I closed on a duplex I bought at auction for $9,000 today.

[Travispassiveinc]

I really don't have a problem finding a 2-3 bedroom, 1 bath home in the areas I work for $25,000 or so in good enough shape that I won't have to put much money into

What grade of neighborhood is that in generally? Ranch style or old 2 stories? and how much do you get for rent?

 

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[BrandonS85]

What grade of neighborhood is that in generally? Ranch style or old 2 stories? and how much do you get for rent?

Mostly 2 stories with some ranches mixed in, usually 50/50 in terms of tenant/owner occupant mix, maybe higher on the tenant side.

I'm getting ~$600ish for a 3br apartment, $650-$700 for 3 bedroom home, $525 or so for a 2br apartment.

I'd consider it a C+ neighborhood in terms of what most investors use. These are the tougher neighborhoods in smaller towns, not large metro areas. The difference between these neighborhoods and ones in a big city is that people don't get robbed in the streets, stabbed, shot or killed every day, the whole city of a population of 25,000 had 4 murders in the past 10 years. While I wouldn't run around telling everyone I had pockets full of cash, I'm not in fear for my life by any means, and I can't say that when I'm in a bad neighborhood of Columbus.

 

[Madhu]

Out of interest, why is property so cheap in the US? Also, is it as cheap in places like California or is it only certain states.

In the UK buy-to-let properties are a national hobby (at least for 40+ middle classes. Those 30 and under struggle to find a home to rent for them to live in, never mind a second house to let out). Is it not like that in the US?

It sounds like you say that from experience Madhu, what areas roughly have you hunted in and what would you consider a bargain price here in the UK? I'm from London myself, I'm sure you're familiar with our prices haha.

UK bargains (e.g. £80K - £100K for 3 bedrooms) are in Northern rural areas. The downside is finding a good tenant who can afford the rent and/or won't trash the property (I am grossly generalising, but this is a rough rule of thumb).

Of course for one UK bargain, you could probably buy 4 of the houses BrandonS85 is talking about and it sounds like you wouldn't have the same tenant issues. Gotta get that green card!

 

[Imgal]

UK bargains (e.g. £80K - £100K for 3 bedrooms) are in Northern rural areas. The downside is finding a good tenant who can afford the rent and/or won't trash the property (I am grossly generalising, but this is a rough rule of thumb).

Of course for one UK bargain, you could probably buy 4 of the houses BrandonS85 is talking about and it sounds like you wouldn't have the same tenant issues. Gotta get that green card!

Totally agree with this. There are some bargains to be had if you're willing to put in a load of work doing something up and look in the less desirable areas, but sick with jealousy with the price of that duplex @BrandonS85 !! Even up North you're well into the double figures to get started.. and that get painfully high with the US exchange rate as it is for outside investors!

 

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[iAmTrade]

Tip..... Hold the property in an entity. Make sure anyone you meet in relation to this unit knows that you work for that company.... NOT that you are the owner...... Helps with collections, getting stuff done, less grief, etc.

Thats about the best advice you can get. Keep the fact that you own it away from EVERYTHING.

 

[Sauce]

Thats about the best advice you can get. Keep the fact that you own it away from EVERYTHING.

I am going to have to disagree with this advice about not letting them know you are the owner (the entity comment I 100% agree with). If you are not a confrontational person or have problems setting boundaries, then you should strongly consider out sourcing your property management.

For my professional real estate business, I try and set up rules and processes so I don't have to worry about how to react to problems. A few examples:

1. Rent is due on the 1st, Late on the 3rd (with a 10% penalty), and I post a 3 day notice on the 5th.
2. If your kid drops a toy in the toilet and causes a back up, it is your responsibility to get it fixed or I will bill you back. I have it written in to my lease and I go over it in the on boarding process.

To the OP, well done on your acquisition. Looks like it is going to generate some great cash flow.

What kind of appreciation has that area seen historically vs the Columbus market?

 

[BrandonS85]

I am going to have to disagree with this advice about not letting them know you are the owner (the entity comment I 100% agree with). If you are not a confrontational person or have problems setting boundaries, then you should strongly consider out sourcing your property management.

For my professional real estate business, I try and set up rules and processes so I don't have to worry about how to react to problems. A few examples:

1. Rent is due on the 1st, Late on the 3rd (with a 10% penalty), and I post a 3 day notice on the 5th.
2. If your kid drops a toy in the toilet and causes a back up, it is your responsibility to get it fixed or I will bill you back. I have it written in to my lease and I go over it in the on boarding process.

