Are you brand new real estate investor that is looking to buy your first single family home rental property? If so, this video is for you.
This is going to be a series of videos, but in in part 1 we cover the following:
1. Why you should get approved for financing first
2. The different ways you can make money with your rental and what to expect
3. Finding the right property and how Ryan gets tenants that stay for a long time so you don't have a lot of vacancies.
If you want to learn more about real estate investing with me, click the button below for a quick webinar where I explain more about how all this works:
The very first thing you need to do with rental properties as an investment is to determine financing because when it comes down to it, if you can't finance than nothing else matters.
So don't spend time finding properties, evaluating errors, or doing anything else until you have your financing set up. Now, we're gonna talk about a couple of different options here because lots has changed over the years when it comes to financing.
So first off, you can be looking for properties that are in need of repairs.
Now if they're in need of repairs to the condition, where a normal appraisal with a full everything in working order can't be done, then you're gonna have to get a hard money loan.
And then you would do a refinance into a thirty year fixed.
So that's something that needs a lot of repairs. Now if it just needs a few things or some updates, but it's still, It's still in good condition.
You've got the money to do those updates. No problem. But if you need money to get the repairs done and it wouldn't qualify for a traditional loan, then you're gonna have to do a hard money loan and then refinance. Now let's say that it's in decent condition.
You could go right to getting a thirty year loan.
One of the things people don't realize that there's a new called DSCR (debt service coverage ratio). And what that basically means is rather than looking at your income and everything that you make and those types of things, they simply are looking at the property itself. You will need decent credit to qualify.
Another thing that you can look at if you have experience and you have money is doing a construction to rent, which basically means you're getting a construction loan and then you're refinancing that into a thirty year loan.
Now with both of these types of things, if it's in good condition or it is new construction or you're going right to the DSCR, there is going to be money down. You're going to have to put money down to make some of these deals happen. You will need to have money down for these.
Now how much. It's gonna depend on the program. It's gonna depend on the lender. All those types of things.
We'd help you out with all about but there is going to have to be money down, right? And there's gonna have to be some reserves.
So that's one thing to keep in consideration. However, with something that's in need of repairs, this is where we get into like a bird type scenario where we're trying to get into a property with little to no money down. Now, it has to be the right deal. It's gotta work out. We're gonna talk a little bit about this burst strategy. So the burst strategy basically is that I can get this property and fix it up.
If I can get that fixed up property for somewhere around seventy five, eighty percent. Once the work's all done to it, to appraise for that, then I can get a rate and term refinance. Let me tell you what that means.
Stepping back. Hard money, short term loan, high interest, expensive.
Thirty year fixed loan is gonna be a low interest loan, monthly payments. It's gonna be a lot less expensive.
Something you're more used to with a regular house, although it will be a little bit more expensive than that. Okay. So let's say the end goal here is the appraisal.
Once the property is fixed up, And all done, we wanna get that praise lit. Let's say two hundred and fifty thousand. I'm just gonna use pretty easy numbers here. So to get our rate and term refinance, we're gonna be somewhere between seventy five and eighty percent of that number. So we're gonna take two fifty, and we're gonna divide that out on my handy dandy calculator here. Two fifty.
Divided by zero point seven five.
Oh, whoops. I did that wrong.
Zero point seven five one hundred and eighty seven thousand to two hundred thousand. Okay. So basically, I need to make sure that there's twenty five, twenty to twenty five percent equity in this, but I wanna create that equity I wanna create that equity by doing rehab to the property and by purchasing a good deal on both fronts. Okay. So what that basically means let's just use two hundred thousand just as an easy number. What it basically means is my purchase.
My rehab, my closing cost, and my interest that I'm gonna have to pay on that time I want all of that not to exceed two hundred thousand dollars. So maybe I maybe my rehab is forty thousand and my interest is ten thousand and closing costs are fifteen thousand.
