of things to keep in mind. Most tenants do not stay when you take over a property. I handle property management for many clients, and we always lose a couple of tenants during a takeover. We make it brutally easy too. We say "Nothing is changing! We still want you as a tenant! Just make your check out to SBH Inc, and mail it to:......." Still we lose tenants.
Have some money in reserve for repairs after purchasing a property. Most owners start deferring maintenances when selling properties or considering selling properties.
During inspection phase, have a contractor go through and give you quotes for getting units rent ready should the tenant leave immediately.
Make an offer subject to review and approval of inspection, schedule E, and current leases as well. We recently closed on 2 duplexes that had 3 tenants in place, only to find out 2 of the tenants were children of the owner. Guess who left immediately after closing.
Here in Indy(Indianapolis), people pay more for quads or larger. They are happier to get less of a return. I attribute it to the "I own an apartment building!" ego boost.. Of course they are also leveraging on those deals, and lenders don't want to write a loan for less than 50k.
You may want to consider duplexes or triplexes. Here in Indy, quads are considered commercial properties, and not residential. So we pay 2% of assessed value in property taxes for residential, and 3% for commercial.
Are you planning to manage this yourself? You may want to interview property managers, just in case... Ask the property managers what they think of certain areas, and drag them to a few viewings to see what they point out.. Property managers may know some off the market deals as well.
