Also, I'm one of those people who buy 1-5 properties from bigger investment firms. My return (with rentals) varies between 17-20%. So, no, I don't feel had.
Depends on how the speculation is defined for the investment. If the speculation is that one can buy low and sell high, then no problem. If the speculation is that one can buy low and convince others with falsehoods to buy high, then that's a problem.
I think this is plausible, since return is based on your investment. EG: You buy a $300k property, maybe have $40k in rent, $6k in maintenance costs, but only put down $30k on the property, your total investment is $36k. On rent alone you're returning $4k (spread between mortgage+maintenance and rent income.) $4k on a $36k investment is %11. But on top of that you have added ~%50 of your mortgage payments (which are covered by rent, "free" money) to your assets.
Do you believe this is rare? I don't know the real estate market well, but it seems pretty plausible to me.
First thing I'd do is look for a city where the influx of population exceeds the new home starts. If you find something like that early on, after a few years, your return will be pretty dramatic as rental prices go up, but your mortgage is based on the price at the time you bought (which may be well below the current value of the property.)
Between appreciation and the rent paying down your mortgage balance, plus possibly a return on the rent itself, a return on equity (which really is just the downpayment plus maintenance costs) could be pretty high.
It depends on the city, which is why I ask. You definitely won't get this in Detroit. In Los Angeles, out of the three people I know who own rental properties and have told me the financials, two of them have rent coming in short of the mortgage payments (by 10-15%), never mind the maintenance, and are banking on the value of the property appreciating. With something that is as dependent on sale timing as real estate (I know people who scored deals in 2009, at great expense to the sellers), that doesn't seem like a good choice to put a large percentage of your capital in.
I'm using Canadian interest rates because it helps me do gut-checks related to the current property values around me. A $300k house here is a decent house. A 5-year closed fixed mortgage at today's rates (3.24% on promo) works out to $1456/mo. From what I've heard from friends, they're renting relatively most homes around here for about that price. Looking at MLS, there are significantly nicer homes in the $300k price range, and it probably wouldn't be a huge problem to rent one of those out for $1750/mo ($300 profit/mo = $4k/yr)
While the $40k/yr rent number above does seem suspicious, the percentages otherwise work out reasonably well on the back of my envelope. Another important thing to consider is that at the end of it, even if you made $0/mo on the property, you still end up with a (hopefully) valuable piece of property to sell that had the mortgage paid off by the renters.
Rather not give away my location. Remember, these are rentals, so I'm buying and holding, not flipping. Also, interest rates allow me to leverage the fed pretty heavily to my advantage. My profit is a combination of cashflow + equity. Most gains are unrealized for now and won't be until I decide to retire (hopefully early) or do a cash-out refi.
Also, I'm one of those people who buy 1-5 properties from bigger investment firms. My return (with rentals) varies between 17-20%. So, no, I don't feel had.