Hello

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So, already you're asking the wrong questions. There are a lot of wrong ideas about REI out there and your first step is to train yourself out of them. For example: why would you invest where you live? Have you determined that your city in particular will give you better returns than the standard go-to cities? Have you looked at the numbers? Do you even know what a good deal looks like? Probably not, you're just looking in your area because you live there. I'm not trying to shame you, only to get you to start asking the right questions.

There's a lot to REI and you have to learn more to get started correctly than if you were to just put your cash into an index fund for example. But for someone that learns the details, the returns can be better and it's a nice way to diversify outside of stocks.

That's why I told you to look at BP. It's probably the most comprehensive site out there. But learn first, otherwise you can get yourself into trouble.

HTH

I'm glad you've said this.
I studied Finance with a focus on Real-Estate in college.
My father was in real-estate development.
I have a fairly firm grasp on the art, but I'm always learning more.
My city is a shit-hole, but I'm forced to make some money and I know that it's there to be made. There are some stable neighborhoods where I live, and if not, I can always go to the outskirts of town to flip a house in the suburbs. I've been researching for a while now, and I'm still ever-presently looking.
You're asking the right questions, I respect that, but you should also respect my own decision to carry out my business.
The reason why I asked you about the website you posted, is because I need a partner to go in with 50/50, and I would like some practical knowledge as well.
I'm curious what experience with the site you've had.

Sorry, most of the people on here don't have any background in REI, so I always assume the worst. But I'm glad to meet someone who's taking it seriously.

As for me, I'm not in real estate as a career, I'm just an investor. So my usage of BP has been mostly about information, not developing business contacts. So, I can't speak to that side of it.

Most of my local business contacts have been through local groups. Have you tried looking on meetup.com to get contacts? I've met some great people through there. The one thing to note, though, is that there's also a fair share of shady people too. And some "coaches" just set up a meetup to sell you overpriced training, so do your due diligence.

Guy that owns 2 apartments and buying a third next August here.

Real estate is very profitable as long as you have leverage. There are few other investments in the world that can give you a +20%/yr from initial investent (downpayment) and being very safe.
I have made +300,000€ (potential) profit since I started investing in 2008.

To answer you, indeed I have no knowledge in this field because I am rather young and I have not yet started my studies. I am still at the stage of reflection of orientation towards a specific field. That's why I'm interested in real estate. For information I am foreign and I use a translation site.

>Follow the 1% rule always.
you are the first actual landlord here that seem to know about that. i was starting to think this board is full on retards.

>1% rule

Is the real estate market in the US really that different? I mean, good on you if you find a property that fits that "rule", but it always struck me as a completely unreasonable expectation. Why would anyone rent if they could amortize a purchase in under 10 years? Why would anyone leave a property that yields 1% a month on the market? Plenty of people have money, so who wouldn't put it into a 12% investment (given ideal conditions) with very little volatility? And that's not even account for the property appreciation... this is so good, it should blow any stock market investment clean out of the water!

Why should that still be possible? I thought the US had recovered from the bubble popping? Is it just the cardboard houses?

Over here in Europe pre-2008 we dreamt of 8% annual ROI, and post-2008 we're looking at more like 2-3% on average (just on the rent, full ROI including appreciation is naturally a bit higher), with high-value investments (city centers) trending towards 1%. Any apartment selling for just 100x monthly rent would be on the market for approximately 10min before 8 different sharks would seal the deal via phone without ever visiting the location.

For reference: Bought my last apartment a little more than a year ago for 115k (under value due to personal connections), put 35k into renovations, renting for 700 gross, 500 actual rent. Pretty happy with 4% per year in the current climate. Could have eeked out 800 stacking refugees in, but breaking 1k would be utterly impossible, 1,500 (aka "1%") delusional.

I've heard this from other people in Europe, so I believe what you're saying. But, the 1% rule is a real thing. And, if you have trouble believing that, here's a mindblower: there are people that only buy properties that fit the 2% rule or ABOVE. See Lisa Phillips and Joe Lieber on BP, they specialize in that.

Hell, around my area, I have seen a few places that would return (in theory) the entire purchase price back in 2 years. So that would be 50% per year / 12 = 4% rule. Now, that's in theory, of course. I'm sure you'd be hard pressed to get a full year of rent out of the tenants. But they exist.

So, how many can I put you down for? :)

> I'm sure you'd be hard pressed to get a full year of rent out of the tenants.
I'm not following. What kind of sense does any of those %-rules make if you can't actually get the money? Sure, I can advertise my apartment for 1.5k monthly rent and now I'm following the rule. Oh, sure, nobody's ever going to pay that amount...

