Buying a rental property

amother

Ghostwhite

Tue, Mar 05 2024, 12:41 am

amother OP wrote:

Not looking to make tons of money off it… If we can get rent to cover mortgage and flip it in a few years hopefully it’ll have gone up in value and we’ll have made money on it
It just sounds like a better investment than a cd
If not Jackson/toms river any other places come to mind? Or other ideas how to invest it?

I looked into this recently. Like others mentioned, it’s not likely to have the rent cover the mortgage. I would discuss with a very knowledgeable RE agent.

amother

Aubergine

Tue, Mar 05 2024, 5:50 am

What about using the fund to buy in a cheaper place like cleveland or detroit, all cash/mostly cash in an area that is becoming frum...

Over a few years it will go up in value, less risk because you don't have a mortgage/ have a very lowe mortgage.

For example, Cleveland has homes in the 150k- 300k range that when they are in the frum areas ( a few blocks over) are going for more like 300-400k. Then you can afford to leave the home empty until you get the right (non jewish) renters, all the rent goes directly to savings ( some will need to go to property management, but it would still give you about $1,500 - $2,000 profit) and hopefully once it becomes frum you will make an additional profit.
Also in general, RE has a stable 5-6% increase value, so that's a decent rate of return even if it doesn't become frum when you are ready to buy in Brooklyn.

If you are more comfortable with the Lakewood area - there are investors buying in parts of Howell, Jackson, and Brick that don't have any frum people at all yet - they are gamboling that in 10,20,30 years TR and Jackson will be as frum as Lakewood is today and those areas will be the Jackson, TR equivalents...

You would still need to have non jewish renters and its a kind of gamble on will it actually become frum over time....

amother

Tue, Mar 05 2024, 7:12 am

happy7 wrote:

Are you trying to eventually be in Brooklyn? Why aren’t you using the money to buy a house in Brooklyn that will allow you to have tenants in your home NOW that will help you cover the mortgage?

We do want to be in Brooklyn. What we have is not enough for a down payment right now, the rates are so high. Rent probably wouldnt cover the mortgage and we can’t really afford to add to it without being super tight and we wouldn’t be able to save anything.

amother

Tue, Mar 05 2024, 7:16 am

amother Aubergine wrote:

What about using the fund to buy in a cheaper place like cleveland or detroit, all cash/mostly cash in an area that is becoming frum...

Over a few years it will go up in value, less risk because you don't have a mortgage/ have a very lowe mortgage.

For example, Cleveland has homes in the 150k- 300k range that when they are in the frum areas ( a few blocks over) are going for more like 300-400k. Then you can afford to leave the home empty until you get the right (non jewish) renters, all the rent goes directly to savings ( some will need to go to property management, but it would still give you about $1,500 - $2,000 profit) and hopefully once it becomes frum you will make an additional profit.
Also in general, RE has a stable 5-6% increase value, so that's a decent rate of return even if it doesn't become frum when you are ready to buy in Brooklyn.

If you are more comfortable with the Lakewood area - there are investors buying in parts of Howell, Jackson, and Brick that don't have any frum people at all yet - they are gamboling that in 10,20,30 years TR and Jackson will be as frum as Lakewood is today and those areas will be the Jackson, TR equivalents...

You would still need to have non jewish renters and it’s a kind of gamble on will it actually become frum over time....

That’s a good idea. I’d have to find out how much rent goes for there.
What about Baltimore?

amother

Hyssop

Tue, Mar 05 2024, 7:25 am

amother OP wrote:

That’s a good idea. I’d have to find out how much rent goes for there.
What about Baltimore?

Rent is proportionally cheap and again unlikely to cover a mortgage or be a decent ROI.

Can you buy in Brooklyn and live in the bottom half/ rent out the top, is that a thing? Like in bayswater or another cheaper area.

amother

Tue, Mar 05 2024, 7:45 am

amother Hyssop wrote:

2 or 3 family homes go for a lot more so mortgage ends up being a fortune. We probably won’t qualify for a mortgage.

