First Time Multi Unit Buyer - Is Buying A First Property Far From Home Worth It??
Hey all - I'm looking to get into multi units (3-4 family) for investments... I know the rule is "buy in your neighborhood" - problem is, I live in New York City and in MY neighborhood TWO families are selling for 1.25 million... so I started looking elsewhere and here's the question:
1. Is it smart to buy a 3 family two hours away even if getting a property manager in the area?
2. Has anyone ever actually moved to an area just to invest? If so, is it worth it?
Thanks
IMO, and I am sure a lot out there will agree with me, there are a lot of disadvantages in buying rental units far from home and no obvious reasons to do so other than affordability. However, IT IS POSSIBLE to be successful in doing so.
The distance adds a whole set of factors that you would need to seriously consider.
I too live in NYC and have a duplex 3 hours away. Being so, I made sure that the property was in very good condition, familiarized myself with the area, interviewed several property managers, factored in travel related expenses into my analysis, and more.
So far things have been going well. I have a positive monthly cash flow, and as long as nothing major breaks, I see no reason to travel to the property frequently.
Good luck.
I live in an area that i conscider to expensive to invest in. i'm kind of a risk taker and last year bought my first 2 properties all the way across country. A house and a duplex.
I have to say for most people this would definetly not be the best option. but the property is about 1/3 the cost from where i live and rents are only 1/5 or so less in rent. when i factor in the good buys and good management. the distance does not bother me.
In addition to that, I have talked to several owners of multi units who have no problem having them managed. the key is finding a good manager who is on the ball and is firm with tenants.
In my opinion you will either end up with good tenants or you will not, the risk is all part of the game. where you life is just one part of the the over all package
I have, er, had, my children now have a little house in England out in the county of Kent. There now resides the third generation of the families who have been tenants. The little town has grown and now the tenant lives upstairs in a very attractive apartment and the downstairs is where she conducts a design business. Her dresses are now all over the world. But she stays in the little house in Saffron Walden. She changes her boyfriends with each new line, but the house well that goes on forever. No problem she just has her bank do an automatic deposit to the control account which is in the same bank. I get a monthly statement. The repairs are her responsibility and the rent reflects it. But that wonderful old real estate firm of Foster and Sons, been in business as Estate Agents for over four generations. They visit and have tea with the tenant once every six months. Never a problem. Their fee for which is I buy lunch for the three senior members of the firm at our club once every six months. I think this is the occasion when they order the extra Trifle..
The other property was in France and is a 9 unit close to the Champs. I passed that onto a daughter and she resides therein. It has been steady since 1945 when Paris fell and I was able to get the SS Headquarters out of there. No they did not pay rent they gave vouchers. I have three of them framed in my office.
Most of the tenants are very very wealthy Saudi's they came to go to school and of course are super rich and can afford these large two and three bedroom apartments. Parking for cars etc. etc. etc. The best of the 5th Around. Just off the Etoile.
To rent one of these apartments requires payment of a key payment. That is a one time payment for the right to rent. Used to be about $25,000 now up to I believe $45,000. The rents are not cheap.
My first investment in Real Estate. I think it was about $15,000 full cost. Of course at the time the S.S. Headquarters were there and the average Frenchman thought that it was the end. I was too stupid to listen, thank god. Besides what could I do with money? Nothing. I was busy trying to get back to England after all I was a pilot in the RAF. Getting shot down was like a little vacation. So being in Paris I made my first and best Real Estate Investment. Sort of fun. The year 1941.
Cheers Lucius 8-) 8-) [ Edited by Lufos on Date 03/29/2004 ]
Thanks, hey j_owley and aurera I have two questions for you -
1. How often do you find yourself visiting your property? Do you have a scehdule (let's say every month or so) or is it when something happens?
2. With a property manager, do they take care of the little things like taking out the garbage and someone toilet leaking? Or do you get someone in addition to them for that kind of thing.. and if they handle it what's a fair amount for them to charge? (10% maybe?)
Thanks for the info.
My experience is limited, I had one long distance rental, held it for about 7 years. All in all it was profitable, but I was never comfortable with the situation.
Sometimes I knew I was being scammed but it was out of my control. I know the management company was getting a kickback from there favorite plumbers, painters, etc. I know they swapped my fridge with another absentee owners every 2 years and told us both they had gone bad, sent receipts to prove it, from the local bargain barn where receipts cost $25.
Do I really know this? No. But I always felt I was being scammed. The place had to go, too aggrivating.
That being said, 2 hours away is alot different than living in Alaska and having a house on the east coast. 2 hours isn't bad at all. Even I would feel comfortable doing that. You can easily go look at the broken fridge if you are having heartburn over it.
How often to visit...I'm curious as to others opinion on this myself. Personally, I will visit after 1 month, after that if things looked ok, maybe every 3 months, generally under the premiss of doing a bit of maintenance.
Someone said they go every month to change the airfilter, I liked that idea, most tenants aren't very good about changing it, and it's a non intrusive excuse to get a look at things.
Mykle
1. I don't have a regular schedule. I do a drive-by when I am in the area (when looking for other investment props). Thank goodness, nothing has happened that would neccessitate me to go there otherwise.
2. Some things, the tenant takes care of (e.g. putting out their own garbage). For repairs, the manager notifies me of what needs to be done and waits for my approval. Some prop managers have developed relationships with repairmen and may get good discounts which they will pass on to you. But don't take their word for it. Initially, get quotes from repairmen and compare. After you've developed a level of trust with the manager, then you can forego this.
Just my 2 cents
Quote:
On 2004-03-29 09:31, dtaylor wrote:
Thanks, hey j_owley and aurera I have two questions for you -
1. How often do you find yourself visiting your property? Do you have a scehdule (let's say every month or so) or is it when something happens?
2. With a property manager, do they take care of the little things like taking out the garbage and someone toilet leaking? Or do you get someone in addition to them for that kind of thing.. and if they handle it what's a fair amount for them to charge? (10% maybe?)
Thanks for the info.