If these rules should have any kind of meaning in decision making, they've gotta deal with realistically achievable rents, right?

I'm still not getting the basic principle here. If 2% properties exist - why don't a million investors swarm to them? 24% annual ROI in simple rent before even accounting for property appreciation? Where's the catch? Something's fishy. That's literally too good to be true. "Brought to you by Madoff Realties" territory. Hidden toxic waste dump kind-of-thing.

And if you say there's a bunch of hidden risk associated, like niggers not paying up - then the initial calculation is simply wrong, because it doesn't account for that. If the property does not yield rent 6 months out of 12, then it's not a 2% property, but a 1% property and should be labelled as such.

>Is the real estate market in the US really that different?
it is in the us you can find well above 1% 1.2-1.6 is the norm around many areas.

you have to weigh in both mortgage and maintenance costs to get a feel for what's worth it. under 1% buying on leverage is unreasonable. under 0.5% buying at all is silly.

>I'm not following. What kind of sense does any of those %-rules make if you can't actually get the money?
no the point is don't buy the property if you can't make the 1% at least.

my current rent is 0.39% i have no interest in buying with these rent levels like ever. it's very hard to explain it to my gf and her mother. they are all like "hurr you throw money out the window and not get anything in return" i try to explain to them how it's not worth it to buy anything but they don't get the math.

So, I'm not saying you can't get the money. People will sign the lease and maybe you'll have them pay the first few months on time.

But it's just that after about 1%, the collections of rent starts to become a problem, which is why I don't usually deal with those types of properties.

That's why most people buy 1% properties - they have good collection rates AND good ROI. I have had some 1% properties for about 5 years now and I have not even had a vacancy during that time, never mind a missed rental payment.

These types of percentage rules are just rules of thumb, metrics to help in property evaluation, not an actual hard ROI percentage. You still have to take into account taxes, insurance, etc.

yeah a 1% rental property will never ever in a thousand years make you 12% a year. cost of ownership starts at 5% a year add property taxes and mortgage payments to that, typically comes out around 8-9% yo you get 2-3% roi. but at least you are making money not losing it.

I wouldn't go that far. I'd say you could get a good 8% after everything if you paid in cash. But, luckily, leverage with RE is easy, so adding that will boost those percentages up to in the double-digits. And that's NOT including principal paydown OR appreciation.

>if you paid in cash.
sure, and if it's a new property and you sell it before need for serious repairs becomes apparent. but if you buy on mortgage and keep for longer period of time or buy older property then what i said.

with leverage on paper your returns look better but that's the trap. because you can get 16% return on your investment with 25% costs (because 5% gets multiplied by your leverage stupid people always forget that)

Eh, again, this is not at all what I've seen. Many studies have shown that repairs are nowhere near the big boogeyman that landlords think. The largest cost has ALWAYS been vacancies, even for older homes. If you can reduce that through good care of tenants, you're eliminating of 80% of your costs.

As for the other 20%, a mgt company I work with found that 80% of their maintenance calls are because of washer/dryers or fridges. So, they left that up to the renters to supply and their repair costs went way down. It's funny how that 80-20 rule keeps coming up, huh?

Detroit

>These types of percentage rules are just rules of thumb, metrics to help in property evaluation, not an actual hard ROI percentage. You still have to take into account taxes, insurance, etc.

I see. Why not run a full calculation then? I mean, you've prepared the spreadsheet for your first property, why not use it for subsequent purchases? I don't need a rule of thumb if I can run the actual numbers.

I guess I thought it was more helpful than it actually is, given how the other poster insisted it was elementary to not being a "retarded" landlord. I guess I just don't see the utility in a quick estimate. It'd rather have the actual numbers on any investment above 10k.

i'm not talking about tenants calling you because shit broke down that is a tiny tiny part of cost of ownership.

the big part is keeping the value of the home the same for 30 years. that's gonna cost you an average of 5% a year. depending on type of home this can be more or less.

you either pay maintenance or lose equity. simple math.

>I guess I just don't see the utility in a quick estimate.
well here is the thing: you have no idea where home prices and rent prices are going and unless you pay premium for a fixed rate mortgage you have no idea about your costs either.

you can run the numbers all you want. it's all guesswork. the 1% rule is born of many decades of actual collective experience.

oh and one more thing... there are types of homes usually smaller apartments in the city that have much better rent/price ratios than family homes and their maintenance costs are not as bad as a single unit family home either.

if you want to landlord find these good deal on your local market try to anticipate the need to get an even better price. like if near a low cost neighborhood an office district is coming up you can bet your ass the rent prices will go the fuck up in a few years.