$100k Rental property investment- where to buy in US?

[tompalm]

Was that in Las Vegas? Did prices peak in 2017?

Go in Zillow to see price history for

6527 Bethalto St, Las Vegas, NV 89148

Prices are up this year, but not higher than 2007 and Zillow is providing estimates a lot higher than recent sales. Most recent sales in that neighborhood are less than $300,000. In 2007, prices were over $400,000.

 

[Maverick1963]

Thank you very much for all the suggestions and advice．I tend to agree with what Big Matt has said even though I bought a condo. I bought it in Waikiki using mortgage with 30 year fixed 4.5% interest rate. Mine was 1% point higher because I am non-US citizen and non-resident. In terms of capital appreciation, my investimet is working. Cash flow after every cost including mortgage payment is break even, taking my tax return into consideration. I understand it is important to know the area and to have a team of good people. I just do not want to increase my mortgage balance. That's the reason why I want to find an opportunity for real investment with a limitation on the budget. In states with major cities, the average home price is very high. But there are states where the average is $100-200k. For my next investment, I do not need capital gain. Rather I am interested in getting additional income of $500. Market is not good for buyers now. I will try to find what is good for me and keep looking for opportunities.

 

[Snazzylass]

In terms of capital appreciation, my investimet is working. Cash flow after every cost including mortgage payment is break even, taking my tax return into consideration.

Wait, you are just breaking even? So, you are doing this for the capital appreciation?
I feel like all of the responses including mine are meant to be helpful, even if it is not what you want to hear. Mortgage rates are always higher for investment property versus owner-occupied. The best rate is for your primary residence.
Long-distance landlording is never advised. It's sound like your condo investment could turn negative if and when there is an assessment.
Memphis is supposed to be a hot area for the young tech crowd, but they typically are not in the market to rent a single-family homes. And, there are two additional concerns: if you can find a $100K house, it might not be in an area where you could expect the type of appreciation you can expect in Waikiki. Secondly, property management costs - that would be my concern.
Asking to net $6000/yr on a $100K investment? Sure, if you bought 6 or 7 years ago. Since then, most areas have experienced considerable appreciation (Las Vegas is conserved overheated.), and the rest may never recover. So, yes, I am skeptical about your timing, but good luck! Please update when you find it!

 

[easyrider]

If I were looking to buy real estate outside of the USA it would likely be Panama City , Panama. The property prices are about 60% less than comparable real estate in the USA. The capital appreciation rate was about 14% in Panama City meaning the prices are heading up. It isn't unusual to make a profit right off the get go in a good market.

Bill

 

[am1]

If I were looking to buy real estate outside of the USA it would likely be Panama City , Panama. The property prices are about 60% less than comparable real estate in the USA. The capital appreciation rate was about 14% in Panama City meaning the prices are heading up. It isn't unusual to make a profit right off the get go in a good market.

Bill

Property prices are down, rent is a lot lower then before. A lot of inventory. But not a bad place to invest but you have to be pounding the pavement and not dealing with English speaking brokers.

 

[tompalm]

I think you should wait a few years to see if prices come down. If there is a recession, there will be good deals for cash buyers. Keep saving and wait for the right time to buy.

 

[bizaro86]

Property prices are down, rent is a lot lower then before. A lot of inventory. But not a bad place to invest but you have to be pounding the pavement and not dealing with English speaking brokers.

What would you say the "English speaking broker premium" is?

 

[Maverick1963]

Whatever I buy or do, the best strategy is "wait" right now. I'm convinced. For those who are not familiar with Hawaii properties, I have to say that you cannot expect good income gain out of Hawaii properties. Mine is not so bad, I suppose. I meant break-even in terms of bank book figures.　Rent covers my mortgage payment and reduces the principal. And as I mentioned, I can reduce my income tax. I do not have any complaint about my first investment. Now in Waikiki, e.g. you buy ,with cash, one bedroom condo and monthly rent will be like $2k. After deduction of maintenance fee, tax and agent fee, you can only expect $1k or a little lower as your income. Some will say it's stupid, I know. Positive side is that Hawaii banks provide Japanese residents with mortgage. You can expect capital gain; of course, timing is important. Waikiki is a very special place. And I have been able to find a tenant within a month after contract termination. At the time of Lehman shock, the Hawaii real estate market did not go down as much as the other major cities in US.

