I've looked into buying a rental but never taken the plunge as I'm scared of debt, bad renters, real estate crash, etc., though still interested in learning from anyone who has invested. One of my major questions are what rules to follow. I've heard the 1% rule: the rental income each month should be at least 1% of the cost of the property; even heard the 2% rule. What about screening renters, is their a hard and fast rule to look for? I've heard that renters who have car insurance are most likely to pay and pay on time--don't know the validity of that suggestion. Also, how much should one charge/pay for a property manager?
I would schedule a number of face-to-face meetings with real estate attorneys and property managers ìn or near the area you are interested in. Do some "comparison" shopping, maybe check with the BBB and the chamber of commerce, before picking your people. State and local laws, and zoning regulations, will affect what you venture into. But that's me. Undoubtedly others will say you can manage all that must be done without help. HTH. YMMV.
As far as I see it, there is a simple rule. If we do have the capacity to invest and at the same time have a return that covers it, we are good. There are people I know doing it, they buy and rent and they have a profit.
I think the investment rule in real estate is that there is no rule at all - everything depends on the market value and prevailing market prices. You can build an apartment costing 5 million (in pesos) and rent it out for 25k a month. But if the location is good, you can rent it out for 30K or if the area is not that good the rent may go down further. So I'd say the market dictates the price and your plan for investment will go awry if you base it on that percentage.
