great post Daniel! As stated, there are MANY great ways to go about being a landlord!!

The main reason I have stayed away from multiple family units is that if you have a fourplex, you have 4 ovens, 4 dishwashers, 8 toilets etc, which can result in higher maintenance costs...buying a home warranty also would cost 4 times as much...but if you have an hookup on maintenance, it shouldnt be a problem. Also, in the areas I rent, you tend to get a better quality tenant in a SFR than in neighborhoods with plexes....

You can provide washer and dryer and fridge to tenants, but not epxected or required, I never have in the SFR's I rent (maybe for plexes its diferent, they might expect a fridge since its more like an apt than a house)

Check out www.realtor.com for multi-family dwellings in your area of interest...

Cheapest properties near Bay Area are in the Central Valley (Highway 99 corridor), whwre rents are high and prop prices are still low....yes people DO commute! ...But my tenants have been locals....

DaveHanson (my buddy):

All lenders treat any dwelling up to 4 units as a 'single-family residence'.

Finding properties: My strategy has been two-fold:

NEWSPAPERS: The local newspaper reminds me of going to garage sales. Have you ever known someone who goes to garage sales as a hobby? They will go to 100 garage sales and never find any good deals, but the 101st trip will score big. It's the same thing about classified ad hunting. The VAST majority of the listings: (a) is listed by a broker and thus the "value" has been tapped like a keg in an Irish pub! (b) the property has, shall we say...issues. (i.e. a piece of crap, bad location, etc. etc.) and finally (c) A FSBO: A know-it-all owner who thinks their property is worth a gazillion dollars and they want every penny, hence no broker.

Every once in a while, maybe once or twice a year, you will find a gem in the rough. Knowing that most people will run their ad starting on Sundays (the most heavily read day of the week), I would buy the paper on Fridays (the early edition) and get a jump on anyone else trying to treasure hunt. I saw an ad that seemed too good to be true. A property in a very good location, reasonably priced, etc. I called the guy that afternoon and got the particulars on the property (in this case, it was an 8-unit, two story apartment building). Everything he told me made sense and by 5:00PM that day I had an offer on his desk. He signed the next day and later told me that I must have got a good deal "because several brokers were trying to get me to back out of the contract". I closed on the property within 60 days and it has been quite profitable. As the saying goes, early bird gets the worm.

ALLIES: To this day, I still don't have my real estate agents license. Not for lack of desire, but more for lack of time. When I started out, I talked to dozens of brokers/agents. I told them of my strict criteria for purchasing a property. Most of the brokers that I spoke with already had clients who were searching for investment properties; people they had been working with much longer than me. It became very clear to me that all the listings that came across my desk had already been picked over and rejected by the more entrenched clients. I therefore had to find a hungry agent who was willing to work hard for his or her fair compensation. I NEEDED TO KNOW I WOULD BE THE FIRST ONE CALLED WHENEVER A GOOD DEAL CROSSED THEIR DESK. Fair warning: MANY MANY MANY agents are idiots. Let's face it, the barrier of entry is low enough that my 2 yr old son could get his license. ESPECIALLY on the residential side (vs. the commercial), anyone who can be sociable can succeed even if they screw up the transactional process. Choose your allies wisely.

ONE OTHER NOTE: I know we are all cheapskates....er...money conscious , but don't underestimate the value of a GOOD agent. If someone brings me a property that makes sense and has upside potential, hell yes I will pay them a commission. I lost one transaction because I thought it was too pricey (with the commission), and to this day I'm still kicking myself. What's that about your nose in spite of your face...sorry, too many cliches.

YET ANOTHER NOTE: Use to your advantage the fact that a listing broker/agent is an idiot. Several times I have been able to get a good deal on a property because the broker didn't do their homework on the value of the property as a income producing property. Don't underestimate their incompetence.

BTW, if there are any agents out there reading this forum, I'm probably not talking about you.

Daniel2218

thanks for the response daniel and suckis.

I did my research yesterday(sunday) and only found 4-5 duplexes within my budget. I also research who are renting out in atlanta ga and oh boy I am suprise, tons of them. When I narrow down the neighborhood that I want, still too many (50-80 units). From my economy 101, when the competition is intense, the market will be saturated. Do you actually check the competition before you buy?

what do you all usually put down on a house, realtor.com used 20%

Wow...I just found this thread. My wife and I are in the process of doing this. We have been doing research, studying our area, talking to people and just overall educating ourselves. As Suckkiss originally posted, this is a fantastic way to have residual income for the rest of your life, and YOU are in the driver's seat. Many people feel that investing solely in the market with stocks/mutual funds etc is the way to go, but you are at the mercy of the market's trends.

I have developed an excellent relationship with a lender. Mostly by luck, but I'll take it where I can get it. She has helped us with creative financing ideas like variable rate loans, balloon loans for properties that we want to sell in 3-5 years, 0% financing, LOC 2nd mortgages, and many other things.

Some of the most important things that I have learned (so far!) is to develop relationships with lenders/bankers, real estate agents (like Daniel said), handy people (more than one), and a CPA. Another would be to do as much research as possible not only on the property you're looking at but the process of buying, renting, maitaining, and selling of rental/investment properties.

There is so much more that I have learned but I don't want to bore you.

Ganja:

Interesting you should mention that because I've been looking at that same question. The difficulty I've seen is that most likely a condo in FL at a resort, for example, will be required to be run by a professional management company affiliated with the resort. When you factor those charges in, I have yet to find a scenario that really made sense (i.e. breakeven to positive cashflow).

I am crunching the numbers and researching a condo at Whistler, BC, as a possibility. The Canadian dollar is so weak against US currency that it may just make sense to buy a US$40K studio condo and rent it out most of the time. I'll post to the thread my findings when I have them.

Daniel2218

Havn't seen this addressed (unless I missed it), but you should consider how to title the rental property. Although you will have liability insurance, you should further limit your potential liability by owning the property in an 'S' corp., or LLC. Then if the worse happens, your other assets will be protected. And if start owning numerous propeties, you may need to consider multiple ownership entites.
Make sure you know the legal requirements in your state for rental agreements, security deposits, damage cheklists, etc. If you don't follow the law to a T, you may have to return a security deposit to a tenant who destroyed the place, or other nasty things.

ALL YOU CURRENT AND FUTURE DONALD TRUMPS:

I used a property analysis spreadsheet I found on AOL a couple years ago called APOD. It gave some common financial equations to determine values. Also, it does a very good job of explaning those equations (GRM, NOI, Cap Rates, etc). If anyone is interested in it I will email them the file. To revise it or save, you need to pay the $10 shareware, but can play with it for free. I learned a lot when I started with it.

Daniel2218

Daniel, Great Info.

Please email me the program you mentioned. Thanks in advance.

shearobbins@hotmail.com

I don't think we can get away from mgmt and assoc fees in vacation property. I like it too so I can spend my vacation there. I saw some rental property for sale in destin, fl and the agent post the rental history anywhere from 13K to +20K. still lookin....