When I lived there (1 hr east NE of Columbus) you could buy houses for $35k that rented all day long for ~$550/mo on section 8.
They didn't really go up in value over the past 30 years in the area I was in, but rent is 2x mortgage on single family and twice that on a 4 plex.
The largest landlord in my local assoc had 380 units, with over 100 single family units. He still worked as an exec at the power plant, he said to max out his retirement. He was in his 40's and had a couple employees to handle the eviction/rental side of it.
I still have a shack 1 hour east of Columbus in zville I've rented out for 12+ years now.
This $17k would rent for $500 easy (not bad area) with paint+carpet+drywall repair:
1103 Ohio St, Zanesville, OH 43701 - Home For Sale and Real Estate Listing - realtor.com® Not 2 blocks from my shack, mostly old people in the neighborhood.
5bdrm 2 bath $25k
1182 Wheeling Ave, Zanesville, OH 43701 - Home For Sale and Real Estate Listing - realtor.com®
There's a few guys in Zville and Cambridge that are in the 50-150 unit area and do extraordinarily well. One guy uses all his crap properties as leverage to buy the 'nice' ones that appreciate.
The low end ones DO appreciate if you time the market (Which is hard to do, but not impossible). Going back to 2003, some of my $25k houses were selling for $60k-$80k. If we ran into another bubble we could see the prices at least go back to where they once were and I could see my property values rise 40%-70% or so.
As for management fees, I figure it'll take employees to help handle them once we're around 60-75 units. Right now I PERSONALLY spend around 10 hours
a month managing our 18 units. If I spent 80hrs/mo on it personally, i'd be able to then handle nearly 150 units myself. I have no clue how it will scale but it's hard to say at this point.
My HOPE is that when we need management I can hire part time managers around the $25k-$35k/yr area on salary and for them to take on another 100 units each. It'll certainly hurt our bottom line, but so far I'm very, very efficient due to software and other modern convinces, alot of landlords don't have what I do.
For repair escrow, it's my feeling that MOST landlords don't save much for them, and that leads to severe problems (Mostly undermaintained properties leading to crappy tenants leading to high turnover which leads to low margins per property which then causes the whole thing to snowball).
FNMA's calculation is 20% of gross rents per month set aside for repairs then another 5% for vacancies. We currently set aside 15% as repair escrow and 3.8% as vacancy. Unlike virtually all landlords we know of, we go in and in many cases completely gut and renovate our rental properties. Anything we feel that has a good chance of breaking down in the next 3-4 years we replace at the time of purchase/rehab. Last year our actual cost on maintenance was around 5.8%, so for the time being we're saving back nearly triple our actual expense on repairs. This year so far, even with the terrible weather has been still around 5% of gross rents going to repairs.
Additionally we've got some other things to reduce repair costs - I spend my time finding ways/methods to find whatever we're using cheaper. Like for furnaces, I actually found the company who private labels all sorts of furnaces for local HVAC companies. I can get a high quality, 96.6% furnace with a 60kbtu output (Which is what goes in almost all our houses) for under $900 after taxes, and the other things needed to get it running. I also can get the furnace installed for around $200 with the contractors I have working for me. If I went to a normal HVAC company, it would run me nearly $2,5000 installed for the exact same furnace as a private label version. We've replaced something like 5 furnaces in the last year for a grand total of $5,500. If I was to get the exact same thing done with a outside contractor (Like almost all landlords I know do) it would have been nearly $10,000.
My next big thing is wholesale plumbing. We've switched from PVC which most are using to PEX which can be bought in obscenely high amounts with massive savings. It's already half the price of PVC with higher reliability, but we're taking it a step further and buying our fittings in thousand unit contractor packs. The cost is going to be around $2k-$3k to do, but we'll have enough plumbing supplies to rehab over 50 houses, and to ongoing maintenance on all our properties for something like 10 years. When we started out, we were paying normal retail prices by going to the local menards/HD/Lowes and buying them. By buying in bulk our supply cost will be extraordinarily less.
