rental homes

Discussion in 'Business Operations' started by cutbetterthanyou, Feb 24, 2013.

  1. cutbetterthanyou

    cutbetterthanyou LawnSite Bronze Member
    Posts: 1,178

    Not sure if this should be in this section or off topic section, if its wrong please move it . I was wondering if anyone invested in rental homes. As the economy is crappy ,and home values are at a all time low i was considering buying one, or if it works out well more. My thought was investing in low priced hud/section8 type homes.The reason why is low upfront investment, guarantee government check on the first of the month( no chasing money and taking 3 months to get them out for no pay), and honestly low cost of repairs. If they can't take care of the home like a human being, and treat my rental like a animal, i'll fix it like a animal lives in it. I have remodeled most of my home ,and done my up stairs from scratch. I'm no million dollar home builder, but i can do most of the repairs myself and like i said b4 it will not have to be perfect. Anyone have any thoughts? Experience? Is this a profitable business? According to the demographics a 2 bedroom is about 900 a month a 3 is about 1100 . I can buy one with a 30 year mortgage for about 200 a month. I would bank everything except the 200 a month for the first 2-3 years for repairs and overlap in renters, then after 3 years start paying extra to principal.
     
  2. alldayrj

    alldayrj LawnSite Gold Member
    Posts: 3,752

    Suze orman says you're better off investing. On that note, my dad bought a two family in october and we renovated it. Tenant already has furniture there and is moving in march 1 so i will let you know.
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  3. newguy123

    newguy123 LawnSite Bronze Member
    Posts: 1,094

    Investing in Real Estate for cash flow (not capital gains) is probably the safest and smartest choice for investing.

    I've contemplated the Section 8...guaranteed check, seems like a good deal. I invest more into middle class homes, which usually indicates someone living there longer.

    I would say go for it.
     
  4. Holleywood

    Holleywood LawnSite Member
    Posts: 59

    I invest in real estate here in Ohio. You learn a lot as you go and you'll have to find what works best for you. I have been buying one every winter to fix up and rent. I would stay away from sec 8. It's just a hassle. I know you think it sound easier but the best thing you can do is find qualified tenants. Do a background / tenant screen before renting to anyone. I use a company that charges $20 to do the search. I then in return charge a $20 non refundable application fee to see if there approved or not. There is good money to be made. Also IMO I would not do a 30 yr loan on a cheaper rental house. I would either do a 10 or 15 yr loan. The payment will not be that much different. If you have any other questions just ask I'd be happy to help.
     
  5. alldayrj

    alldayrj LawnSite Gold Member
    Posts: 3,752

    X2 on the background check and also credit check. Charging the tenant up front makes sure they are serious. Section 8 brings deadbeats. Hollywoods got it right
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  6. camshaft49

    camshaft49 LawnSite Member
    Posts: 21

    I have a buddy who a sec8 rental he does ok with it. He has a old man in his takes pretty good care of it. But I dont think you can screen your tenets. He gets like 875 a month the house is in hood. Other than that the rent is never late and the property taxes are cheap I know there are certain thing you have the do. Then the house is inspected to see it it complies. Also I think if the tenets tare it up the government pays to fix it I believe.
     
  7. cutbetterthanyou

    cutbetterthanyou LawnSite Bronze Member
    Posts: 1,178

    Thanks for the advice. The only thing about the middle class is more money for the homes. Here it varys from dumpy section 8 style homes 10-40k ,then it seems to jump up to 80-100k. As for the 30 yr loan my plan was to take it out for 30 to have the cheapest payment possable in case it don't work out well for a few months in the beginning, then later just pay 1/4 or 1/2 my profit to pay it off early. What are prices in your town? Are they around what i just discribed for mine?
     
  8. newguy123

    newguy123 LawnSite Bronze Member
    Posts: 1,094

    In my area you can buy homes in the ghetto for 10-40K, all day long. Some you'll have to work on, others not so much.

    Jump up to middle class and it's 100-140's for something halfway decent, not modern, but clean none the less.

    I understand your idea with the Section 8...look into all the gov't regulations/requirements and what they do provide you as the landlord. Obviously a guaranteed check every month is an incentive, but there should be other things as well.
     
  9. camshaft49

    camshaft49 LawnSite Member
    Posts: 21

    One of the things im looking at is mobile homes man there getting decent money down here for a single wide there getting anywhere from 650 to 900 a month which the investment is smaller in my opinion also I would learn the rental laws in and out because every where is different in our parish if you have your name on any of the utilities you can get bad tenets out quicker in under 30 days where as it could take up to 90 in other places with u paying utilities it kinda looks good like future tenets arent paying as much out of pocket. Also my buddy goes every month and changes the a/c filters so he can look around make sure there is no foul play
     
  10. Big C

    Big C LawnSite Bronze Member
    Posts: 1,641

    I have 5 properties that I rent....excellent money. Always screen potential tenants ask for proof of income and references from past landlords, get a real estate attorney to write your rental agreements, do not use the generic one from Office Depot or the ones you find online. Protect yourself legally and you will be fine, we use a home warranty on our properties for repairs, we pay a flat fee per year and $60 per service call and it covers all maintenance problems associated with the home.....like every other biz....do your homework before jumping in....Good Luck!
     

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