I’m a HS teacher who is looking to supplement income with potential rentals.
i have the time, relative to most f-t jobs, to be a landlord.
i’ve read about the pitfalls of being a landlord and spoke w/ my in-laws about their exp as a landlord. i understand its not a free ride.
My question is: how does one determine if an area is a good rental mkt? for example, the area where i live has had several rentals on the mkt for quite some time so i figure this is NOT a good location.
however, nearby is a mkt where there is a substantial military presence (meaning potential turnover) and rental mkt.
fyi: my goal is NOT to generate an income stream but instead create some equity for my retirment (i’m 38 yrs old). if i can buy a property, offset the mortgage w/ rental fee, then sell at retirement for a nest egg.
teacher pension plan is not enough these days to live comfortably…
you need to work up some calculation of potential rent vs. epxenses to operate a rental property (i.e. mortgage payment, taxes, insurance, repairs, prop. mgmt, vacancy provision, capital expenses, etc).
a rough rule of thumb is the sale price of the property divided by rent per month should be 120 (or much less).
also look around and talk to people about how the rental market is in that area (lots of vacany, etc).
being in an area with heavy military prescence can be good or bad. It can bring lots of tenants, but also if the base closes in the future, the value of your property could drop like a stone to the bottom of a lake. I would avoid towns/ area with one large employer (your RE rental biz future will be directly linked to them).
Mike in Calif.
P.S. “pension”; what is that? are you speaking a foreign language? ;D
teacher pension plan is not enough these days to live comfortably
Unless you live in New Jersey (%50 of the average of the last three years salary)
If you live on the coasts, I would wait till the bubble blows, it fact I have seen big discounts by sellers who desperate (ie relocating). I am glad I sold the properties I wanted last year and the year before.
I would wait about 5-6 more months. Interest rates keep rising so I think the price of houses will come down as people will have their stuff on the market later…however a good deal is a good deal…anytime! So if it’s a good deal get it today. It’s nerve wrecking buying your first rental property but after you do it you will ask yourself why you didn’t do it sooner
Any easy way to find out how good the rental maket is: run an ad before you actually buy it. Put a general ad in the local paper that says something general… Nice clean 3 bed/2 bath SFH for rent in good area (close to base, etc.). $595/mo (or whatever the going rate seems to be). Then just see how many calls you get and take down their info.
It will cost you a few bucks to run the ad, but at least you’ll know what the rental market is like. Much cheaper than paying PITI on a vacant property! >:(
Good luck and happy hunting!