Let's see forty plus fifteen plus ten. I'm just using numbers here minus two hundred. That means my purchase, I'd wanna be around one hundred and thirty five thousand dollars as a purchase. This is obviously just for example purposes. Now what happens if this is more than two hundred thousand Well, if it's more than two hundred thousand, let's say it's two hundred and ten thousand dollars, you'd have to find a way to come up with ten thousand dollars to make this deal happen unless it appraises for more money than this two fifty at the time that appraisal's actually done. So you'd have to find a way. But the great thing about this is instead of having to pay the rehab, the closing costs, all those different types of things, the purchase price, you're getting into a rental property for ten thousand dollars if you look at that ten thousand divided by two hundred and fifty, you're getting into a rental property for four percent.
You know, very, very low, right?
And you've got something that's fixed up in good condition and everything else like that. So this whole burst strategy is getting into a property as little money as you possibly can, buying a great deal, getting the rehab done, then doing the refinance, and then you can do the refinance into a DSCR type loan. So those are the types of things you need to be looking at. First thing you wanna do is get prequalified.
You wanna get prequalified so that you know you can get that DSCR loan on a takeout. You wanna get prequalified so you can get the hard money loan. So you can do the bird type thing, new construction, whatever the case is. But the first step in all this is getting qualified, making sure you know what the lender can lend on and what you're qualified for.
The important thing with that you wanna make sure you're shopping for properties that work for the loan that you're able to get because if you go out there and find properties, that you can't even get a loan on, you're wasting everyone's time and especially wasting your time. So step one in all of this is getting pre approved, getting ready, for the financing, making sure that you understand how it works, what those parameters are, and then go in finding deals that may work for that. Now, There's several ways that you make money from rental properties. Number one, you make money from cash flow.
I would not plan on this in the first five to seven years. You might get some, but I wouldn't plan on it. I find a lot of people go looking for cash flow and they buy wrong properties and don't understand the management headaches, the repair headaches that are necessary for that. And so they buy something that looks like it as cash flow, but in the end, it eats all of that up and more because of repairs and maintenance and management and those things.
The second way that we make money is appreciation.
The next way that we make money is amortization.
Which is basically appreciation of the property value going up over time. Amitization is your tenant paying down your loan. See, each time they make a payment, part of that goes towards the principal balance and they're paying that down. And then we've got tax write off.
Okay. So you're gonna have business write offs, cell phone, that type of stuff. You're gonna have tax write offs for repairs and inspections or whatever you end up doing. So that's the multiple ways. What I find when people are first starting approaching rental properties is they only looked at one thing, and the one thing they look at is cash flow. And so here's what happens.
There's a lot of properties, in the Midwest, that look like they're really good cash flowing properties. And so somebody says, Hey, that looks really great. The rent's a thousand dollars. My payment's gonna be five hundred dollars.
I'm gonna make five hundred dollars cash flow minus, you know, few expenses. I'll make three hundred bucks. Let's just call it. But what they don't realize is every six months, they're gonna have to get a new tenant in there.
What they don't realize is that that tenant's not gonna leave, and they're gonna have to go through an And what they don't realize is that the conditionless property that's vacant is going to get vandalized because it looks like it's in a nice neighborhood.
But those are all things that look good on paper, but the reality they don't look good. And I'm gonna show you how to avoid some of those things as we talk about areas and things that we should be looking at here. So setting the right expectations is comes first.
You're not gonna make money in the first five to seven years. They'll probably cost you some money. In the long term, it's gonna double in value and your rents are probably going to double. And that's when you're gonna start really catching.
The that's when you really start having the advantage. If you're looking for advantages today, in your rental properties, you're probably not gonna find very many and it's really easy for people to get discouraged.
It really comes down to staying power. The longer you can retain that asset over the longest duration of time, that's when you end up winning in the real estate game. So Let me show you a few things here on the computer. Okay.
