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Is now the time to buy rental property?

Home Forums General Columbus Discussion Development Is now the time to buy rental property?

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  • #93770

    billbix
    Member

    I have been reading all of the useful threads on the pros and cons of home ownership. I currently own a home but have some money sitting in the bank gaining little return. I am wondering if people think now is the time to buy rental property? I was thinking of buying a double in one of the up and coming areas and renting it out. Maybe Weinland Park, Old Towne East, King Lincoln, or Franklinton as area properties seem affordable with potential for rising appreciation.

    Do people think the trends in rental demand (and rising rents) will continue? What are thoughts of this as an investment strategy considering those neighborhoods?

    I would appreciate any insight readers can bring.

    Thanks in advance!

    #514080

    buckette13
    Member

    Personally, I would rather buy in a transitional neighborhood than rent in one. I would be careful to look at location and amenities to make sure that they appeal to a renter’s mindset.

    #514081

    Matthew
    Participant

    I bought my first investment in 08 on the hilltop and lived in it until earlier this year. In the meantime I picked up a single family investment in the same neighborhood last Dec and I’m closing on the third property this month. I’m extremely happy with my return on investment and plan to be retired from the 9-5 job in another couple of years.

    I do most of the work myself but I’ve also aligned myself with real local contractors who do the work for a fraction of what chains such as Atlas Butler and Hanson’s charge.

    I don’t know the market in any of the areas you mentioned but I will share my real numbers in the hilltop. I paid 77000 for a duplex in 08 that brings 1500/month today. I paid 15k for the 3 bed single and it brings 750/mo, and the new property, a 2 bed for 17k is projected to bring 550-650 depending on amenities I add.

    I’ve learned to screen the hell out of my tenants. Regardless of reputation, there are good people in this area and they are willing to pay top dollar for a nice house. I run them all on background and credit checks, plus I visit their current homes to see how they live before signing them. In exchange I offer security systems, central ac and appliance loaded kitchens.

    When I look at the overhead and prices here vs other areas I don’t see any comparison. Prices in other areas of the city get you a broken down shell in the same price range. Here it gets me a property in need of minor cosmetics and allows me to instead add upgrades. I’ve been reinvesting every dime since the beginning and living off of my day job.

    To answer your question, in my experience there is no better time to buy an investment. I will go a step further and say that I work at a bank and that I put my money in real estate. The return won’t be beat by any bank or financial investment. But real estate is something I understand and am passionate about. There is a lot of legal legwork and surrounding yourself with knowledge is an important step otherwise you can really lose your ass.

    Good luck!

    #514082

    mrpoppinzs
    Member

    I think now is a good time. I recently bought into one of those neighborhoods you are suggesting. It needed a lot of work and it really took its toll. I feel that eventually the value of the property will increase due to its location. That said, I think Matthew has a good approach and maybe my next property will be a lower cost one with less work involved in rehabbing it. In that case I would be looking more for potential return on rents (based on purchase price) than concern over the appreciation of the property itself.

    #514083

    Matthew
    Participant

    I personally believe the hilltop will gentrify one day because it is stocked with desirable inventory similar to Clintonville, it is close to downtown and it has a commercial corridor similar to Short North. I’m 35 years old now though, so my focus isn’t necessarily on up and coming as much as here and now. The monthly return on investment here can’t be beat imo. I think the whole investment strategy needs to work based on where you are in life, age, goals etc. If the hilltop gentrifies great. If it doesn’t I’ll have still gained from it even if I end up giving them away in the end.

    #514084

    gramarye
    Participant

    I can understand why someone like Matthew would want to put money in real estate. Someone who (a) is passionate about it, (b) understands it, and (c) has the skills necessary to put sweat equity into the necessary maintenance and upgrade expenses is going to have significant ongoing advantages in the market on top of the attractive buy-in prices offered by the current economy.

    I fit (a), but none of the others. I like looking at real estate and real estate market trends, following neighborhood development (and decline) news, and other developments and trends in the market. But that doesn’t mean I have what it takes to be a landlord. I’m not particularly handy, much as I wish I were, so I can’t do what Matthew does and do a lot of work on properties myself. By contrast, I am comfortable reading balance sheets, income statements, cash flow statements, 10-Qs and other SEC forms. I’m also comfortable talking about different valuation metrics for public companies’ stocks, and for options based on them. Therefore, I’m more at home in the stock market than the real estate market even though, in the abstract, I know that there are outstanding opportunities in the real estate rental market right now. People need to think about themselves, not just the market, before taking the plunge and becoming a landlord. That’s not to say I’d never consider investing in a rental property, but it’s definitely not in the cards for me for now.

    #514085

    Jman4ever
    Participant

    From the mile high view, it would seem so.

    Interest rates are low
    Property values are still depressed

    Yet the renter population is pretty high.

    That being said, it’s certainly not a “whim” thing. There are headaches with being a LL. While the cash cost isn’t bad it’s the other costs that can be difficult. Specifically the time one.

