Our very own Frank Cava was recently featured on the Passive Real Estate Investing Podcast where he discussed the Richmond market in full and the incredible opportunities available to investors right now.
Here are a few takeaway from Frank’s chat with Marco Santarelli:
1. Richmond’s diverse market is the number one reason to invest in the city.
You can find properties for less than 100k in thriving neighborhoods while also finding properties in the $3-$4 million range. There’s huge potential for Section 8 housing as well. The city has a thriving job market with a medium income at or above national average, but there is also a large sector of working class people who rent from us.
2. Invest in properties that are in the path to progress.
Our bread and butter is the 3 bedroom, one bath house that rents around $1,300/month. We pick neighborhoods where people want to go and more importantly, want to stay. (We retain about 90% of our renters). Our renters are working class folks who qualified for a voucher with section 8 housing.
3. Section 8 housing can be a great investment opportunity if you’re willing to do it the right way.
A lot of people either dislike section 8 housing, or they like it. In our case, we’ve found it to be a great investment opportunity and a way to provide good housing to people who want to take that next step. We have a good relationship with the inspectors and make sure we renovate all of our properties to a certain standard. We like to create a sense of pride in rentorship for our renters; a place they genuinely want to take care of.
When working in section 8 housing, you will occasionally get bad tenants or fail an inspection. However, because we have trained our team to know how to communicate effectively in this line of work and prepare for the types of issues we might run into, we’re able to get the right people into the door and identify issues early on. You have to remember, Section 8 housing is a people business.
4. Aim for a 0.7% rent-to-price ratio for favorable cash-on-cash returns.
A lot of investors shoot for a 1% rent-to-price ratio. You won’t find that in every market because markets change and fluctuate. For example, you could have a $140,000 or $150,000 property and rent it for $1,300 or $1,400/month. That isn’t a 1% ratio, but as long as it’s over 0.7%, you’re going to have favorable cash-on-cash returns. You may have strong appreciation over years 3, 4, 5 which will far make up for the cash flow you might get with a better rent-to-value ratio.
Hear Frank and Marco’s full conversation at https://www.passiverealestateinvesting.com/market-spotlight-richmond-virginia/. Reach out if you’re interested in investing with us or in the Richmond, Va market.