Rental property prices over time, right? Nineteen forty, there are seven dollars in twenty twenty one, they're one thousand one hundred and ninety one dollars is the average rent over time. If you look at this area between two thousand and ten and two thousand eighteen, you'll see two thousand ten is about eight hundred and ten bucks in twenty fifteen. It was nine hundred and twenty nine hundred and twenty three dollars.
The interesting thing here is this is the two thousand eight. This is the worst real estate crash of all time. And guess what?
Rents went up for most people. For me, they went down for just a minute, but not a lot. And then they started coming up because a lot of people that were losing their house had to find a place. To move into if they weren't moving in with family and so rinse actually went up during that time and you can see the steady incline of rinse the bottom line is there isn't any more land.
Right? Land is you can't make more land. You just can't make more land. You're seeing prices go up and you'll continue to see that.
So we've gotta be in this for the long haul. Next thing I wanna show you is are this shows you values of properties over a period of time, and Again, I like to highlight this again two thousand and eight property values for two twenty three.
Okay. This is the worst time to possibly buy a house, two hundred and thirty three thousand dollars, right? Two thousand and eight.
Well, actually let's come up here. Two thousand and seven. There's the peak of market. Two hundred and fifty seven thousand dollars.
Okay. What is that? Q1 of two thousand and seven. That was probably the worst time to buy a house worse time to buy a house.
Okay.
And so let's look at this. It came down to two hundred and eight thousand.
Okay. That was the low during the worst time possible in the real estate recession, the days of two thousand and eight, the worst things possible. Let's look at two hundred fifty seven minus two zero eight. We're talking about forty nine thousand dollars.
Okay. Forty nine thousand dollars divided by that two zero eight or divided by the two fifty seven.
K? We saw a loss of nineteen percent. K?
There's a reason why lenders like you to put twenty percent down. Because they know this data. But there's a loss of of nineteen percent. Okay.
So, that if you do things right, should be a good guy to say, hey, kind of what's worst case? And I say, I think worst case is twenty percent. Could it be more? Absolutely.
But If we look at the median, it doesn't look like that. Now let's look from that time. From that worst case scenario which was two thousand and nine when there was a two zero two zero eight, okay, and then let's say what did it get up to? Well, it got up two, that same property went up to four seventy nine.
Okay. Over the period of let's see. This is twenty twenty two. So this is two thousand and eight. So we're gonna say fourteen years. Okay. Fourteen years, the property went from two zero eight to four seventy nine, it more than doubled in value in fourteen years.
So when we look at this, even if you look at the low, let's say you bought high here at two hundred and fifty seven thousand. How long would have it taken for you to get back to that same price Well, let's look here to fifty eight. There you go. So twenty thirteen.
So if you would have bought in twenty seven, it would have taken you till twenty thirteen to have your property value get back to where it was. So we're talking five to six year period. I think that's six depending upon the quarters of the months. Whatever case is, but the worst real estate crash we've seen of all time took five, six years to get the value back from if you would have bought it at the highest possible to getting back to where it was before. So that's why we've gotta put things in perspective here because we're not day trader Right? We are looking for things that are gonna go up over time, over consistency.
And that is what we're looking for when we're looking for these rental properties. And so setting the stage here and saying, Hey, can you make money with rental properties? Absolutely. There's multiple ways to make that, but it's all about staying power.
Buying it, hanging on to it, and keeping it for the long term. So the the thing that also is great about when we're talking about this rental properties is you don't have to buy a great deal. These are market prices. This is not discounted market.
This isn't using investor's edge to find good deals and all that type of stuff. You wouldn't even have to do that and you still would have doubled your money. So there's a lot of ways to find properties. You don't have to be looking for that very best deal because the difference between a good deal and a bad deal is fourteen years, ten years, and you've seen, you see the things doubled as long as they have the staying power.
So that's where we get this whole point of I need to make sure that you're at least breaking even.