To the OP, well done on your acquisition. Looks like it is going to generate some great cash flow.

What kind of appreciation has that area seen historically vs the Columbus market?

Both are within a close margin of Franklin county. It's hard to say exactly what the rate is compared to 'columbus' as columbus includes places like Linden and Hilltop along with downtown which is on fire.

FYI for everyone, I'm starting to do streams of looking at properties, talking about real estate. My goal is once a week to go and view 3-4 foreclosure/abandoned/ect homes and stream the process.

First YT video is at

Periscope is periscope.tv/investmentjoy

 

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[BrandonS85]

Update 1 year later :

Duplex is now fully rehabbed. Had to gut the electrical on one side of it which cost a bit more money. We had one side occupied since October last year, the other side took till I think April or May of this year to get ready and rent out. Since that time it's been making decent money on both sides. Some of the typical landlord problems.

One fun fact talked to a section 8 admin and they informed me the region the rental is in just had a pretty substantial rental price increase as per October the first. In some cases , rent vouchers are going up 20%! Now, in our case neither side is occupied by a section 8 tenant, however it will have a very positive effect on rent rates due to the fact that sec8 tends to set price floors on rentals, causing a increase across the market.

Since last October I've bought 13 or 14 more rentals and am hoping to buy more.

One thing I had happen last week that was kind of odd was a new guy showed up to our local REIA meeting. He asked a few guys (Including me) "How to get rich in real estate".

The biggest landlord said this - "Figure a way to save up $5,000 or $10,000. Take that money and go out and buy the worst dump you can find, then put money into it and make it nice, then you'll either have some equity in the house or be able to rent it out and put an extra $500 or so per month in your pocket for the rest of your life."

The guy's response "But I don't want to buy properties in XXXXX part of town, tell me how I can get rich in real estate buying nice houses!" Both of us shook our heads and said it would be difficult to explain.

The moral of the story is that 'get rich quick' isn't very real most of the time, but 'get rich at some point' is a very valid thing. It isn't wise to put stipulations and want to do it all your own way, especially if someone who has been there before gives you advice on how to do it.

 

[andviv]

Thanks for the update. Have you revisited the refinancing with a bank tongget equity out? How has the mortgages market changed since last year?

 

[BrandonS85]

No real changes with traditional ban financing. The new complaint was that they don't like my corporate structure. So, I have had our articles of organization updated and moved my investor down on equity requirements and replaced it with debt. The bank seems to want more debt in regards to investor, less equity, so hopefully on next tax season they are better about it. They also made complaints about an apartment my brother and I owned, this month I'm buying him out so it will be in both our names.

 

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[EvanOkanagan]

Since last October I've bought 13 or 14 more rentals and am hoping to buy more.

Great work man! That's some awesome progress.

What is the average price of these? Are you financing?

 

[BrandonS85]

Great work man! That's some awesome progress.

What is the average price of these? Are you financing?

It was 32k last time I checked, unsure where it is now. Have closed quite a few recently under 20k a piece.

 

[EvanOkanagan]

It was 32k last time I checked, unsure where it is now. Have closed quite a few recently under 20k a piece.

Unreal. It's about 350-400k minumum for a dump around where I live. My avg rental prop costs about 450k.

Should move some of my money to Ohio!

 

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[BrandonS85]

Unreal. It's about 350-400k minumum for a dump around where I live. My avg rental prop costs about 450k.

Should move some of my money to Ohio!

Give me a call if you do, I have two entities that have 506 filings and work with private money way more than I do banks.

 

[andviv]

Give me a call if you do, I have two entities that have 506 filings and work with private money way more than I do banks.

Interesting. Definitely want to hear more about this.

 

[BrandonS85]

Interesting. Definitely want to hear more about this.

My various legal entities can accept direct investment from accredited investment as we've filed with the SEC to be able to do that.

Additionally we can also take loans from private individuals who want to give us money at a rate well above average of the market.

It works well for me with private investors because they're way more flexible than dealing with banks, although banks DO offer very low interest rates, they're also hard to work with. They want 'sure fire deals' and don't like taking on loans that present any sort of risk, that is unless their loan department hasn't been issuing many at all, then they tend to get a little better, but from what I've seen its hit and miss.

 

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