You can’t really go by the rents that are being asked. There is a reason those units are not rented – maybe the rent is too high.
You may have to price your unit a the low end of the market range in order to get a quick fill. The lower you can make your rent and still cash flow, the shorter your vacancy will be.
Good luck.
Based on the information I gathered, which is current rental on the market, I thought the information showed me that the market range is $1300 and up. I’m planning to be at the low end of the $1300 range.
Is there another way to interpret this information? Are you say I need to be lower than the low end of $1300?
With regards,
Sebringc4
Current rentals on the market are current vacancies. How long is the typical rental on the market in your area? These properties are being advertised for rent but there is no assurance that they will be rented at the asking price.
Today, rental applicants are negotiating for lower rents and getting them because the property has been on the market so long and is not being rented at the asking price.
With the number of properties competing with you, you may need to set your rent below market to even get any interest.
Dave, since opportunities seems to be more readily available, I started working with a RE agent. She provided me specifics about rentals in that specific TH community where the opportunity is and is also working on getting info on neighboring communities.
Below are the details regarding that specific TH community with my assessment.
04/09 4/2/1 $1395 active (new to the market)
02/09 3/1/1 $1200 rented on 03/09 (listed @ $1300; 1st quarter of yr very slow on rentals or property quality in question)
12/08 3/3/1 $1450 application registered (rent on the higher end by at least $150/month)
07/08 3/2/1 $1500 rented on 07/08 (nine months old; rental demand stronger in the summer time)
01/08 4/2/1 $1500 rented on 05/08 (yr old; rent on the much higher end)
My current plans still seem to be viable at $1300 but I am looking at options to get the rent lower if needed, $1200-$1250.
I plan to see the property by the end of the weekend.
With regards,
Sebringc4
As I mentioned, I saw the property this weekend. To say the least, it was interesting. So interesting, my camera refused to take any more pictures and died! Truthfully, the battery died.
Below are the details. I am most concern with the first three issues I listed under CONS and would like some suggestions.
PROS
Nice size TH.
Pergo floors in the dining room, living room and walkout basement family room.
Second full shared bath was decent.
Has two legit full size baths and one half.
Corner TH with decent size yard. Yard was bare and needs some landscaping. No biggie.
Nice location.
CONS
(Basement) The left side of the floor in the room in the basement towards the front of the house was slanted. I say about 3" total slant. Higher at the entrance of the room and slanting lower as you go forward to the outside wall which is the exterior of the TH house. Basically, my concern is about the foundation. It was mentioned to get a basement expert, whatever that is, to check this out and the next two issues mentioned below.
(Basement) The other end of the same room in the basement had a hole, 12"x12", in the drywall on the bottom. There was a sturdy black pipe exposed, which didn’t seem to have an issue, but the studs and floor was damp. My concern is mold, and the cost of finding and solving the leak.
(Basement) In the utility room, they utilized 3.5’x7’ and tried to create a third full bath. Wasn’t complete and basically needs to be teared down. There was no door. When you take one step into the “so call” room, you are standing directly in front of the sink. No room to easily move either way. Take just one step up to the left, and I mean one step up, and your at the toilet. Keep in mind, the theme with having no space is continued. Between the sink and the toilet is a column. Now, put yourself back in front of the sink, and go one step up to the right, yes one step up again, and now you’re in the shower. My concern is a lot of things about this bath since I believe the people who lived here did it themselves. So concern is for the plumbing, wiring, etc. In order to test anything, I need to pay the bank to turn on the water. Its been winterized.
(Outside) Since it was raining, water was puddling up in front of the steps. The downspout from the gutter needs to be switched to the other side and/or a small french drain put it.
(First Floor) Half bath needs mirror cabinet(missing) and a new floor.
(First Floor) Kitchen had refrigerator missing and cabinet above the refrigerator missing. There was expose wiring from an existing outlet to something but I couldn’t trace it. Floor needs to be replaced. Needs to be upgraded with the sole exception of the stove but once you do everything else, the stove will stand out like a sore thumb so that will need to be replaced.
(First Floor) Broken window in the living room.
(Second Floor) Mold at the bottom of the master shower. Hole on the wall towards the floor next to the shower. Simply put, master bath needs to be upgraded.
Any suggestions you can provide, especially for the first three CONS would be greatly appreciated.
With regards,
Sebringc4
Anything can be fixed for a price. Go back to your cash flow analysis. If you pay the full asking price of $85K, how much more will it cost you to fix everything? If you spend another $30K, you have $115K invested in the property.
What does this do to your cash flow projection? Rental property investors do not buy the property, they are buying the cash flow. If you do not have an acceptable cash flow after repairs, then walk away.
Dave, I appreciate the response and you are right. Investors buy the cash flow. I always planned on reducing my offer to compensate for the work that needs to be done. So, if $30k of work needs to be done, I plan to reduce my offer by at least that much if not more because of the time lost to get the work done.
I plan to contact a basement contractor and find out the cost of their inspection. Is it worth finding out if the bank is flexible on the price first? Recent properties over the last 3 months have sold for $272k, $135k, $125k and $96k. I rather know up front if the thought is the price has been lowered to compensate for the work needing to be done. The property had a lot of RE cards meaning its been shown a lot but its getting no offer.
With regards,
Sebringc4
How many of these recent properties are 3/2 TH in the same neighborhood as your target property?
All four are TH 3/2 and in the same community, within a block or so of each other.
What explains the disparity in prices? Does the $272K property have more square footage and a garage, whereas the others are smaller and use street parking?
How many of the recent solds were foreclosures, and does that explain the $96K price?
Below is the information on properties sold within the last six months. As a base, they all are TH 3/2.5, 1178’-1360’, no garage, street parking, similiar taxes and HOA fees. I stated the properties that were definitely REOs. The properties with no description, I couldn’t find out whether they were or not, but I’m still checking.
These properties are in the same community and even the same street with the property I’m looking.
Sale Date
2/09 TH 3/2.5 1320’ $135k
2/09 TH 3/2.5 1320’ $125k
1/09 TH 3/2.5 1360’ $96k
11/08 TH 3/2.5 1320’ $95k REO
These properties are in the adjacent community and have the same TH features. There are currently two properties in this community for sale. One for $119k and the other for $114k.
3/09 TH 3/2.5 1254’ $109k REO
2/09 TH 3/2.5 1320’ $130k
1/09 TH 3/2.5 1178’ $91k
11/08 TH 3/2.5 1254’ $150k REO
10/08 TH 3/2.5 1262’ $128k REO
The property that sold for $272k is no different from the properties I listed above. So, I can’t easily explain this price.
With regards,
Sebringc4
Bill, I am in your neck of the woods. Where the heck are you finding those deals?