Okay. That's the whole formula here. You've gotta break even, which means your cost you can't be feeding it. Okay?
We want you to break even. That's where we're kind of saying, okay, this is where we get into a break even type situation, that's where we're looking at a deal. Now my old rule is I wanted a cash flow. I wanna make a hundred bucks a month.
That was kind of my goal. If I can make a hundred bucks a I was good, but that becomes more and more difficult as prices have gone up and everything else. So right now it's break even. Right?
So what that means is my rent that I get. Let's just say it's a thousand dollars. Okay. My rent's a thousand dollars.
Then I've got property taxes.
Let's just say property taxes are a hundred bucks a month. We're this is monthly.
Okay. I got my insurance.
My insurance should be, I don't know, somewhere around thirty bucks, let's say, my property. And then what we get into is we've got some maintenance.
K. So I plan on about five percent. So I put about fifty dollars a month in maintenance and repairs. I'm gonna put about fifty dollars a month into repairs.
What's the difference between maintenance and repairs? Repair are things that stop them from using the house right now. Maintenance are things where every five years or ten years, I'm gonna have to replace the roof. So I'm putting some money in here.
I put it in a high yield savings account And then that high yield savings account is growing, and I just put a little money in there. So, I've got it set aside for some of those things and repairs that I'm gonna need. Now, I used to take out some money for vacancy, but I have learned how to manage properties. My average tenant stays about ten years.
So I don't deal with a vacancy, which is the most expensive thing that happens, is tenant turnover because you lose rent. You have to fix it up. And so that becomes very expensive, and I'll show you how to avoid that here in just a minute. So let's just take this.
We've got our thousand dollars, and we're gonna take out hundred bucks minus thirty dollars minus fifty dollars minus fifty dollars and we're at seven hundred and seventy. Okay. So what I wanna make sure is my payment is not more than seven hundred and seventy dollars.
Now I'm just talking about principal and interest.
Okay. So what if my payment on this deal is gonna be more than seven hundred and seventy dollars? Well, then I either have to find a better deal. Or I have to put more money down, right? Those are the two things because I wanna be making sure that I'm at this break even, which it's really not a break even because maintenance and repairs are coming out, so I'm putting that over here to save that up in my high yield savings.
Let's talk for a few minutes just about rent in general. Okay. This is the strategy, that everybody overlooks. Everybody's looking for what's the most I can possibly rent this property for.
You get the wrong tenants if you do that. What I look at is what are market rents and then I take down the market rents by, like, a hundred bucks a month. And I'm not looking for what's the highest market rent. I'm saying, Hey, what are things going for in this If everything in the area was renting for, eleven hundred dollars or let's say everything's renting for a thousand dollars, I would rent around nine hundred to nine fifty.
Okay. Well, why am I doing that? Because I wanna get the very best tenants. What's gonna happen is you're gonna get flooded with applications and you're gonna have to be really, really picky about who you rent to.
And the way you'd be very picky is you find someone that really values that great deal that isn't just looking for it because they have that's the most they can spend. And then you sort through, you find the very best person, you find something that wants to be long term. We're in the business of long term rentals. We don't do short term rentals.
And when I say long term rentals, six months is not long term. Long term for me is someone staying there thirty years.
K? That's what we're into. I think my longest time tenant so far is fifteen years, right? Paid for half my mortgage, let's say.
That's who I'm looking for. So if somebody comes to me and they don't have a toolbox, if they don't have a lawnmower, if they don't have those types of things, I don't rent to them. And if somebody comes to me and they're saying, Hey, I just wanna rent for six months or eight months or a year, whatever the case is, I don't rent to them. I want a minimum of two years, but I really want them to be there for five to fifteen years.
Plus, when they ask me I say I want it to be there forever. Like, we want people that are wanna put roots down, which means I have to buy a property that people can put roots down. And so for the most part in my area, I need a little bit bigger of a house. So my my, four beds, two baths, and a two car garages ideal.
