Hi,

I have been looking recently into buying a property for let. I have around £20,000 to invest into a property and am thinking as the dollar is so weak to the sterling that now is a good time to purchase, especially with the housing market so low.

What i have been looking at is properties in upper New York state that are valued at around $25,000. I hope to buy the property outright and fix them up on a low budget, as many of these properties need work done to them. Then rent out.

Certain properties i have found claim that i can gain $1200 rental income a month, and the areas i have chosen have at least 60% of the local population renting properties. Most of these properties are available through repossessions.

This would be my first investment and i would definately like everyones opinions.

I am hoping that within 4 years i will start making a profit and eventually sell the property at a higher price once the credit crunch is over.

I am based in Leeds, UK and will be flying out to the US in July to do some research on this.

I am looking to make further similar investments in mainland europe too, specifically looking at Budapest, Hungary.

Thanks,

Adam

I don't know that market, but the thought of getting $1200 a month for a house that you paid $25,000 for raises a little skepticism.

You should be able to find the town on HUD's site and see what they pay for Section 8 rent in that town. They make very little allowance for condition or location. It is simply so much rent for a 3 bedroom and so much for a 2 bedroom. Their rent allowance includes utilities, though. You won't include utilities if you are smart, so the rent you would get from HUD would be less than what they are showing in their rent tables.

If it is a larger town, you can look on Craigslist and see what the asking price of rent is, and what kind of house commands that sort of rent.

And finally, call a couple of different property management companies and get their opinion on rents.

Also, be aware that unless you screen very carefully, Section 8 tenants will probably tear your houses up. There are a few good Section 8 tenants but they are not in the majority.

Adam

If you're still looking to buy in the USA check out my post "The US Government will pay me $36,500 to rent out a property in the USA".

Too good an opportunity to miss in my opinion.

Regards

Paul

Hi and welcome Adam

There have been several posts like yours on this and other forums. People that have done what you are looking to do say that 50% returns were not realistic and that the best possible is circa 20%. (That’s from people that have taken on a number of money pits to find their one true gem.)

A particularly useful thread is one in the Overseas section of the Singing Pig forum titled “USA 30% gross rental yield?”.

Hi Adam,

I have only just joined the forum but I am finding quite a bit of interest in buying in the US already.

I was involved in the post on singing pig that "Soup Dragon" mentions and the returns that were mentioned were probably something to do with the areas that Ajay Ahuja was buying or advising where his clients should buy.

Did you by any chance pick North East USA, possibly New York State because of what Ajay Ahuja has suggested or was it just on research of your own?

As the guys above have said the realistic rental income on a property worth $25k is certainly not going to be $1200.

In the area I am buying prices are as follows; single unit, purchase price $36k - $40k, rehab work of between $15k & $24k, revalued after rehab $100k, rental income - $850 - $900.

Multi units such as the 3 unit I am looking at buying is $62k - $65k and will rent out at around $1500 - $1800, after rehab.

So, $25k and $1200 rental income it doesnt sound right, maybe I am wrong.

All the George (Best)

Simes