I want to buy a 2nd home and put it on a rental prog. Where in the US can I get the best income?

Question

Prefer SE US; I'm trying to find somewhere with established rental management companies and fairly low maintenance properties. So far I've found one or two places where rental income, net of mgt. fees, is about 7 - 8% of purchase price. Can I do better?

Answer 1

Yeah, you can do a LOT better. Leverage your investment -- borrow the money to buy. Rates of return on your investment (the down payment) can easily exceed 100% per anuum when it comes time to sell.

Answer 2

The way you asked your question makes me think you are from the UK or using the UK as a reference point. Gross yield is a common measure in the UK.

Why the SE of the US? Other than being popular with folks from the UK, is there a reason for the focus?

If you do decide to pick one region the way to get a higher gross yield is to focus on a property with multiple units. Duplex (sometimes called a twin), tri-plex or 4-plex properties will show better gross yield. Note that they might have lower levers of capital appreciation. Note also you can assume much of the SE will have lower appreciation at this time so you might not be giving up much in area.

Focus on areas that have good employment trends and which are not tourist areas. You want steady rental income from people who prefer to rent. Tourist areas will have more transients and may have high prices from people who buy property for holiday use.