I don't have to necessarily be that, but what I would find is this is a demographic where people stay for a much longer period of time. Kids get in school, they put down some roots, they go to the local church, whatever the case is, it becomes their home. Whereas, when I'm looking at duplexes, it's more transient. Maybe I'm going to school, and then I'm gonna go somewhere else.
And so every six months I'm getting turnover or in the summers, I don't have anybody because there's no school in session. Or whatever the case is, if you're dealing with rental properties on that type of a level, it's short term. And I'm not talking about vacation rentals, but I'm saying six months eight months, three months, whatever the case is, you're dealing with that, where when I'm dealing with this, I'm dealing with a whole other class of people. Okay.
Totally different people, totally different needs. The needs that they have is somewhere that they can stabilize, stay long term, and their needs are they wanna make sure that they're gonna get a deal. And here's the great thing. If five years from now, We're raising rents.
We're gonna raise rents every couple of years, right? You know, rents are gonna raise. Rent are gonna go up, but here's what I can do. I can go to these great people and say, Hey, you know what?
Prices have gone up. Values have gone up, taxes have gone up, insurance has gone up, maintenance and repairs has gone up, I have to raise rents. I don't have a choice. However, I want you guys to go out.
I want you to look around. I want you to see what you can find out there that's comparable to this property, and then I want you to send it to me. And I will give you even better deal than what they are offering. So go on the market, moving socks, moving to hassle, unless they have some life altering event.
They don't wanna move as long as the house is big enough to fit their needs. They've moved, you know, they've made it their own. So what do you do? Well, you have them go out there?
You have them find comparables.
They bring it to you. You take it down by fifty to one hundred dollars a month. You sign get them sign in the lease and then you raise their rents and you keep doing that every couple of years. They're getting the benefit of it.
And so are you, but mostly you're getting the benefit because you don't have the turn tenant turnover. You're not having a loss of rinse. You're not having to pay to repaint and carpet. Do all those types of things that you may normally have to do.
But that comes down to finding the right properties, which is what we're gonna talk about next.
Alright. So next, we're gonna be talking about finding the right property. Okay? So the question here is how do I find the right properties?
Well, we talked a little bit about it. We don't wanna be in the transient rental business. And when I say that, I'm talking about people that are staying for less than a year. I really don't like people staying less than two years.
So anything less than two years to me is transient, meaning they're leaving too fast for me. I really wanna have people be there for their lifetime and for their kids' lifetime to come but and so what I'm looking for is I want places that people will stay an average of ten years. That's really what I'm looking for. So, typically, I'm looking for four beds in my area and two baths and a two car garage.
But here's the thing that gets most people don't realize.
There is a declining return when it comes to purchase price and rent. Okay. There's this place where it where it crosses.
Okay. So basically you're gonna see your rents going up and then you're gonna see them start to plateau. So we're gonna call this rent amount.
Okay.
And we're gonna call this they'll they'll they'll kinda come up just a little bit. Okay. That's the rent amount, and then this is the property value.
Okay. So you're gonna have some gap here, but this is where I wanna be because here If I buy a house for a million dollars, you know, I might get four four thousand dollars a month in rent, but I could buy a house for three hundred thousand and I could get two thousand dollars a month in rent. Right? So I'm paying three times more, but I'm only getting double the rent.
That's where we start saying I'm getting declining returns. Okay? So the properties that I think you should be going after are things where people are gonna be staying for ten years, which means they've gotta be big enough, but I also don't wanna get too expensive of homes because I want the majority people to be able to buy them. So for me, I don't go over anything more than the FHA limit in my area.
So I wanna be under the FHA limit. So how do I know my FHA limit? Really quite simple for single family house. So single family home FHA limit, for whatever. Let's say Atlanta.
That was horribly spelled on a lot of ways. Counties, they have a limit of four hundred ninety eight. However, there's some counties with a higher limit, blah, blah, blah, I don't do the higher. So five hundred thousand, you know, five hundred thousand is the very most I wanna spend.
