Investing in low cost small income properties is a proven way to wealth and positive cash flow, especially in today’s cheaper market. What is a small income property? A Single family house, duplex, triplex, or 4-suiter (quad) and small apartment buildings.
Why are small income properties a great investment? You have a large tenant pool to work with. Most renters would prefer to rent a house or duplex as opposed to a large apartment complex for many reasons. You can buy them at ultra low prices in CERTAIN markets, and there are more renters out there NOW than ever before. They are generally RECESSION-PROOF if bought in the right neighborhood, such as affordable rental neighborhoods.
Finding the deals:
This is the easy part to some extent.
Dealing with local brokers and agents is a good way to develop long term deal flow. But if you really want to charge full speed ahead start doing private marketing campaigns to owners of free and clear property and pre-foreclosures. Because of the real estate crash in past 3 years A LOT of the competition (Especially the amateurs) was eliminated out there! Most investors today are cash investors only going after REO’s and MLS listed properties.
You have to follow certain rules and make sure you aren’t buying junk. There are a lot of super-cheap properties out there as a result of the real estate meltdown, but remember that all that glitters is not gold. You have to put yourself in the shoes of the tenants. Make sure you have at least 2 bedrooms per unit and a nice floor plan lay-out. Remember the cash flow comes from the tenant, not out of thin air.
I focus my efforts in low-income rental markets, I find the most cash flow and success in these neighborhoods, plus the competition is a lot less, even today. The cost is low and the cash flow is high. You want to find a similar market where rents are stable but prices are still low or undervalued. They are still out there. If you live in an expensive market, you can always go outside your market. Thanks to Internet technologies this is very doable today, BUT you must have a reliable, trustworthy team in whatever market you set-up in.
Most people want to create a portfolio of cash flow rentals to maximize their income, returns and lifestyle.
Wherever you set-up shop, you must have these team players in your business:
-Real estate agent willing to work with you in getting pictures and making lots of low-ball offers
-Professional licensed property manager
-Handyman / maintenance / on-site type manager (Cheap)
-Eviction attorney that does things YOUR way
-Subcontractors such as, roofer, plumbers, HVAC, etc.
-A general contractor that won’t rip you off.
-A low cost rental market with stable solid rents.
Making money in small income properties is a proven way to wealth. You simply have to have the systems set up as you go along and use a lot of common sense in your dealings with the various vendors you will use, and also including the tenants.