 

[DazedandConfused]

Why buy in USA when you appear to live near Tokyo....I would probably buy in Japan

 

[am1]

What would you say the "English speaking broker premium" is?

It can vary greatly. Someone just off the plane reading International Living is going to get taken to the cleaners and lied to. Not shown all available properties. Just ones the broker will get a fatter commission from. The broker or lawyer or anyone involved in the transaction can sell you at one price but by it from the seller at a much lower price and pocket the difference plus a commission.

 

[bizaro86]

Thanks! I've always thought it made sense to rent somewhere you were moving for at least a year. Aside from deciding whether you actually like living there, it gives you a chance to get acclimated to how things acutely work where you're buying.

 

[am1]

Thanks! I've always thought it made sense to rent somewhere you were moving for at least a year. Aside from deciding whether you actually like living there, it gives you a chance to get acclimated to how things acutely work where you're buying.

For sure. I did not do that. But I went with the intention of buying. First day I took possession I looked at a neighbours apartment to get a few ideas and a month later bought it as well. Has worked out fine but the return has not been but it once was or projected.

 

[tompalm]

Whatever I buy or do, the best strategy is "wait" right now. I'm convinced. For those who are not familiar with Hawaii properties, I have to say that you cannot expect good income gain out of Hawaii properties. Mine is not so bad, I suppose. I meant break-even in terms of bank book figures.　Rent covers my mortgage payment and reduces the principal. And as I mentioned, I can reduce my income tax. I do not have any complaint about my first investment. Now in Waikiki, e.g. you buy ,with cash, one bedroom condo and monthly rent will be like $2k. After deduction of maintenance fee, tax and agent fee, you can only expect $1k or a little lower as your income. Some will say it's stupid, I know. Positive side is that Hawaii banks provide Japanese residents with mortgage. You can expect capital gain; of course, timing is important. Waikiki is a very special place. And I have been able to find a tenant within a month after contract termination. At the time of Lehman shock, the Hawaii real estate market did not go down as much as the other major cities in US.

I don’t understand “wait”, right now. That has two separate meanings. Do you plan to wait for the best price or buy right now. I have lived in Hawaii for more than 20 years and will say the price has changed a lot on different parts of Oahu as well as the state. In 1998, anyone with credit could assume a VA loan for $1 and buy a townhome in Makakilo or other areas on the west side. Those same units now sell for 2-3 times that amount and there are no more deals for $1 or $100,000 that they sold for in 1998 or 1979 when I bought my first town home there. Yes, townhomes built in 1976 sold for $50,000 and two years later where at $100,000 and went up to $125,000, but in 1999, they were back down to $100,000 and today at over $400,000. The same can be said for Waikiki prices in 2009 or they dropped and came back up. What happened before might happen again, but who knows. Anyway, buying at the top or buying where it is difficult to get a good return on your money on Oahu or Maui at today’s prices is not going to be a smart idea. Wait for Hawaii prices to come back down or buy some place else. By the way, prices have been coming down for the last year in my neighborhood. But that might not be the same as the west side or Maui.

Check Zillow for townhomes around 92-993 Makakilo Drive. Wish I had bought in 1999, but those days are history.

 

[jimf41]

I can't offer any advice except don't bother looking on Long Island. We do have some homes that pay $100K in property taxes though.

 

[1Kflyerguy]

Texsas is a hot real estate market. It may be too hot now. I have not thought about Canada while I may wish to keep doing tax return only in US. Parking lot is intersting. It is a possible option. Would anyone has opinion about Memphis?

I have a coworker that has a number of income properties. I think he has around 11 units, in a few states. He recently shared that he was looking into adding a place in Memphis. His research showed that Memphis has a stable Blue Collar economy which should result in stable tenants and rental income. Believe he was considering working with a service that would help locate the property, then manage it for him.

 

[easyrider]

I like my properties to be within a 30 minute drive or less from home regarding investment properties.

Bill

 

[Maverick1963]

Thank you for all the comments. Whether I agree or disagree, it is very helpful to see different views and opinions.

Having read all the comments, I will try to make myself clear for your interest. Above all, I want to avoid earthquake risk. In Japan, wherever you live, you have chances to encounter earthquakes. I live in the greater Tokyo area. I would not be surprised if a big earthquake should hit us tomorrow. Within 30 min drive locations, I could buy a tiny one room condo under $100k. To buy a house, you have to spend at least half a million dollars. So none of these is my option due to risk management and financial limitations.

