I wanted to share some quotes from a book my wife sent me. This highlights the point to properly educate yourself about REI. Be careful what you take as gospel from materials as well.
All of the following are direct quotes from Buy, Rent, and Sell by Robert Irwin who coincidentally is America’s #1 Real Estate Expert (it says it right on the cover).
The key to buying property for the long term is to buy that property when it’s young, no more than 10 years old.
The price-to-rent ratio is simply a rule of thumb that wise investors use to gauge the relationship between monthly rental income, the monthly expenses, and the price of the property. It simply says that the montly income from rents should be around 0.7 to 1 percent of the total purchase price (depending on such factors as interest and tax rates). If the monthly rent is less than 0.7 percent, unless the property is flippable, it might be just too expensive.
Here’s a rule of thumb for maintenance costs on rental property:
Age of property, years 25-older Maintenance as a percentage of monthly income 15-20%
How do I determine the Local Market? There are two ways to accomplish this: the hard way and the easy. The hard way is to spend some time investigating the area. Check with the local chamber of commerce for the types of employers in the area…You can do that. Or you can call a few real estate agents who specialize in property management and just ask.
Of course there are some good points in the book, but some of it is just comical. The whole .7-1.0% of purchase price for rent will likely bury you in a hurry. In my case, .7% rent wouldn’t even pay my mortgage payment (and that’s after I put 25% down). 1.0% would pay the mortgage and the taxes, but that’s it. My point is that you get more useful, up to date, real world information from the veterans of this site. Most, if not all, of the people selling books are more interested in selling the book than building wealth through REI. Educate yourself as much as you can, just be careful to cross reference your info so you know if what you’ve just read is :bs