This is for both units of the duplex; total purchase price is $85k, and total rent is $1600. Using these numbers I get pretty close to Spex's 10% cap and 25% cocr. It is indeed a lot cheaper than your $560k duplex

I live in Melbourne, Australia. Have 150k saved up (+10k fake FTP $), so yeah.. 150k saved up. I'm 23 and a couple of my friends with normal jobs have recently bought a house with a much smaller deposit. Which has gotten me interested.

I'm not greedy and i hate taking risks which is why i still play 200nl despite making 200k+ there and i just keep my savings in my bank account earning 5.8% interest

I still live at home and i don't plan on moving out any time soon because i plan on traveling for a good part of next year (likely playing poker at the same time too), so as you can imagine my living expenses low and most of the money i spend is on going out drinking etc.

How much should i spend on my first property? I'm going to be renting it out which should cover the interest... I worry about the future of online poker which is another reason why i am such a nit with this type of thing. Oh and i hate stressing!

I know this is a bit off subject but how on Earth are you getting almost 6% interest in a savings account?

Unless you find an amazing deal, I'd imagine owning a rental property while traveling abroad would be more of a headache than it's worth.

Lol banimal
Do not buy anything unless you find some kinda super steal insider info for 100k

It's in a 6 month Term Deposit that reinvests after maturity.

Why? Is this because i am already getting good interest in my term deposit without the hassle of worrying about a property? Or is it because of the uncertain future of online poker?

thanks!

Australian interest rates absurd. I get <3%

Mostly because you are going to be traveling. The return you are going to get on your real estate investment could easily be >6%. But, unless you find a really good deal, it probably won't be enough more than 6% to justify the hassle of having it while you are traveling. You could have a property management company take care of everything for you, but that takes up a lot of your profit.

Anyone here ever do any short term rentals, ie vrbo or homeaway? I'm toying with the idea of investing in a place that I could only use 3-4 times a year, and having someone else manage it for me on there.

I don't understand. $85k total price tag for a duplex? And it rents for $1.6k monthly?!?! How is this even possible?

Or is it $1.6k yearly which is under $100 per door per month? I'm lost.

_______

So I just closed my first transaction! I got help from my father which is great. Bought a 4-plex downtown in a small city. $255k and going to put about $10-30k of repairs into it. I estimate gross rents to be $25-30k per year with about $4k of expenses so net before mortgage is around $22-25k. However I'll be living in one of the units which will bring that down but make land lording easier.

First-year rate at 0.85% APR is nice (jumps up after that to the fixed-term 1-yr rate).

I'm thinking of buying a single family rental. I'm going to pay cash and am still researching it.

What type of property would make me the most money and how much should I expect to pay a property manager to run things?

If things go well I'll tryand buy more and expand over time

selling an old-style florida villa near englewood. The other houses in the area are valued at $174,000 but thanks to my rental skills, this house has a gross rental income of about 32k per year. Since I'm in the UK and have to pay for upkeep etc remotely, its not really that great and after taxes and expenditure probably net about 6-7k.

I've just had an offer for $195,000 after 3 bidders each put in their best offer knowing about future rental agreements. How should i feel about this? They will give me 5% of rental income from bookings already taken for after the house has changed hands.

how would a house valued around 175k get nearly 3k/mo from a rent?

cant imagine buying a single family and paying someone to manage it as being a worthwhile investment

Even if you out right own the house? Would that still generate too little income?

My plan was to buy one every 2 or 3 years

well im no expert, but assuming your buying a place that isn't generating an absurd monthly rent, I cant imagine so.....even with no mortgage you still have taxes,insurance,upkeep,etc that cut into profits...not sure what a property manager would cost, but your profit margin is small to begin with...unless you have a ton of properties, I dont think its worthwhile

I'm no expert either but the property goes up in value and you get a lot of deductions. Someone told me a property manager is around 8%

It really depends on what type of property you want to buy and where you are at. For example, you can buy a house in Tampa for $100k and net 9-10k/year. That's not bad. You could also mortgage the place and net 5-6k/year, but only have to pay 25k up front. A couple people shared their ROI formulas early in the thread. I'd recommend reading through the thread from the beginning.

There are a couple of things to consider:
1. I saw a stat that last year, 33% of homes were paid for in cash. That means investors and they move quickly.
2. There are still a bunch of short sales/foreclosures on the market and you can get decent deals. But, the ones in good shape that are priced well are getting multiple offers in only days after being listed. So, you have to be ready to either do some work on a property or to put in an offer quickly. This is very dependent on where you are.
3. I would not count on home values to appreciate much in the near future. There has been a lot of activity. But, there are still a ton of short sales/foreclosures, and a ton more people that are underwater on their homes. For my own returns, I'm not factoring in appreciation even though I plan to hold them for a long time.
4. I'd consider mortgaging the properties now while interest rates are so low. If you are going to buy more places, you can pay cash after the rates have gone up. You can always pay off the mortgage if you want to. I would run the numbers both ways and see what makes more sense to you.
5. I would not get a property manager for only 1 or 2 units. I would wait until I had more to start paying someone to handle them for me.
6. You get to deduct a lot and you get to carry forward your losses. So, it can be a while before you even have to pay any taxes on the income you get from the properties. But, you probably won't get as many deductions as you think. I was surprised when my accountant told me that I could not deduct some things. And, that I do not want to deduct other things because that would mean I was a real estate company and would have to pay more taxes. I'm sorry for being vague, but I don't remember the details. Talk to an accountant.

Property management generally runs 8-10%. You can still make a decent return utilizing a property management company, but you're going to have to make sure you purchase at the right price. It is entirely possible.

Based on Spex's estimates (45% expenses), the $195000 offer is right at a 9% cap rate. You may have better estimates of the expenses, so you might be able to come up with a better estimate of the cap rate. What kind of cap rate are other deals going for in your area? Spex likes to get at least 10%, so he would not pay you $195k, absent other factors (under market rent, etc.) The additional income they will provide after the fact is obviously an added bonus for you. Is the $6-7k net after making mortgage payments? If so, how much is the debt service, annually? What is the loan balance, rate, etc.? Is that $6-7k after paying some unusual expenses (roof, AC, etc.) or is that an average year? All of that will impact whether it is better to keep the property or sell it for $195k (which is not much different than the question of whether it would make sense for you to buy at that price).

rented as a holiday home. Its more than 3k a month in peak season. I have one family thats booked both jan+feb 2013 for 8k and thats standard.

Thanks for the feedback. I dont want to keep the property I want to sell it I just wasnt sure about the price. Sounds like I should be happy with 195k

How on earth do people make 8-10%/year before maintenance and tax? Here in central Europe that's pretty much impossible to achieve, you'd be lucky to get to 4%.

stevepra, good stuff, thanks

Good read. Thanks for all the infos. Now time to sleep lol.