I currently live in California, I am sitting on a descent amount of cash and am looking to by a income property idealy 1-4 units that will cash flow postive. With California cap rates crappy 4% its not possible here. I am looking at price range from 50k-250k to start. I would ideally like to start small and expand. What part of the country should I buy in? Is absente managment a good idea. Someone said Nashivelle is growing area with cap rates. I dont know. Thanks.
2007-02-09 06:10:57 · 3 answers · asked by Suzy V 1 in Business & Finance ➔ Renting & Real Estate
The reason why the cap rates are so low is because the value is expected to appreciate in the future. Areas with higher cap rates are riskier because the values are not expected to rise as high due to high turnover rates, poor tenant quality etc.. I would shoot for an area where values are stable. If you put down more money on the property you will be closer to having a positive cash flow. I think a absentee landlord can work when you are yielding enough profit to pay a management company. My neighbor is an absentee landlord and owns a 26 unit building in NY however, he has owned the building for over 20 years with no mortgage and can afford a property management company (they charge 10% of gross income). Rental properties take time to yield a good profit but year after year the rental prices increase and you will yield a profit plus enjoy the appreciation on the property.
2007-02-09 06:35:51 · answer #1 · answered by tianaramal 4 · 0⤊ 0⤋
I don't think absentee ownership is a good idea unless you are very experienced at this sort of thing. You will need a property manager, which will eat into your cash flow. You will need to trust that they are doing what's best for you while you are not there.
I don't understand why you can't do this in CA. Many real estate investors make a good go of it in CA. Think it through carefully. If you don't think it can work there, maybe you should consider another type of investment opportunity.
2007-02-09 06:17:26 · answer #2 · answered by Insurance Biz CT 5 · 0⤊ 0⤋
Write a term on your purchase settlement which you will take the valuables over after the tenants have long previous. enable the owner eliminate them. If there is any hardship or injury why might you elect to take that on till you have a great deal?
2016-12-17 06:09:02 · answer #3 · answered by erke 4 · 0⤊ 0⤋