I'm not gonna spend a penny over five hundred thousand. Frankly, I wanna spend less than that. But what people typically do is they say, what's the cheapest property I can possibly buy? They try and buy that property, but they don't think about the maintenance the repairs, the vandalism, all those things that you're gonna have to deal with.
Okay? So that's what we're looking at here is we wanna be under the FHA minimum, something that they're gonna be there for ten years is the goal.
The next thing that I'm gonna be looking into is I am gonna be looking into some information on the property itself. So one of the things I wanna look at is crime reports. I do not wanna be in high crime neighborhoods.
Three zero zero three three. K. Let's just see what we've got here.
Okay. There's eight records.
This is the date range. The date range is just seven days. So I wanna do a custom date range, and I wanna look over the last, like, six months. So Let's just go back.
I don't know if that's six months or not, but it'll give me a better idea. I'm gonna apply that. Okay. So let's say my property's right here.
I'm looking here saying, okay, what are we dealing with here? Okay. We've got theft from a motor vehicle. We've got burglary.
We've got an assault aggravated assault. We've got theft. We've got those types of things. Okay, guys.
This is probably not a neighborhood that I want to This is probably not a neighborhood that I wanna be living in. The rule of thumb that I have, my wife and I say if we wouldn't live in the property, we wouldn't own it. Now, that doesn't mean it would be our first choice, but it means we would be comfortable. My rule of thumb is I would be comfortable with my wife walking down the street alone at night. If it doesn't meet that litmus test, you shouldn't be buying it.
So this is what I'm looking at here. Now how do you know because every area has crime. We get that. But the best thing that you can do is you can put in your the zip code where you live and look at the crime there and compare that to the crime for a property, a zip code that you're looking at buying in.
And you can compare those two and be like, hey, my my area is really, really low crime. I'm okay with that. I'm okay with a little bit more crime, but not a lot more. Or maybe you say, Hey, where I'm at, there's more crime that I would wanna see in one of my properties, and I can use that as a comparison.
These are ones that the aggravated assaults or, yeah, these assault charges These are ones that really worry me.
And then also when we're dealing with motor vehicle, theft for motor vehicle, I don't know if that's grand theft. This is with a police county that it comes from so you can get the information from them. So I'm trying to find and this is a busy street here I'm assuming. So know, this may not be I don't want somebody from Atlanta saying that neighborhood's awesome.
I don't know, but what I am doing is doing a comparison. So What I start doing is I start building a list of zip codes that I would be interested in purchasing properties. Okay? I'm building this list of zip codes.
And the way I'm gonna build that list of zip codes is I'm gonna look at crime in the area. I'm gonna compare the crime for where I live for the where that ZIP code actually is.
Next thing that I'm gonna be looking at is schools.
What I find is that schools. Let's just say Atlanta. Oh, zip code eight four what? No, not eight four. What was that zip code we were just in there?
Three zero zero three three. Okay.
Three zero zero three three. Okay. I find let's just middle school.
Okay.
So I'm looking through here, and I'm looking for good schools.
Let's just zoom out just a little bit more.
Yeah, I mean, these schools look great.
Ten. Let's see. Nine ten.
Nine ten. Let's just go a little bit further. Let's go like ten miles.
Okay. That's an eight. That's an eight eight seven seven seven sevens Okay. So I like what I'm seeing here with the schools. You can see it here as well. What I start worrying about schools is when we start getting into the fives, the fours, the threes, I really wanna see more sevens or eight.
So that's what I'm looking for. And the idea is remember, I want someone that's gonna see there a long time say they're a long time, they're probably gonna wanna be in in good schools or have kids that are gonna be going through schools. Let's look over here and say, Hey, what's Let's get rid. Let's look at the high Oh, that is high school.
No, I don't know. Is that high school? Let's come up here and see.
