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Iowa | I'll throw in my experience. I bought a property about 5 years ago. It has 4 small commercial spaces and 4 residential units. It barely cash flowed when I bought it, but rents were below average and most units needed remodeled, but it was full. Each winter I would purposely leave one of the units empty and remodel it. I remodeled them pretty thrifty, used well made cabinets still in good condition from higher end remodels I bough off swap pages, and watched for sales on stuff I know I would need. It also cash flowed it's own remodels since I was doing most of the work and the deals on stuff. Each time I remodeled a unit I raised the rent and had no problem finding tenets. With 8 units I've really only had issues about once every two years with tenets. At this point I really only have one unit left I would like to remodel, but there's an older lady in it who has been there for 15 years, so I'm fine with letting her keep the cheap rent and ride it out. At this point the property cash flows well and makes around 15k profit each year after paying expenses.
I have another friend who is better at construction than me, he buys foreclosed/sheriff sale houses. Most of his houses he has gotten for under 25k. If they don't need much work, he fixes what needs done and rents them out. If they need a lot of work he takes a winter and flips them and sells them. He had around 10 rental houses in the area and flips a house every winter. It seems to work pretty well for him.
When I looked at getting into rentals an older guy I know that had rentals in the past made the comment if you just have one or two units you will have a bad experience because when you get a bad tenet you will have no income and only expenses. If you have multiple units, it's not too bad because if one is bad the rest are still bringing in money to cover it. | |
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Rental house market
