I would love to know where to get 10, $100,000 properties that tenants would pay $1000/month to live in. In my neck of the woods, anything that I can pick up at $100,000 is trash and most likely being sold only for lot value because the house isn’t even salvagable. (Actually, a typical lot price in my area is $130,000+) At $500/month, that’s a different story, they will rent all day long without even trying hard. I know because I lived in one and had to break the lease so I had to get someone to take over. I couldn’t schedule the people fast enough there were so many that wanted to rent it. Problem is, everyone that owns something like that realizes the same thing and they ain’t gonna give those up.
My $60K property in central IL brings in over $1200/mo and will be over $1300/mo shortly. They’re out there. Rents may be low in some lesser populated areas, but the property values are low as well. $100K where I grew up will get you a nice house.
I was just using as example to make a point. More than likely the properties (if paid off) would produce about $5000/mo. after operating expenses. With this money, I can refi and take some money out to invest/live on, buy my yacht and champagne like the gurus on T.V, or just live off the cashflow.
Also keep in mind that if I were to buy a home worth 100k now, it would just about double in value every 10yrs. Therefore, my 10 properties (if paid off) would be worth 2M. The rents would surely have increased also.
Finding these houses is very easy to do and you can get them for 70K. I plan on picking up between 5-8 more of these in the next two years to bring my total close to 15.
In 30 years, I will refinance all of them. Take the 750K lump sum (along with the rental income) and retire. Also, if you are doing 50 - 70% LTV, your interest rate is not likely to exceed 8% (today).
“would love to know where to get 10, $100,000 properties that tenants would pay $1000/month to live in. In my neck of the woods, anything that I can pick up at $100,000 is trash and most likely being sold only for lot value because the house isn’t even salvagable.”
I’m looking at a solid 9-unit that brings in about $2,200/month per $100,000 purchase price. Neck of the woods is a huge deal. Location may rule, but only relative to the local market. I don’t even know if this place is worth it.
Eli,
The conventional wisdom used on here of evaluating properties using the 50% rule would show this to be a pretty decent deal. Payments on a $100K mortgage at 8% for 15 yrs. would be $955.65. 50% of your rent is $1100. At first glance, it looks like the property would cash flow. You would want to analyze the numbers and see what all of your expenses are to support the above estimate.
A 9 unit building should yield at least a $900/mo. positive cashflow. Based on the numbers. He would have only $145/mo. Not worth it in my opinion. It wouldn’t take much for a suprise expense here or there to wipe his positive cashflow.