Let's just do high school. So, okay, that was middle school. Let's go to high school or elementary or whatever we wanna do.
And let's see some results on that.
Okay. So I've got some fives and sixes. I've got some sevens and eights, right? So I like this area more than I kinda like this area. And so that's the same thing. Now you're gonna say, well, right. How do I know what's a good school and what's not a good school?
What you can do is compare it to the schools that you know. So you can put in areas here that you already know and say, hey, would I consider that a good school, a bad school?
It's not bulletproof.
This gives you an idea, but it helps give you an idea of, hey, Here are some areas I wanna go. So I'm gonna look at the crime, and then I'm gonna look at the schools. And I'm gonna say, Hey, am I okay with these schools in this area because I want decent schools. Does that mean they have to be tens?
No. I definitely won't do anything over fives. Maybe you're saying I wanna be more on the seven eight nine or maybe the nine ten and the seven eight Those are all things that you've gotta look at when you're trying to determine the area that you want to go to. Okay.
Now the next thing that I'm gonna do is I have to kinda get an idea of what is happening with rents.
Okay. So one of the things that's gonna be really helpful is we're gonna be looking at statistics stats. K. The stats we're gonna be looking for are here in Investors Edge.
I'm gonna put in okay. What I'm gonna do is put in here the zip code. And then I'm gonna change this to the last six months. Okay?
Cause I wanna get an idea of what's happening. Okay. So prices have gone down negligible rents gone up.
Price per square foot. I'm seeing that's going up. Average days on market. Okay.
Let's see. Listing trends, sales price.
I'm seeing pricing come down. Days on markets coming down. Okay, that's that's interesting information. The other thing that I wanna look at is I wanna look at rinse.
Okay. What type of rinse am I gonna be looking at for this area and I can come here. I can look at rents, and I'm gonna look at total rents. Okay?
So just straight up rents, what are we looking at here? Oops. As we are saying, what is this property?
What are rental values for this property in this area?
Rental price. Okay. This gives me the idea. You see, this is under five hundred. This is over five thousand This is giving me idea of neighborhoods and rents and that type of stuff that I'd be looking for.
I can also get an idea of kind of what we're talking about purchase price, three eighty, three seventy, you know, somewhere in there. Okay. That's interesting. I can come and I can look at some of these different properties.
This will tell me an idea of rents.
It's not something that you wanna bet the farm on, but it gives an idea to start looking for those properties and what you're looking for. And if is it a good deal, is it gonna make sense? Is it gonna pencil? So those are the things that we're looking for when we're looking for what areas that we wanna be in.
We're looking for crime. We're looking for schools.
We're looking for what's happening with property values and you know, we're looking for rent. What's the average rent? A five bedroom goes for three thousand four bedroom on average goes for two thousand four hundred and thirty two dollars. Okay. That is really interesting.
Price per square foot, What are we looking at here? Two hundred nineteen? So that helps me determine, and what I'm gonna do is put a bunch of zip codes together And these are zip codes that I am interested in buying potential properties in if I find the right deal.
One thing you may have to do is drive.
I think anything under an hour is okay. I prefer to be thirty minutes or less. Forty five minutes is kinda borderline an hour or more. I'm not I don't wanna go over an hour, but thirty minutes, forty five minutes is perfectly acceptable because depending upon the area you're in, you'll probably have to drive thirty to find something that's gonna meet this formula we're looking for.
Right? We're looking for something that people can stay there for a long time, right? Five ten plus years. To do that, we're looking for low crime, great schools.
We're looking for stats. We also wanna make sure that we're gonna be breaking even at least. And we wanna be buying in this zone here where we're not getting diminishing returns, where the price that we're paying versus the rent we're getting, we start seeing us go upside down in. So that's what we're looking for.
When we're finding these and looking for the neighborhoods, and finding these zip codes, then we make a list of all those zip codes, and then we actually start shopping for properties.
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