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Author Topic: Anybody here have rental properties?  (Read 761 times)

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SlammedNiss

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Anybody here have rental properties?
« on: April 01, 2017, 07:55:46 pm »
The wife and I have a sizable CD maturing this September, and we're considering pulling the $$ out and purchasing 1 or 2 rental properties instead. Is anybody here have rental properties? Any pros or cons you can provide?
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mahuti

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Re: Anybody here have rental properties?
« Reply #1 on: April 01, 2017, 09:01:30 pm »
Manage it yourself or it can be tough to make $$$ after expenses. Personally I didn't do too well but my Dad does very well and my Father in law makes enough to cover mortgage and expenses and a bit left over... which is ok since he just owns the property to stay there himself.

There are a lot of potential pitfalls. Lots of potential pitfalls, but more satisfying than a CD.
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menace

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Re: Anybody here have rental properties?
« Reply #2 on: April 02, 2017, 07:44:44 am »
I have several and its true they are not without their pitfalls but I have watched a 50K nest egg mature to over 400K in equity in 4 yrs (spread out over 5 properties).  Things in the real estate biz are much different up here in Canuckistan compared to the US but some basic principles remain:

Look for good cash flow but don't let it be your only guide.  One of my houses only makes $11 after expenses LOL (but its grown more than 70K in equity since I bought it in 2014)
Buy a nice place and you will get nice people--buy a dump and you will get people that live like pigs (more work and effort)
Student rentals have good cash flow but require more work
he who puts up with the most sh$t wins!

I'm actually going out to look at another one this afternoon!
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Ian

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Re: Anybody here have rental properties?
« Reply #3 on: April 02, 2017, 09:15:58 am »
I am in the Paint business... so I know my share of property owners. The above poster is 100% right. You have to buy nice places to get nice people. However you have to make sure your mortgage isn't too high otherwise you will not make as much money.

but it is a lot of work. And if you want to make money you have to do as much work as possible. Do not get a property manager, cut the lawn yourself, make as many repairs yourself as you possibly can...and again the previous poster was right put up with the most ---steaming pile of meadow muffin--- to win.

Good luck.


Just curious but have you thought about flipping homes? I know 2 guys in their 20's that are worth close to a million dollars and they started renting... but got out of it quickly and both (two totally separate companies) got into flipping homes and have been very successful doing it. One of the guys is only 25. He plans on retiring at 35. Just crazy!
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Re: Anybody here have rental properties?
« Reply #4 on: April 02, 2017, 12:20:04 pm »
A couple things:

First, several of my friends are into rentals, and one thing they have learned over the years is that, at least in a smaller city (100k people), the lower end family properties are the most reliable for a steady flow.  The tenants are poorer and can't afford to hop around as much or be out on the street, so they are more reliably paying rent.  Middle income tenants tend to think more highly of themselves, so they complain more and have a higher tendency to miss payments, mostly because they don't think anyone would have the nerve to kick them out, but even if they do get the boot, they can afford to get another place easily, so it isn't a big deal.  I can imagine in larger cities with more widespread poverty and crime that lower end tenants would be more difficult.  Plus I imagine in the more central states that people are more respectful of what they have than in the coastal states.

Second, I read a great article about investing about a year ago.  It stated that when it boils down, there are three ways to put your money to work.  The first is investing in stocks and bonds in some form.  This is the most volatile and usually the most lucrative.  But you have to stay your course during the good and bad times, and for some that is difficult.  If you have a nest egg invested and the stock market has a downturn, you have to be able to weather it or you lose your money.  If you are living off the capital gains and dividends, you don't have a reliable source of income in the short term.  The second is real estate, which is primarily income properties.  Less risk than the stock market and more reliable income, but the best way to get a return is to manage it yourself, which is where the real work is.  Not only can it be a major undertaking for even a few small properties, the pitfalls mentioned above are there in spades.  And of course, it isn't without risk.  Finally, the third and final way to make money work for you is to start a business.  Obviously business isn't for everyone, so while this can be profitable, the level of risk is directly associated with your ability to run a business. 

When it comes down to it, there really isn't any other (legal) way to make money with money.  There are safer ways to invest in stocks and bonds, but the safer it is, the lower the return.  It is difficult these days to get a CD to even cover inflation let alone make money.  If you have any penchant for real estate, that is probably the best way you can go, and you don't even have to have a lot of cash.  You can borrow a lot in a stable market, and once you get the ball rolling, you can leverage your equity for more loans and buy more property.  As long as you can weather another 2008 crash, you will probably never completely lose your investment.

