1. Avoid properties with a walkscore of less than 50 (please refer to http://www.walkscore.com):
Walkscore is simply a gauge of how urban your neighborhood is and the more metro you are the better, per this website. That said, if you look at scores 50+ on Walkscore, ie…NYC, Hoboken, NJ, Miami, FL, Los Angeles, CA, etc… you will easily exceed everything you state below and price yourself out if you are looking for cheap properties.. These are actual urban cities with huge demand where prices easily eclipse 200k. Domestic investors like buying in these areas and are content with 5-6% returns. Prices too high, rents not enough to justify most people on this forum's interest in cheap properties / high returns. If you look for future upside, then good. Not a good gauge though for foreign investors especially on this forum who look for cheap properties. In my opinion, if I used Walkscore, I would gauge a higher score on my future upside and speculation. Cash flow will be minimal in 50+ scoring markets.
Stay clear of properties in areas with more than twice the national average rate of crime
Ok, I agree. Never been a fan of war zones. Problem is, most metro cities rate twice as high as the national average. Not a good gauge if you ask me.
Only buy properties less than 30 years old
Where are you buying? Florida? Vegas? Arizona? Yes, definately possible.
Avoid properties with HOA like the plague. Or pay a maximum of 5% of the monthly rental value for HOA dues
So if your condo rents for $1,000, according to your theory you would pay no more then $50 per month? I have never ever heard of a good condo complex that is stable charging this low. In fact, this would raise a huge red flag. Healthy HOA's would charge about $200 to $300 per month in healthy neighborhoods with rental rates around $1,000. You have to account for their reserves to fix things, insurance, common areas, landscaping.. I mean if you are paying this, clearly you don't want the responsibility of taking care of these chores yourself. That's why you pay an HOA. I do not agree with your 5% theory. I'd say if you aren't paying about 20% of your monthly rental value to HOA dues, the HOA is either not healthy or could be problematic in the future.
Monthly rental value must be at least 2% of the purchase price (eg $40,000 purchase price with an $800 monthly rental value)
Investors used this theory during the peak and it still didn't work.
Don’t buy anything with more than 2.5% annual property taxes of the purchase price
What Alex said.
Ouch!