I don’t want to move to bayswater… wherever that is lol. Furthest I’d go is beginning of marine park

amother

Ecru

Tue, Mar 05 2024, 8:11 am

Why don't you buy in marine park now, live in it, then flip it when you can afford a bigger house?

Rental property sounds nice but if you have no experience I wouldn't do it, If thats the only money you have to play around with. A lot can go wrong, and a lot of expenses can pop up. You also have no guarantee that it will be rented consistently and your tenants will pay rent.

amother

Tue, Mar 05 2024, 8:56 am

amother Ecru wrote:

I’d do that but we can’t afford a mortgage now. We can buy there and rent it maybe… then at least if we need to put toward mortgage it’s something we can eventually move into

amother

DarkViolet

Tue, Mar 05 2024, 10:21 am

amother OP wrote:

Rn I have 200k to put down. Maybe a drop less, maaser wasn’t taken from it yet.
But scared to use all of it lol

thats a lot of money!!
I bought a house a year ago in TR
I am renting it out and just covering the mortgage

I am using dena hochman management. I think its worth it
I think the property will go up and when I need the money I will sell iyh

I would defintely buy 2 houses with that money not 1
maybe there is a better area to buy but definitely buy 2not 1

amother

Ecru

Tue, Mar 05 2024, 10:38 am

amother OP wrote:

I’d do that but we can’t afford a mortgage now. We can buy there and rent it maybe… then at least if we need to put toward mortgage it’s something we can eventually move into

If you can't afford a mortgage I would be wary of buying a house to rent out. What will you do if you don't find tenants right away? Or they pay rent late or don't pay? Or the house needs repairs? It's a big risk...you may come out ahead you may not.

amother

Hosta

Tue, Mar 05 2024, 12:06 pm

amother DarkViolet wrote:

how much was the house and down payment? Do you think the value went up since you bought?

amother

Aubergine

Tue, Mar 05 2024, 12:52 pm

amother Hyssop wrote:

Actually this is not true - the lower income cheaper areas tend to have a higher ROI, but are also higher risk beause the are lower class.

So like my cleveland example - rent in the homes that are 150 - 250k ranges from $1,500- $2,500 (can even go up $3,500 , depending on condition) a month - that is a very nice monthly ROI.

The issue is that you have lower income renters and many times they don't pay rent, cause damage, ect. Being a landlord to these kinds of renters is a headache

When you by cash you avoid many of the issues common in these kinds of investments. You can afford to leave the property vacant until the right renter comes along, or afford to charge slightly less then market value to attract frum renters to an area they wouldn't normally go to.

When you buy on the edge of frum area's over time the values go up more then adjacent areas, as the areas become frum, and it makes it easier sell once an area is frum

amother

DarkViolet

Tue, Mar 05 2024, 12:54 pm

amother Aubergine wrote:

re your last sentence- as much as its true its very hard to predict whats the edge of the frum community and will people spread out to that direction

amother

Aubergine

Tue, Mar 05 2024, 1:06 pm

amother DarkViolet wrote:

re your last sentence- as much as its true its very hard to predict whats the edge of the frum community and will people spread out to that direction

True - it is a risk.
But usually you can make educated guesses. Usually if there is a major highway the frum community doesn't go over to the other side. They tend to spread to areas that are already nicer and less "hood".

Even if you miss the ball on an area becoming frum, RE is a stable investment over time, similar to an index fund.

There is also a general consensus that if and when the interest rates drop demand will skyrocket, as all the people who have been holding off buying will jump in to the market. And if the rate doesn't go down or goes up more - the prices will also rise as the rental prices rise so that the investors can cover the increased rate.

All investment is a risk - the stock market, even in index funds is a risk. Like re the market always goes up over long periods of time, but there are always dips.

Basically the rule of rental properties is buy cash or a very small mortgage that you can afford to pay even if the renters don't pay you.