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| Anybody here have rental properties? |
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| SlammedNiss:
The wife and I have a sizable CD maturing this September, and we're considering pulling the $$ out and purchasing 1 or 2 rental properties instead. Is anybody here have rental properties? Any pros or cons you can provide? |
| mahuti:
Manage it yourself or it can be tough to make $$$ 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. |
| menace:
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! |
| Ian:
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! |
| dkersten:
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. |
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