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My area is in the East Bay Area, 20 miles Northeast of San Francisco in Contra Costa County. I know the San Francisco Bay Area gets a bad reputation for being pricey however in some areas prices have dropped to 1995 prices. Here is an article I wrote on my blog:http://wp.me/p1tNzl-UThe article talks of a house in San Pablo that I sold two weeks ago.
Look around where you live not out of state.
For $200k you can get a lot of bang for your bucks if you Invest in Rentals in Buffalo New York. In fact, investors in the United States and from all over the world like Canada, Singapore, India, Australia and other countries in Europe, literally, know about this best kept secret!
Here's what I mean. Here in Buffalo, we have Investment Properties from 2 to 4 units that range between $2,400 - $350,000. Of course, the cheaper the price the more work will be required on the property and the more depressed the neighborhood of its location. The more expensive the price, the better the location and the more immaculate the condition. Typically, monthly rental income range between $150 - $1200 per unit.
Majority of the time, I recommend to both local and out-of-state investors to focus on Investment Rentals ranging from $45k - $65k. Often, these types of properties are in decent neighborhood with equal amounts of owner occupied homes as there are tenant-occupied rentals. This is a good mix since home owners tend to keep watch of the neighborhood including your Rental Investment. These properties will most likely require less attention from your property manager, therefore, putting more money in your pocket. Monthly Rental Income of these types of properties are between $500 - $650 per unit.
Putting 20% down (conventional loan) on a property with these characteristics will give a rate of return of 37%! I don't want to just throw numbers around, so here's a link that will show you the math to arrive at this ROI:
But here's my point! If you're looking to spend $200k on Rental Investments, Buffalo is your best bet because, you can purchase four ($200k÷$50k) of these properties in cash and according to the math in the link above, you can net $27,500/year in cash flow (water, roof replacement reserve, property management, sanitation, insurance, property management, maintenance and taxes – all accounted for). Or, technically speaking, you can purchase 10 ($200k÷$20k) of these properties with 20% down conventional loan ($20k total required per property) on each property and net a total cash flow of $40,600/year! I say "technically speaking" because a lot of mortgage lenders only allow you up to 4 mortgage loans that has a balance in them.
If you need help looking for these types of Rental Investment Properties, feel free to contact me.
I hope this helps.
South Bend Indiana / Notre Dame You can buy a 10 unit for a little over 200k
If you are open to the whole USA, you have tons of options for investment properties all over the country. Many investors prefer college towns, which have proven over the last 3-5 years to be more recession proof than non-college towns. I am a REALTOR in both Indiana and Colorado, and there are a few pretty solid cities I'd like to recommend. There are several great opportunities in the Valparaiso area near Valparaiso University. These places will not only rent to students, but may also rent to general public depending upon location and amenities. There is a grad law school and business school at VU, as well as all the undergrad options. Likewise, you might look at the college towns of West Lafayette, South Bend, and Bloomington. Or around the campus of IUPUI in Indianapolis, but usually the larger the city, the higher the prices per foot. Let me also highly recommend Fort Collins, Colorado, one of the best places to live in America according to many publications over the years. It is anchored by the nearly 30,000 students of Colorado State University, and is home to many tech jobs and other highly educated professionals. This town has held it's own over the last several years, and was voted as one of the most recession proof cities over the next 10 years by one noted publication. No matter where you choose, look at property value graphs, average rental rates, occupancy data, local zoning/use and landlord restrictions, taxes and other holding costs before making your decision. Often we'll encourage investors to look at all the ratios including CAP rates and GRM ratios before deciding. Good hunting to you and best regards,Matt EvansKeller Williams Realty
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