All Forum Posts by: Vernon Martin

I would like some input from other investors about the experiences you've had with rooming houses. 

Good, bad or be advised?

I am in a contract to purchase one in Cedar Rapids, IA. 13 sleeping rooms in one large house, sharing three kitchen/bath combos throughout the house.

It is an old house but has been lightly remodeled and is in good shape and well maintained. 

With the price I'm in the contract at and the rents that they were getting ($375/ room), using the 2% rule it comes in at a 3%, and shows potential for some strong cash flow.

It's in a good location, across from a bus stop, close to down town and close to stores, business, restaurants and bars.

I am planning to use a small property management company that has been primarily managing their own properties up to this point and has never managed a rooming house (though the manager has lived in one in the past). He said he would manage it for half of first month for a new tenant and 8.5% thereafter.

Any advise is much appreciated!

This past March I bought my first rental property.

I'm not sure how to go about evicting tenants. I thought Bigger Pockets used to have eviction forms available, have they discontinued that? 

I could use some help as to how it is done. 

Quote from @Chad Kastel:

There are tons of information on what makes a market great (rising pop, landlord friendly, economic diversity). If you’re not familiar you probably should learn that as you dive in.

If you invest close to you it gives you an advantage of finding vendors and possibly knowing the lay of the land.

Your investment in multi-family should have a goal in mind. Are you investing in cash flow? Appreciation. They’re not directly at odds but a lot of the time great appreciation plays aren’t necessarily great cash flow plays.

Thank you Chad!
You and others have mentioned doing research and studying an area before making purchases. Makes sense. Where are your 'go to' places to get the "tons of information" so I can do the research?
BTW, I am looking for cash flow.
Thank you for all your help!

Quote from @Jon A.:

@Vernon MartinThere is no "best" market. If there was a "best" market, all capital would flow there, pushing up prices and making it no longer the "best".

The flipside of this coin is that good money can be made in almost any market with positive population and job growth trends. (And even in cities with generally poor trends, my guess is you can find sub-markets with good future prospects.)

The most important thing in my book is that your business run efficiently. What that means in my book is that you live close enough to your investments that you can handle certain tasks instead of going to market for everything. Think about how inefficient t would be if you were running your agriculture business from another state.

Thanks Jon
I have years of construction experience, so I believe I can take care of those needs.
Would you recommend I self manage or is it better to sub that out to a property management company?

Quote from @AJ Leman:

Hi Vernon,

Welcome to BP! We invest heavily in IC and in Illinois. Its been a very good market for us. Good demand, strong rents, etc. Prices can be on the high side (for the Midwest), but in the long term it has been great. I'm sure other areas are good as well. I think the main thing is doing your research and then jumping in. Happy to answer any specific questions you may have. Good luck!
-AJ

Aj
Thanks for the response! 
My agent has been steering me toward Cedar Rapids, he says investment to rent ratio is better. I am lured to the smaller towns because you can get more for less but the rents are less and there may be more vacancies too.

I am new to BP and the REI market, I operate my own Agricultural Retail business, which keeps me busy full-time. For a long time I have had an interest in investing in real estate. Currently I am sitting on a chunk of cash that I want to invest somewhere to generate more income. My stocks have not done me many favors. So I am looking at investing into multi-family rentals. Is that a good place to invest for significant returns? And also I figured that I would start close to home (Iowa City, IA) but I began wondering, is this market as good as some of the other markets or would it make more sense to invest in other areas, like in other states?

Any suggestions? Your shared experience would be appreciated!