I am looking for a little bit of insight from the real estate world. I am interested in the realities of finding properties priced cheaply enough to bring in a profit as rentals.
I live in California, which means that real estate is on the expensive side. I am looking into buying another investment property and to vacate the house I am currently occupying both in the near future. I would like to keep the house, and make it a rental. The problem is that I do not think that the rent I can get will match the mortgage payment. Similarly, most of the investment properties I have looked at (2-4 unit buildings), would not produce a positive cash flow unless I put down a hefty down payment (50-100K is what I consider hefty in the instance).
Now, I am young, and I am investing for the long term and for my children’s future, so a net loss over the short term is not big deal to me. I don’t mind putting in a couple of hundred dollars per month on each of a few properties in order to keep them alive. However, I have heard folks talk about how they would not buy a property that would not bring in at least twice their expenses. In other words, they would not get involved with a rental that was going to run them $800 (mortgage, upkeep, et cetera included), unless they could get $1600 in rent out of it. This sounds great, but I just don’t see this being a reality in California’s market. Keep in mind, though, my search has been cursory at this point, and I have not beaten the pavement the way a seasoned REI vet might.
So, are there really deals to be had, such as the one just mentioned in all markets? Or, is this a reality in any market? Is this the reason I hear that Californians are buying properties from Phoenix to Nashville and back?
Thanks for the insight.