I always wanted to get into income properties, but every time I have a good opportunity I end up falling back on my family business which is steady and stable and has always had a good return.  My hat is off to anyone who has jumped in, even if just to test the waters.  I will likely get into something in the next few years, but then I have been saying that for two decades, lol. 

SlammedNiss

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Re: Anybody here have rental properties?
« Reply #5 on: April 03, 2017, 12:34:53 am »
Buy a nice place and you will get nice people--buy a dump and you will get people that live like pigs (more work and effort)
Student rentals have good cash flow but require more work
he who puts up with the most sh$t wins!

We're hoping to purchase 1 or 2 $60-80k properties. Which for around here is a modest starter home. I've learned that you don't want to price yourself out of the market, so anything above $800/mo in rent and I feel they would probably just buy their own home instead. I've already decided on a few things, such as type of home (single level) and location. Don't want to get too far south unless it's in a nicer neighborhood. This is a college town, but I think we'll try and avoid the college renters if at all possible.

...but it is a lot of work. And if you want to make money you have to do as much work as possible. Do not get a property manager, cut the lawn yourself, make as many repairs yourself as you possibly can...and again the previous poster was right put up with the most ---steaming pile of meadow muffin--- to win.

Just curious but have you thought about flipping homes? I know 2 guys in their 20's that are worth close to a million dollars and they started renting... but got out of it quickly and both (two totally separate companies) got into flipping homes and have been very successful doing it. One of the guys is only 25. He plans on retiring at 35. Just crazy!

Nope, not planning on getting a property manager. Figure with just 1 or 2 and the wife and I should be able to handle most everything. I'd love to flip homes, but it seems there's a lot more risk involved that I'm not really willing to take ATM. For now, I'd just like to get a little more positive cash flow on a monthly basis and see where things go from there.

Second, I read a great article about investing about a year ago.  It stated that when it boils down, there are three ways to put your money to work.  The first is investing in stocks and bonds in some form.  This is the most volatile and usually the most lucrative.  But you have to stay your course during the good and bad times, and for some that is difficult.  If you have a nest egg invested and the stock market has a downturn, you have to be able to weather it or you lose your money.  If you are living off the capital gains and dividends, you don't have a reliable source of income in the short term.  The second is real estate, which is primarily income properties.  Less risk than the stock market and more reliable income, but the best way to get a return is to manage it yourself, which is where the real work is.  Not only can it be a major undertaking for even a few small properties, the pitfalls mentioned above are there in spades.  And of course, it isn't without risk.  Finally, the third and final way to make money work for you is to start a business.  Obviously business isn't for everyone, so while this can be profitable, the level of risk is directly associated with your ability to run a business. 

Sounds like this "Rich Dad Poor Dad" book we had to read when we had some "friends" try and get my wife and I to join them with Amway. Something to do with 4 quadrants. Lol. 
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mahuti

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Re: Anybody here have rental properties?
« Reply #6 on: April 03, 2017, 01:46:06 am »
Quote
try and get my wife and I to join them with Amway

OT: When I had just graduated college I was talking to a guy where I worked and he asked me if I knew anything about the internet (back in like... 1997 or so) and I was trying to break into web design.... so... when he asked me to meet him over lunch to talk about (what I thought was going to be a job interview for web work) I agreed. When I had the lunch meeting, he started talking about "the internet" but it was some weird way of talking about the network of Amway crap. Man I was pissed. Hah hah. I dropped a few bucks on the table for lunch and split. What a jerk. God I hate Amway "salesmen"
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knave

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Re: Anybody here have rental properties?
« Reply #7 on: April 03, 2017, 12:00:25 pm »
Owned rental property for 12 years plus 3 years as a property manager for 36 units.

Learn the rules...do good background checks. never hesitate to give a 3 day notice for missed rent and be responsive to issues.

I had a good run. For the most part I enjoyed it but when it is bad...it can be really bad. Overall I had 2 or 3 really bad tenants during that time and the rest were fine to great.
It took me 7 years until I had to learn to do an Unlawful detainer.

Bottom line. I miss owning property but not the headaches. Good Luck!

pbj

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Re: Anybody here have rental properties?
« Reply #8 on: April 03, 2017, 12:15:15 pm »
Just make sure you're well above the HUD subsidy on whatever you're charging for rent, or there will be drama.

