From: "Joe Bob Hankey" 
Newsgroups: misc.invest.real-estate
Subject: Real Estate Investment question(s)
Date: 29 Jun 2004 01:06:46 EDT

I've recently begun to focus on possibly investing in real-estate;
specifically, low to moderate housing rentals.  I'm looking in high-growth
markets that have reasonable housing prices, decent schools, etc. (e.g.
North and Central Texas, West and Central Florida, some areas in Virginia).
I'll probably start in one of these regions to get my feet wet, and I'll
likely finance 80% to 90% of the property(ies) while interest rates are low.

Now for my questions:

1.  Are there current publications and/or web sites that show the average
rental rates in specific areas of the country (by county/parish/whatever)
for low to moderate single/multi-family housing units?

2.  Is there any *current* census data (after 2000) that shows current
rental occupancy rates for homes within specific areas of the country?

3.  Are foreclosures/distressed properties still a good thing to look at
when considering purchasing rental properties?

4.  As a follow up to question 3, are online foreclosure listing services as
accurate and timely as going through a local realtor to obtain pre/post
foreclosure listings?  Are there better ways to obtain listings?  Will banks
work directly with potential investors and provide listings of pre/post
foreclosures?

5.  This next question is a broad one, so I'll offer an example after I ask
it.  What is the typical threshold, in terms of percentage of the
mean-housing price of an area, before a house becomes too expensive for
renters to consider?  I realize this question depends largely upon housing
costs within the region, so I'll give a hypothetical scenario:  the average
3/2/2 house costs $155,000.00 in a certain market and has a high population
growth and relatively low unemployment.  The average apartment rents for
between $700.00 and $900.00 for one and two-bedrooms respectively.  Given
this scenario, I'd like opinions on what you believe the average rental
house price should cost, in terms of investment cost and monthly rental
fees.  If I've left out some critical factors, which I'm sure I have, feel
free to offer opinions based upon different factors that you can think of.

6.  Is it unreasonable to consider buying a slightly higher end property in
a desirable area, and to rent it with a small negative cash-flow
(e.g. -$200.00 to -$400.00 per month, taking into account maintenance and
other expenses) with the intention of selling the property several years
down the road in order to realize the profit?  Essentially, I'd be looking
at this as a savings account that, at the end of 15 years (when I'd sell
it), would be worth about five times my total cash output, even if the
property didn't appreciate.  Also, it may be likely that negative cash flow
would become positive as the property appreciated and rents incrementally
increased.  I'd like your opinion on whether you think this is this a good
or bad idea.

I realize this is a long post, but I've read a few real-estate books that
don't seem to cover some necessary details, as outlined above.  The ones
that do cover some of my questions don't seem to be current.

I'm really interested in experienced investors opionions, and I welcome any
reasonable responses, positive or negative, from anyone who has practical
experience in rental property investments.

Sincerely,

JBH