After 40 yrs. of landlording, I’m getting out. Enough cleaning other peoples’ messes and late nite phone calls.
I hired a realtor, since apparently investment properties don’t fit the mold for the on line and Open Door type brokers. I have 2 buildings, 2 units each, next to each other in a good part of town. They have been very well taken care of and improved, but they are over 50 years old each. New roofs, new HVAC, updates, tile, etc.
So what do I need to know? For the last 3 years or so, since the Phx market has come back and then some, I’ve been plagued with letters, calls and texts from firms wanting to buy my properties. But the realtor came recommended and of course, the cold callers were not an option.
Been on the market a month. No real offers. So again, a little help??
Are they empty? Some people are loathe to purchase a property that is encumbered with a lease. If you have tenants, make sure they are on a month-to-month plan.
Thanks, yes, taking his advice. Only a month I guess, I am by nature impatient and thought at least I’d have something serious by now. We haven’t even showed it.
My wife and I have been considering buying investment properties for a couple years. The housing prices have far outpaced rent in our area so it appears now is a terrible time to invest. We’ve been watching the local market a lot (too much), and the houses people are buying to live in are still selling, while all the duplex and other rental homes are sitting. For example, there is a nearby duplex for sale: Each unit is 2 bed, 1 bath. Rent in each unit is $550/month. It sold in 2016 for $145K and is listed now for $215K. It appears the unit is fairly close to the 2016 state except they did paint the exterior.
If your area is the same, I’m guessing other investors are in a similar state: Don’t buy an investment at a high.
It’s been quite a long time since I have talked about this with a friend who does own rental properties, so those may be outdated but I suppose the concept is still good. He stated that he determined the value of a rental property as 100 times the rent, and buying at or below that price meant that it was usually a profitable buy for him as a rental property. I’d imagine that that ratio probably needs to be adjusted for local conditions. The OP should look at his property and act as if he were going to buy them today as rentals. Based on the expected rent, what price would he pay for them? Consider that there is absolutely no reason to buy a marginally profitable property, an investor can keep their money in the bank and wait for better opportunities.
Interesting. I’d think the opposite, as long as the leases are at a reasonable market price and terms. If you’re buying what’s clearly a rental investment property, not having to go find new tenants seems like a plus.
That’s a pretty common rule of thumb, and I bet it mostly holds everywhere. I guess it’ll depend on local property tax rates. Just basic math. A rent that’s 1% of purchase price is 12% gross return. Assume 1-2% for maintenance, a few percent for taxes, 1% for one month’s vacancy a year, and you’re probably still making a decent return.