Find Me A Rental Property

Try Vegas, Miami or Phoenix. Or wait.

As front_porch in her book said someone told her: "If I knew of any, why would I tell you? I'd buy it myself."

Try Phoenix. The lowest cap rate you'll stumble across will be 6%, if you even remotely try you'll find 8%, and if you try hard you'll find 10%. The numbers in NYC are in the 1.5% to 3% range. The only way you go with the latter, IMO, is if you ascribe to the greater fool theory. However, I have a hard time seeing how even a greater fool proponent could make a case that you'll see capital appreciation that is more than 5% a year higher in NYC.

NWT, I heart you.

needsadvice,
I'm on the same mission as you are.
1-bedrooms/studios in new waterfront developments in Williamsurg seem to fall into this category.
I'm also considering new condos in dowmtown Brooklyn.
Maintenance costs and tax abatement play major role in the calculations.
I'm curios what rate of return you're targeting.

Nada:

what return are you looking for, and what type of property

needsadvice, give me a call. I'd be happy to help you.

Scott K
Bond New York

Hmm, NYC will take too much of your money in taxes. Forget it.

@SCOTT; So, what do you think? NYC or Brooklyn? Compare and contrast, double space your answer.

Anybody else on the "which borough" answer?

I think I should have said Manhattan single-unit residentials, rb, not all of NYC. I'm not really looking at anything in NYC. I'd personally want a cap rate of around 10% to tie up my money. What cap rates do you have (at today's prices, not what you paid) on your properties?

Inonada

In Manhattan, Queens and Brooklyn, probably 4-6% based on current rents and sales
prices, with maybe 1 or 2 now breaching 6% as they are currently being rented.

I agree with you on rate of return. Real estate ownership generates a lot of expenses,
and also takes time. I would add 3-4% over any alternative investment for management time.

I would closely examine many REITS. For different reasons, some stand to generate above
average returns in the near future and dont involve a lot of management time.

Thanks, rb. What are your favorite REITs?

I agree with you on management time. Unfortunately (well, fortunately), my hourly rate is too damn high to make my managing of anything worthwhile. I'm considering partnering with a friend to do something in Phoenix where I put up most of the capital, he puts up most of the management in conjunction with a property manager. Still in the exploratory phases, but distressed prices seem depressed enough to perhaps make it worthwhile at around a 10% cap rate juiced with a dose of leverage. Thoughts? Have you considered anything outside NYC?

inonada:

1. I dont invest in REITs because I'm not liquid enough
2. and also to avoid owning investments vulnerable to same adverse market trends
3. I would be very chary of Phoenix
4. aside from the fact that it's the kipnapping capital of US b/c of proximity to Mexico
5. it currently has massive overbuild, and too much room for expansion
6. longer term it is extremely vulnerable to adverse trends in water and energy
7. many oil professionals beliveve mid-term price will reach or exceed $150-$200/barrel
8. if that happens southwest furnace cities like Phoenix will become toast
9. frankly, there aren't many places in US that are currently safe to invest in
10. between domestic and world conditions most parts of the country now face serious problems
11. that said, I would follow Willie Sutton's advise and go where the money is
12. shale oil country looks like it will boom for years
13. and some of the plains states are now selling their freezing climate to computer data centers
14. look for geographic areas and cities which will benefit from emerging tehnological change

I am now renting to an auto dealership - great return.

ph41, does your coop allow parking on your terrace?

Alan - another stupid, though somewhat funny post - sort of what we're getting used to seeing from you.

somewhat? I'll have to try harder. [You knew I'd say that.]

So your commercial property is in the boroughs, the burbs, or another area altogether? My understanding about hard-hit sunbelt areas is that while residential offers good cap rates at the moment, commercial is just a bottomless pit on both sides of the equation (overall; I'm sure there are favorable situations to be found).

I'll have to try harder for epic fail, that is, of course. But I am curious to hear about where your commercial property is and why an auto dealership yields a great return.

The property is in New Jersey, and the dealership yields a great return because the lease terms were calculated that way, and the dealership is a very profitable one. it was win/win for both parties.

Though rental properties in strip malls in California are not doing well at all.

Your NJ prop sounds good!

And yes, the four states that were hardest hit by the residential bubble-burst (CA, NV, AZ, FL) are the ones where strip-malls and the like are a big mess ... possibly because at the end of the day those local economies were basically all about retail spending of cheaply borrowed money, with little else (even considering entertainment in CA and gaming in NV).

Northern NJ has a very broad economic base, so totally different.

"1. I dont invest in REITs because I'm not liquid enough "

What the f*** does that even mean? You can buy a single share of most REITs for under $50. Buying REIT shares is FAR easier than buying property - even property in rural North Dakota!

If you have no experience, why don't you look for an established company looking for private equity investors, rather than doing it all yourself?

MAV:

There are tremendous risks doing business with private equity investors,
such a Bernie Madoff, Alan Stanford and even "legitimate" hard money
lenders, many of which have gone bankrupt over the years.

And ir probably takes more and more difficult due diligence than that
involved in most simple RE purchases/

Jason:

Unless I get a really spectacular RE deal, at thus time I would
rather pay down debt than invest in more RE

so now i am in a private equity fund, (fairly big bucks) which is strictly commercial. They haven't done any deals 2008. 2009. just started some things 2010. Bupkis returns so far, but invested for the long haul. Could be a very long haul. Felt we were too heavy in the stock market.

And yes Alan, also invested in a car dealership (new point) in Colorado (my husband loves to ski).

"new point" means that a franchise auto dealer did not exist there before

What cap rates are the dealerships at, ph41?

Actually, commercial rental is a pretty good idea. I've done that in the past, and the cap rate of 6-7% is pretty good.

The tenants tend to be stable (office, not retail), stay forever, don't mess up the place, generally don't need much in the way of kitchen or bath, and they like to rent for tax reasons.

Good idea!

I'll check that out.

Inonada, just checked. 9.5

wow.

no only do you live in a penthouse but you are an investment genius.

i should have known.

Thanks, ph41.

Is that at today's prices, or the price you paid?

MAV:

There are tremendous risks doing business with private equity investors,
such a Bernie Madoff, Alan Stanford and even "legitimate" hard money
lenders, many of which have gone bankrupt over the years.

And ir probably takes more and more difficult due diligence than that
involved in most simple RE purchases

_____

I am talking about finding a person or company you know and trust (if you do) and backing a small investment 50-50 (or similar) so you can watch from the sidelines but get some sort of experience just by looking at monthly or quarterly reports...