Re: Ohio Investment - Posted by Chyna
Posted by Chyna on January 01, 2008 at 06:14:03:
I’m also in NYC and have been buying doubles for the past couple of years in Indianapolis which are cash flowing very well. The wild price fluctuations that we’re used to in NY don’t exist in the midwest and I’ve found that if you buy in the right neighborhoods for a good price, the appreciation can be fairly good even in a down market. I stick with doubles because tenants in doubles in Indy pay their own heat, lawn maintenance, snow shoveling, etc. All the landlord is responsible for is taxes and repairs.
I’ve had two property management companies and fired both of them because they both dragged their feet in arranging for repairs and finding new tenants. I’ve had good luck working with an individual person who I pay by the hour to show units to prospective tenants and to handle things I can’t handle from NY. This person was referred by one of my real estate agents and it has worked out very well.
I have an electrician, plumber, handyman, etc who I contact when one of my tenants calls me about a problem. I’ve found that they go out right away (unlike NY) and are honest and good to work with. They bill me and I send them a check. The properties I own, tho, generally don’t need any work except if something breaks down. The guy I work with by the hour will go out if anything needs to be checked out before a tradesman is called.
If you decide to use a management firm, get references from other out of area landlords if you can.
I’m just about to rent to my first Section 8 tenant, a lovely middle aged woman who is disabled and lives with her adult son. Section 8 is giving me about $150/month more than a non-subsidized tenant and there’s some red tape to wade through but not much. If you’re considering Section 8, make sure that the demand for these rentals is greater than the supply so you don’t have vacancy issues.
I’ve found this whole experience (investing so many miles from my home) to be a lot easier than I had imagined. I think the single most important thing to consider is the vacancy rate in the area you’re buying in. If there are a lot of vacant units for rent and if they stay vacant for a long time you need to look elsewhere. Sometimes a deal looks really good on paper but if you can’t keep the property rented, you’ll lose your cash flow. A case in point…there was a renovated double in a “transitioning” (but safe)neighborhood in Indy that I could have picked up for about $80K, 3 bedrooms each unit, taxes about $1,400 a year, tenants pay all utilities. Total rent was $1,500/month ($750 a side). To me, that seemed like decent cash flow, especially since the property needed no work. But because of the neighborhood, I decided not to buy because there were so many vacant units near there.
It’s been my experience that owning duplexes in nice areas where there’s a demand for rentals has worked out best. I have one property that rents even before the current tenants move out but that’s in a trendy city neighborhood. I have another where the units stay vacant for several weeks because the neighborhood isn’t so good.
Best of luck,
Chyna