Low Rents Hi Prices - Posted by IanC

Posted by Dan Auito on April 17, 2007 at 23:03:21:

Build a duplex and owner occupy for one year.

Low Rents Hi Prices - Posted by IanC

Posted by IanC on April 17, 2007 at 16:28:53:

I’ve been looking to the local market for a couple months looking to buy some single family homes for long term rental/equity build.

However the house prices in this area are 180-250K for a moderate starter type home (3/2). However the rent market hasn’t kept pace with the house values so a typical 3b/2b home only rents for 800-900 at most. Most investors I’ve spoken to agree the rents are off target but there is little indication its going to change.

Unless I’m doing the math wrong that is about 100-120K of debt that breaks even without going interest only (appreciation is kinda flat right now so I want some otherway to build equity).

What’s the best strategy in a market like this? Switch to flipping? Most sellers here abouts don’t seem very creative or open to creative options since most of my offers are getting shot down pretty quickly.

Multifamily dwellings and small apartments are proving to be the only viable options at this point as they are the only thing that comes close to reasonable chance of cash flow/break even. However most of these have pretty inflated prices also.

Answer is Obvious - Posted by Jimmy

Posted by Jimmy on April 18, 2007 at 07:05:52:

go elsewhere with your investing activities. there is no rule that says you have to invest in your own backyard. I started my REI biz in Texas while living near San Francisco. you can do it. too

Re: Low Rents Hi Prices - Posted by Dons

Posted by Dons on April 17, 2007 at 19:16:13:

Yep, I’ve been seeing the same thing for several years. With the low interest rates over the past few years, anyone who even could fog a mirror would get a loan. Houses were selling like crazy. Thus there were fewer renters.

At the same time there were hoards of new RE investors being “created” and these folks were acquiring properties to rent.

Hmmm. More rental units with fewer renters.

I’ve had to either hold rent at last year’s rate and/or lower the rent to keep good tenants.

Everyting goes in cycles. This too will pass. More forclosures will mean more people needing to rent. That will eventually raise the rental rates.

And if your properties have fixed mortgaged loan rates, your payments won’t go up, but over time the rents will. You just need to be able to either…

  1. hold out until then, or
  2. only buy bargains that are priced below market because the seller is desperate.