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View Full Version : Rental Property Dilemma


Chilehead
05-31-2010, 09:20 PM
This is for anyone who has residential rentals. With all the vacant houses on the market right now, I have seriously contemplated purchasing one for cash and using the proceeds to further fund my landscape business and purchase even more properties.
In Georgia, there are MANY foreclosed/bank owned homes for less than $20K. Quite a few of them have full disclosure statements that indicate major problems like mold, faulty wiring, structural damage, and the like. The rest are comprised of houses that need anywhere from $2K-$7K in work, but the work is of a nature that I can handle performing myself. These are the ones I am more interested in.
That being said, have any of you ever tackled a project like this? If so, has it been worth your while? Realistically, I know something like this will have its headaches. I am also not going into this to get my money back in a couple years--I figure 5 at least just to break even. My goal is one of a more long-term nature: a sizable nest egg in 30-plus years. Comments and questions please, and thank you.:)

PTP
05-31-2010, 09:49 PM
I haven't done exactly what you are proposing but I have done many similar things. You might have a good opportunity here but then again you may not.

Be skeptical about everything. Don't trust anyone's insight or input except your own. I am not saying that you shouldn't take advice - you should, and lots of it - but make sure that you understand the process from the inside out before you jump in. You are going to make mistakes - that is pretty much guaranteed - but you can greatly minimize them if you apply yourself properly.

I would shoot for a return on investment of 2% per month. Meaning that if a home costs you $30,000, you should be able to rent it out for $600 per month. That is a good return. Many people are using 1% as their benchmark but you can do better.

I like the fact that you are paying cash. That will put you much farther ahead in the long run. Like I mentioned, you are going to make mistakes, but if you are paying cash, you are in a much better position to learn from your mistake and move forward.

If that advice is worth what you paid for it, it's not worth much. But if it is worth what I paid for it, you are a rich man.