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Comment by mikemac | Hacker News Reader

how many units do you manage? what would you guess you spend, time wise, managing the property per month?

2 properties, currently looking for a third. Probably about 3 hours / month right now max.

Edit: It's so low because I buy properties that are in good shape. I have a full time job so I wouldn't have time to focus on doing repairs and improvements.

Any advice for someone looking to get into real estate investment?

Feel free to email me for advice

been looking into real estate investment lately, what do you consider a good roi?

Rule of thumb is that the monthly rent should be at least 1% of the purchase price.

More specific ROI calculations are good, but people typically forget a lot of expenses (repairs, vacancy, time spent managing, etc) and end up calculating an unrealistic ROI. After accounting for all that stuff, at least 8% cash-on-cash, plus more in debt repayment.

Is that a hard number to hit? It seems like it could be, without getting great deals on auctions, where it might be hard to predict necessary repairs.

First of all, I know very little about RE. However, this seems quite high, no? Is this for a property you need to do some redevelopment on yourself (i.e. put in a new kitchen and/or bathroom, and do some painting), or for something that is in an acceptable state to rent out?

It is a high number, but it's also just a rule of thumb. You can find a lot of debate about "the 1% rule" if you look.

wow... that rule of thumb makes it virtually impossible to buy-to-let in my neighbourhood. a "Cheap" 2-bed apartment is £150,000 and MAX rent for that kind of place here would peg somewhere about £600, but definitely nowhere near £1500. Even at a liquidation auction or lowballing a desperate seller, there's no way to buy anything habitable for under 60K

To be specific, it's a rule of thumb in the US. I would not be at all surprised if UK real estate works differently. But yeah, in some markets you just won't find things that reach that return. Then you'd have to decide if it's worth buying those properties, or buying in a different market, or just doing something totally different with your money (stocks, bonds, startups, whatever).

It pretty much confirms my suspicions that it's too late to get into RE (here) unless you already have some. (we almost got a place where the numbers worked very well about 8 years ago, but various delays meant we missed out and got married instead...

I do BTL in the UK. For our market, look at 1% of the mortgage. So, if you put down a 50% deposit on a £150k place, you'd want rent of £750.

Actually, it depends very much on your circumstances, attitude to risk, how much you're happy to pay in agency fees etc.

Also, in the UK, we don't tend to have 30 year mortgages, which makes predicting a stable price very tricky.

The UK also has vastly different tax rates - and a changing rental culture - which may also affect the price you want to charge.

Huh, that seems like an odd rule-of-thumb. That would guide you to put more money into deals with lower absolute returns, which would lead you to really low ROIs. eg, if you were willing to put down 66% on that property (£100k down, £50k mortgaged), then a £500 rent would be ok. Or am I reading that wrong?

I am completely ignorant about UK real estate, so I might be missing something obvious.

It's about the minimum you need in order to cover your costs & start making an ROI. Obviously if you can charge more, you'll start making more.

OK, those numbers are a little more favourable. Good to know if i'm ever in that position again.

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