    #514086

    bucki12
    Member

    Matthew said:
    I personally believe the hilltop will gentrify one day because it is stocked with desirable inventory similar to Clintonville, it is close to downtown and it has a commercial corridor similar to Short North. I’m 35 years old now though, so my focus isn’t necessarily on up and coming as much as here and now. The monthly return on investment here can’t be beat imo. I think the whole investment strategy needs to work based on where you are in life, age, goals etc. If the hilltop gentrifies great. If it doesn’t I’ll have still gained from it even if I end up giving them away in the end.

    I rented in the Hilltop for awhile. There are a lot of inexpensive houses and foreclosures up there. I probably could buy a decent house there if I wanted, probably even for what I now pay in rent. When I rented the trouble I encountered was that most of the houses around me were also rentals (lots of absentee landlords) and the landlords did not screen their tenants. (Maybe the landlords cared less because they had invested less per property?) At one point I had two neighbors from hell.

    I was so glad that I was renting and able to move on when my lease was up.

    I appreciate the fact that you screen your tenants and I am sure your neighbors do also. That is so important to a neighborhood’s well being.

    #514087
    Walker Evans
    Walker Evans
    Keymaster

    billbix said:
    I have been reading all of the useful threads on the pros and cons of home ownership. I currently own a home but have some money sitting in the bank gaining little return. I am wondering if people think now is the time to buy rental property? I was thinking of buying a double in one of the up and coming areas and renting it out. Maybe Weinland Park, Old Towne East, King Lincoln, or Franklinton as area properties seem affordable with potential for rising appreciation.

    Do people think the trends in rental demand (and rising rents) will continue? What are thoughts of this as an investment strategy considering those neighborhoods?

    I would appreciate any insight readers can bring.

    Thanks in advance!

    We’ve been very casually looking at properties in our own neighborhood (King Lincoln) as there are beautiful historic homes that often sell for quite low. Matthew is right that some of them require a lot of investment (money and time) but others not as much. There’s still deals to be had in this area.

    What also interests us in rental properties here is the steadily growing student populations at CSCC and CCAD on the other side of the highway. Since living here for five years, we see more and more students moving in and walking/biking to classes every day. I anticipate that increasing once some of the Spring/Long Street bridge work is complete and the infrastructure is a bit nicer for pedestrians.

    Students are also a good fit for renting out a 3000 sqft 4-5 bedroom brick home, as they’re likely to live with roommates. I can’t imagine too many families wanting to rent that large of a house over here for $300 per bedroom.

    And while I have to give props to anyone willing to deal with the headaches, I’d never buy rental property around OSU. The student demographics at CSCC and CCAD seem to be a lot… ahem… calmer, shall we say. ;)

    Anyway, good luck!

    #514088

    leftovers
    Member

    Walker said:

    Students are also a good fit for renting out a 3000 sqft 4-5 bedroom brick home, as they’re likely to live with roommates. I can’t imagine too many families wanting to rent that large of a house over here for $300 per bedroom.

    Careful Walker, it is a slippery slope to becoming a campus slumlord… ;)

    pro tip – paving the backyard and adding a party deck greatly increases rentability for that demographic

    #514089

    cbus11
    Member

    billbix said:
    Maybe Weinland Park, Old Towne East, King Lincoln, or Franklinton as area properties seem affordable with potential for rising appreciation.
    What are thoughts of this as an investment strategy considering those neighborhoods?

    Of those areas I think Weinland Park would be a good choice. It has a lot of rental potential due to proximity to SN, OSU Campus and other amenities. I would probably avoid renting to students.

    #514090

    Twixlen
    Participant

    bucki12 said:
    I rented in the Hilltop for awhile. There are a lot of inexpensive houses and foreclosures up there. I probably could buy a decent house there if I wanted, probably even for what I now pay in rent. When I rented the trouble I encountered was that most of the houses around me were also rentals (lots of absentee landlords) and the landlords did not screen their tenants. (Maybe the landlords cared less because they had invested less per property?) At one point I had two neighbors from hell.

    I was so glad that I was renting and able to move on when my lease was up.

    I appreciate the fact that you screen your tenants and I am sure your neighbors do also. That is so important to a neighborhood’s well being.

    I was just thinking that if I decide to get into rentals, I’d want to buy near Matthew – he’s already created good neighbors, and I’d work equally hard to make sure I had good tenants, in a good property.

    #514091

    Twixlen
    Participant

    leftovers said:
    Careful Walker, it is a slippery slope to becoming a campus slumlord… ;)

    pro tip – paving the backyard and adding a party deck greatly increases rentability for that demographic

    Actually for CCAD, I’d think a pre-prepared garden plot in the back yard would be a huge boon – they aren’t the stand-on-a-deck-pitching-old-milwaukee-cans-into-the-yard kind of crowd. I drive thru the CCAD campus a lot – I *never* see kids in pajamas. Totally different demographic.

    #514092
    Snarf
    Snarf
    Participant

    Q: Is now the time to buy rental property?

    A: I can’t think of any better return on your money at current.

    #514093

    Matthew
    Participant

    @ Gramarye: I wish I had a fascination with balance sheets. That is the one aspect I have to force myself to hold still and focus on. I also utilize a management company for one property and will probably put them on the current purchase too because they handle all of that stuff and make it easy for an ADHD dummy like me to follow.

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