To me, US real estate market is attractive because unlike Japan, US population is growing and housing needs are solid. I know US more than other countries and have had a Waikiki condo for five years. I do tax return myself. If I could buy a wooden structure house +22 years old, that would enable me to depreciate the construction value in four years in the Japanese tax law. I will work as a salaried worker for a few more years. This depreciation works to reduce my income tax even though I do not earn much now.

I know US real estate price is going up. I understand from my experience that you have to pay more if you buy later. I do not mean to wait forever. But US economy expanded more than seven years. That's exceptional. Considering political unstableness and stock market uncertainty, I would not have to dive into the market now. I need to have much more serious thoughts if I decide to buy something.

Last but not the least, turnkey service companies are a viable option for me. I have to pay more but I do not have to go through all the troubles to buy, fix, rent and manage. I know a company - Memphis Turnkey. By knowing them, I thought Memphis or similar cities would be worthwhile looking into.

I would appreciate input from remote landlords who have rental properties in states where you do not live.

Mahalo.

 

[isisdave]

How about a 2-bedroom condo in an affordable college town? Is there such a place?

 

[Big Matt]

How about a 2-bedroom condo in an affordable college town? Is there such a place?

Better still, buy a townhouse of simply a house. These are the best cash machines if you can tolerate the slum lord mentality and realize that the college kids may trash the place. The great part is you make the parents guaranty the rent and damages. Parents will generally look at the cost of on campus housing and pay the same amount or a little less in rent. In Williamsburg, VA (College of William and Mary) there are small 4 and 5 BR houses that get $3200-4000 per month in rent. Best is to find a smaller college town with a lack of apartments. Look at colleges in the rural south

 

[easyrider]

Over time, condos can have problems, especially if most of the units are non-owner occupied. Many hoa's are just elected people with no knowledge of what they are doing regarding everything. Many condos do not qualify for bank loans because they are over 50% non-owner occupied and many condos that were owner occupied have become non-owner occupied rentals. This can make it easier to buy if you have cash.

College age clients will mess up a rental. For the most part, this group needs to have room mates or a parent that will guarantee the rent and damages. This group of renters are not easy for many reasons.

I like employed over 30 or retired with monthly income type renters. I have my best results with these groups of renters.

Since the op is looking for a condo in Oahu I think there are good opportunities to cash out a non-finance-able condo in working order and hire a property manager to rent it out. It might be a good strategy to buy multiple units in the same building over time. Eventually, if a few people control all of the inventory, these people could sell or develop the property for a nice profit, imo.

Bill

 

[Maverick1963]

Thanks for your input.

In the past five years, tenants of my Waikiki condo were single, professional. One or two just moved from the mainland. They can spend annually $24k for their roof. So their income should be good enough. There has been no rent payment delay. I feel comfortable with someone with profession and in his/her 30-40's as my tenant. If I had money, I might consider buying another condo in Hawaii. But one bed room condo units in Honolulu area above $300k. This time I am looking for a property I could buy with the cash I can spend.

Thanks to your posts, I have a better picture now. I need to find not so large not so small cities/towns where population is growing and crime rate is low, hopefully. Probably single family home mean price is $120-150k. Two or three bedrooms with a bath (two is better). Maybe better to avoid hurricane zones. If these descriptions ring your bell and you could come up with US mainland areas or towns I should look into, I would appreciate that very much.

 

[MOXJO7282]

I'd like to propose another question which maybe more manageable approach to investing $100k.

How would you invest $100k? For argument sake you have enough retirement so you don't have to worry about that.

I have a BIL insisting i invest in T-Bills.

 

[jimf41]

If you don't need it to cover your needs in retirement then why would you invest it? Spend it, have fun, give it to your kids or a charity. You could even send it to the US treasury and tell them to apply it to our ever increasing national debt. Do something with it that will make you happy. If your retirement needs are secure and adequate why add to it?

 

[DazedandConfused]

I'd like to propose another question which maybe more manageable approach to investing $100k.

How would you invest $100k? For argument sake you have enough retirement so you don't have to worry about that.

I have a BIL insisting i invest in T-Bills.

T-Bills pay around 2.5% interest
Inflation rate is around 2.5%

You would be treading water

 

[grupp]

Why not purchase a portfolio of Timeshares?