Rich Dad, Poor Dad is a comically bad book, it's been awhile since I read it, but wasn't it basically - somehow make a million dollars, sit on it for two years, invest in ultra risky private placement securities with interest income.  If I recall correctly, he claims he flipped some business selling nylon wallets for $2 from a kiosk at the beach for several million in the 70s.  Believe that if you like.


Nobody beats the market long term.  For every retire at 35 "house flipper" there's a thousand more that lost everything.  I'm astounded people still see that as a get rich quick method after what happened 10 years ago.  At best, look at it as a way to subsidize building equity that you can then leverage for... things.

 :cheers:




Mike A

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Re: Anybody here have rental properties?
« Reply #9 on: April 03, 2017, 12:19:55 pm »
pbj speaks the truth.

Even the "Oracle of Omaha" has been behind the market for a long time now.

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Re: Anybody here have rental properties?
« Reply #10 on: April 03, 2017, 04:07:53 pm »
I own a rental property.  Use a management company.  Home is in the $200k-$250K range with rent at a solid $1,500/month in rural Alabama.  No issues finding tenants.  This past year I took a loss but saw it all back on my taxes.  This current year I should break even or owe a bit as we just refi'd.  I'm having someone else build my savings, it's great. 

When I was in highschool my mom owned about 35 properties in town with several of those being multi-unit apartment complexes.  Worked daily doing upkeep for several years - we only hired out for the boiler at the big apartment unit.  Everything else we did ourselves.  Great training, might do that again after I retire from the Army. 

Now they just own a few homes, life got in the way and then needed to get out of the market for other priorities.  Luckily my Dad has a separate income so it wasn't an issue getting out in a hurry.

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Re: Anybody here have rental properties?
« Reply #11 on: April 03, 2017, 08:30:52 pm »
Nobody beats the market long term.
Words to live by.  There is no reliable get rich quick method, and I'm not suggesting there is.  What I'm saying is there are really only three ways to invest money and make a return greater than inflation.  Stocks/Bonds, Real Estate, and Business.  And a GOOD investment would yield 10% annually over time.  If you can find something that yields better than that over a long period of time, jump all over it.  Or perhaps the better advice would be to run, because like PBJ said, nobody beats the market long term.  If there are legal means to infallibly make better than 10% annually over time, it's the billionaires that know about it and they aren't talking. 

If you are going to go the income property route, don't jump in based on advice on an arcade forum (not that there isn't some solid advice here).  Just about every city has some kind of real estate investor's group.  Join it.  Network.  Learn.  Pay more attention to what challenges others have faced than to what successes they have had, because chances are they are exaggerating their successes (or simply not sharing them).  Then use what you learn to make your first investment.  Some day you will know enough to spot the investments that can really pay off, and then you can leverage what you have to jump on it.  That is, if you still have a taste for it.

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Re: Anybody here have rental properties?
« Reply #12 on: April 07, 2017, 10:27:16 pm »

I have one. Rented it out until recently. In Australia, there is a quirky negative gearing 'loophole', whereby you can claim not just all regular expenses, but if you are LOSING money on it, you can claim the cost of the loan as well. Therefore, if you get an interest only loan, and put just enough deposit on it that you are only losing a small amount of money, you get quite a bit back on tax. The big reason to do it though is to get your income down a notch on the tax bracket so you pay less tax. Ive NEVER earnt enough to BE in that tax bracket anyway! I kinda did it just to say I've done it. Now the banks are cracking down on investment loans because the market is heating up too much (it makes me cry when I see the prices of property in the US- you could buy a veritable MANSION staeside for the price of a 2 bedroom apartment here!). And my tenants moved out, and I figured I might as well make it an honest enterprise, get a 'real' mortgage and move in.

This doesn't help you any, but just thought I'd mention it in passing ;D


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Re: Anybody here have rental properties?
« Reply #13 on: April 18, 2017, 12:48:17 pm »
TL;DR
Did anyone mention insurance? I would imagine you need a whole different type of insurance.
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menace

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Re: Anybody here have rental properties?
« Reply #14 on: April 19, 2017, 07:20:40 pm »
Re: insurance--as long as you disclose what you are doing then its not much different.  The exception being student rentals--they charge a premium for those. 
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Re: Anybody here have rental properties?
« Reply #15 on: April 23, 2017, 10:13:09 am »
I have been considering it for a while but the property is just too damn high here.  For $80k you couldn't buy a place to park an RV.  Decent 2 unit split level house here would be $400k and they don't turn over very often.  Rent is super high, too, much higher than mortgages.  The rental market is very strong if you can get ownership but getting into the ownership is rough.  Very rough.




  
 

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