If you have come this far in peace… then on to the investor
# Entrepreneur of the Week Amnon Bar
# Post 3
Purchase of a house for rent when the rental is managed through a management company. Called Buy & Hold
2. Execution of a flip, ie the purchase of a house intended for renovation at a price below the market price, its renovation and sale at a price higher than the costs of both purchase and renovation. This is a strategy that many Israelis follow, but since a renovation can take up to three months, it should be noted that this strategy is good for a market where prices are rising for at least three months ahead.
Purchase on paper of a house that has not been published for sale on-line and its sale to another investor (called Wholeselling)
4. Joining a purchasing group in Israel that intends to purchase a commercial property in the United States and renting it out.
I work with the first strategy where after buying the house and renting it out there is almost no need to do anything because the management company does everything (maybe except for property tax payments and two years insurance). As I wrote earlier I do not recommend the fourth strategy, both because I do not want partners in my property and also because I trust only myself as I have already mentioned, and the understander will understand.
I invest in individual houses called Single Family Home. These are houses in good neighborhoods that include 3 or 4 bedrooms, a living room, at least two toilets, a garage for two cars and a large backyard / garden. An important consideration is the relationship between the price of the house and the potential rent. A ratio of 1% is the challenge although at today's house prices one can only approach such a destination in less established neighborhoods where I avoid investing. It should be noted that as a result of the corona, the demand in the United States for single-family homes has increased due to the desire for social distance and the fear of families living in condominiums with shared elevators. Such a detached house is what is called the American Dream. A slightly more sophisticated strategy in this area is called BRRR which means: Buy, Rent, Refinance, Repeat. The issue of funding, and refinancing will be reviewed later.
To be a little more practical then I will show pictures and data of one of my houses, so that it will be understood what it is actually about. In the photos below a house in Oklahoma that I purchased in the spring of 2021 for $ 168,000 (today after a year, its market price is about $ 205,000) and it was rented within two weeks for $ 1500. Total expenses per month (property tax, insurance, management company, HOA, repairs) are about $ 500, ie a net return of 7% without leverage. If leverage is made, that is, we will take out a loan to finance about 70% of the purchase price, then the yield will increase to around 9%.
The following pictures show the house. Due to the limitations of the post I can not describe each image individually. What you see is:
Picture from the front
Living room (living room)
The picture of the kitchen
Picture of a master bathroom and closet
One of the bedrooms
Garage for two cars
The yard is backyard
Responses