How To Buy A First Rental Property
I am still a newborn in this great group reading almost everything whatever and whenever I can. Meanwhile I started looking into listings posted in craigslist, local realtors websites.
I started eyeing on a specific location(jersey city, NJ) where there are chances of having a good rental property with positive and negative cachflow. When I watched many listings closely some of them really tempt me or attract me to rush to a decision. The reason behind is affordable prices (property <150K) and thats where I limited my maximum bracket.
With knowledge I gained from this group, I am able to calculate mortgage, questions relate to tax, maintenance and other basic calculations but I could not decide which listing is reliable, worth and considerable one by looking at them.
My question is how experts decide whether a listing of a property is worth following up or go away.
Thanks
Mani
Not sure what you mean, are you asking how to determine a good deal based on the listing price? You want to know the rental income and the comps in the area. Keep in mind the listing price is the ASKING price, you can always negotiate unless the area is just red hot or something
[addsig]
Okay let me try to phrase it in a better way, is there a way to assess a property listing without visitng the property or talking to the realtor.
Mani
Not sure why you would not want to talk to the realtor, they may tell you important info. If the listing has the monthly income, then you can run your own comps, so, you could tell if it was close to a deal at that point without talking to anyone.
[addsig]
Bottom line you need to know the area!
REaltors can be invaluable if you have a good one. They can provide you with rental comps and sales comp.
This is what I do:
PI: I have several brokers I work with and I know what intrest rate I can get.
TX: Look up the property in the local city site and use the tax assesment numbers for the previous year.
Insurance: Establish a realtionship with a agent (make several calls and get quotes)
Then do the math
At 130k it sounds like a good deal to me. Thats only a little over 32000 per unit. I would make very clear what is wrong with the property when making an offer. The insurance seems a little low to me, but rates very significantly place to place. Also, I wouldnt over analyze it and get paralized from making a decision. Run the worst case numbers and if the cashflow is acceptable to you then buy it.
kleinpm,
Thanks for your input. These two properties would need HUGE amounts of elbow grease (along with about 30k). The insurance surprises the heck out of me also but it is a legit quote from an area provider.[ Edited by OldPal on Date 03/31/2005 ]