I've been doing this for a long time and I'll tell you now that you either embrace the low end units or you avoid them like the plague. I personally avoid them. I have no interest in being a slum lord or dealing with the shit that comes with it. The benefits of low end tend to be steady payment (section 8), the tenants tend to stay a long time (low turn over, here there aren't many options for them) but at the cost of your property going to shit and your difficult tenants can be huge problems.
Location is key just like anything in real estate. If you have rentals in the nice area, you command nice rents and you get nice tenants. Turn over in desirable areas is generally NOT a problem. In fact, if you are smart with your lease times you can virtually guarantee a list of people begging for your place. Especially if you take care of it.
Hard floors, nice kitchen, granite and molding / wainscoting are all relatively cheap things you can add that will place your unit over and above everything else. People tend to be cheap with their rentals. I have people fighting for mine and never have to replace carpet or other wear items because everything I have is quality. Tenants love to feel like they are in a home, so open concept and upgraded. You can command more rent and you'll have people throwing money at you when your unit comes up.
If you can get setup near a level 1 trauma center and hook up with an agency service that is some great money and tenants. They tend to always have staff coming in and out of the area. These units must be furnished.
I love colleges and University areas. Grad students make the best tenants.
Older folks, widows and recently divorced woman also make excellent tenants. Woman tend to not bring their shit home with them as much as men. So even if they are a rebound bar whore they tend to sleep out more than sleep in. They also tend to not be as loud or rowdy in the younger brackets. You can get a pig in any group, that has been my experience.
Single family units can work, I prefer multi unit buildings. Duplex or bigger in general. Condos in a well managed HOA can also work very well especially if they are established, have an excellent reserve fund, large community (low HOAs) and cover the exterior maintenance. Commercial property can be very profitable and can also be a nightmare. Every property is it's own beast with it's own set of numbers to crunch.
There tend to be two types of investors:
1. People that leverage themselves out the ass.
2. People that have cash, invest it and tend to buy and hold
You'll occasionally see a smart one using leverage to buy something and paying it off. Then repeating. That is rare though. Generally you see people going balls deep and getting a property, then within a year or two trying to get 3 more. I'm sure some people can make it work, but it is dangerous and most of the people I've watched try it are doing something else now.
Generally speaking, if you get good units in a good area you want to hold them. Flipping is an entirely different business and I find that people that engage in that type of business generally have a fair bit of debt, are looking to upgrade and see the marginal gain they made on the flip as worth more than the rents they are getting. This is generally because their ROI is shit since they are paying the bank a ton of money in interest and principal.
Also, many people tend to flip because they are piss poor at doing this and can't make the numbers work when the homes starts needing new roof, AC, water heaters, appliances etc. Again, generally people are leveraged up to their eye balls looking to take on as many properties as they can and adding new ones ASAP. I find this to be a recipe for disaster.
Owning free and clear real estate is an amazing investment. You get a great ROI which rivals aggressive growth stocks, you have excellent asset preservation and if you buy in an in demand area you will see appreciation. You can't get anything like that anywhere else. The real players in this buy and hold their investments. Leverage is fine but a free and clear property is worth 3x+ a leveraged one. No reason to be greedy, if the cash flow is really that good that you can add 2 more you can pay the first one off fast enough that you can wait on the others and be in much better position financially.
Location is key just like anything in real estate. If you have rentals in the nice area, you command nice rents and you get nice tenants. Turn over in desirable areas is generally NOT a problem. In fact, if you are smart with your lease times you can virtually guarantee a list of people begging for your place. Especially if you take care of it.
Hard floors, nice kitchen, granite and molding / wainscoting are all relatively cheap things you can add that will place your unit over and above everything else. People tend to be cheap with their rentals. I have people fighting for mine and never have to replace carpet or other wear items because everything I have is quality. Tenants love to feel like they are in a home, so open concept and upgraded. You can command more rent and you'll have people throwing money at you when your unit comes up.
If you can get setup near a level 1 trauma center and hook up with an agency service that is some great money and tenants. They tend to always have staff coming in and out of the area. These units must be furnished.
I love colleges and University areas. Grad students make the best tenants.
Older folks, widows and recently divorced woman also make excellent tenants. Woman tend to not bring their shit home with them as much as men. So even if they are a rebound bar whore they tend to sleep out more than sleep in. They also tend to not be as loud or rowdy in the younger brackets. You can get a pig in any group, that has been my experience.
Single family units can work, I prefer multi unit buildings. Duplex or bigger in general. Condos in a well managed HOA can also work very well especially if they are established, have an excellent reserve fund, large community (low HOAs) and cover the exterior maintenance. Commercial property can be very profitable and can also be a nightmare. Every property is it's own beast with it's own set of numbers to crunch.
There tend to be two types of investors:
1. People that leverage themselves out the ass.
2. People that have cash, invest it and tend to buy and hold
You'll occasionally see a smart one using leverage to buy something and paying it off. Then repeating. That is rare though. Generally you see people going balls deep and getting a property, then within a year or two trying to get 3 more. I'm sure some people can make it work, but it is dangerous and most of the people I've watched try it are doing something else now.
Generally speaking, if you get good units in a good area you want to hold them. Flipping is an entirely different business and I find that people that engage in that type of business generally have a fair bit of debt, are looking to upgrade and see the marginal gain they made on the flip as worth more than the rents they are getting. This is generally because their ROI is shit since they are paying the bank a ton of money in interest and principal.
Also, many people tend to flip because they are piss poor at doing this and can't make the numbers work when the homes starts needing new roof, AC, water heaters, appliances etc. Again, generally people are leveraged up to their eye balls looking to take on as many properties as they can and adding new ones ASAP. I find this to be a recipe for disaster.
Owning free and clear real estate is an amazing investment. You get a great ROI which rivals aggressive growth stocks, you have excellent asset preservation and if you buy in an in demand area you will see appreciation. You can't get anything like that anywhere else. The real players in this buy and hold their investments. Leverage is fine but a free and clear property is worth 3x+ a leveraged one. No reason to be greedy, if the cash flow is really that good that you can add 2 more you can pay the first one off fast enough that you can wait on the others and be in much better position financially.
