Recently, I asked those who are on my newsletter what questions they may have in regards to passive income investing. There were many responses and I thought it would be good to share some of them with you.
For the next few posts, I’ll answer the most common questions and post them here on the blog for everyone to see. Since I get these questions all the time from people, it seems as though you would also like to hear the answer.
So, thank you to all of you who responded with a question. AND, if you have a question about passive income investing, please feel free to reach out to me. You can get a hold of me here: firstname.lastname@example.org.
I hope you enjoy these reader questions!
Reader: “I share the same desire as you of quitting my job and supporting my family with passive income from rental properties. I have enjoyed your updates and it has helped me a lot. I am trying to buy my first two rental properties soon and will like to have a good first investment. The price range of which I am interested/ afford is $25,000 each. Also, I work in OH (close to Akron) and will like to know if there are available properties/ neighborhoods that I should look into as a newbie to real estate. I appreciate all the information you are sharing and is motivated by your actions.”
Where to Invest in Real Estate
Where to invest in real estate is a question I get all the time. Almost every person I talk with who is looking to get into the business of passive income with rental properties ultimately is concerned about where to start investing for their rental property business.
So, where to start investing is really a matter of numbers for me. Right now I invest in five separate areas/cities in three states because the numbers work out well. The price of the home vs. the amount of rent is what I look for. For all the areas I invest in, I use two key metrics.
- Asking price =< actual value
- Monthly rent amount >= .01 * Purchase price of the property + rehab.
Basically, I look for areas where homes that have greater appraised value than it is selling for and can rent for .01% or more of the purchase price + what it will take to fix up the property.
I explain it all out in this video I made on how to find properties to invest in.
The main thing to succeed in this business is knowledge. Knowledge about how to find properties to invest in and how to manage them once you own them, and knowledge about how to be successful in making passive income.
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Once you have found an area you would like to start investing, I suggest finding yourself a really good property manager who knows the area well. Take your time to research the area in these ways:
- Price of homes
- Amount of rent the average house would receive
- Type of tenant who would apply and how long they stay in a home on average
- Areas that have good school districts
- Areas with low crime
- Areas that have a more desirable location than the surrounding parts of the city
I personally suggest using a realtor and a property manager to find/invest in properties. I heavily lean on my PM’s to find good properties. As the Realtor finds me a property, I have my Realtor check all the above points with the property. If he gives me a good report on it, I proceed. Now, the question on where to invest in real estate can easily be answered.
I have shared many times that I already am investing in Akron OH right now. That could possibly be a good place to start looking for anyone. Not saying it is the best area but is the best area I know of for my business model right now.