Posted by Wayne-NC on August 13, 2005 at 06:33:41:
You are right,that is a difficult market. Finding undervalued property to even possibly cashflow will be like finding a needle in a haystack. I am in the same kind of market on the Outer Banks. My properties were bought when positive cashflow was the norm. Now appreciation is king but how long that will last is anyones guess. So, I just wait it out and enjoy the increasing values and look for the “needle” and improve what I have. I will buy again when things change. For the reasons I have stated, I don’t want to leave my backyard. This is my comfort zone. I have 2 places in Florida but I don’t like the lack of control. There are things that I want to do and it is more difficult. In your situation you should look out of state as your choices are limited in town. The other posters had it right in that regard. Good luck.
I am new to this site. I have question on which markets would be best for me to invest in a brand new home to rent. I am looking for great cash flow and a little appreciation or vice versa. Which markets would you recommend? Thank you.
Re: Which Cities Have High Rental Rates? - Posted by Wayne-NC
Posted by Wayne-NC on August 12, 2005 at 06:29:21:
In a simple answer, the best area for investing is your own backyard. You should know it the best, management is easier due to the close proximity of the property and, you will be aquainted with the the people working with you such as contractors and repair services. Aside from that, areas with high rents may have high purchase prices as well offsetting any positive cashflow. Look for cap rates in comparing areas. That will be a start.
I’ve used a city’s newspaper classifieds to tell me the going rates on rent in other parts of the country. Most newspaper classifieds are now online. Just do a google search for the name and website of any given city’s newspaper.
Your comment that the best area for investing is your backyard is very true. There are alot of problems with investing in other areas, being a long distance landlord, and not knowing the other market as well as the local one.
However, in most of California, the needles in the haystack have been long gone. Rents do not even cover half the mortgage payment, much less repairs, taxes and vacancies. I have not been able to find a property that would “pencil” in more than 3 years nearby.
I have come to the conclusion that I will have to go to other markets, in this case one about 200 miles away, where for some reason the ratio of price to rent has not gone up much. While that market is not appreciating very much, at least the rents will cover the expenses, so the tenants will pay for the mortgage over the years.
And when you sell a house in California, I will be able to buy 10-20 in my other market :>
I live in the San Francisco Bay Area. You don?t get too much rent in my backyard. I have a property at FMV $1,000,000 (64% LTV) and the rent is only $2,650. I am barley breaking even. My backyard is not a good place for cash flowing.