Anyone Have Rental Properties?

[krazykats]

Yea I got all that, plus I way over remodeled it because I live here. Most of the stuff doesn't belong in this house because of the price range which is also why my wife prefers to sell because she can stand thinking someone would tear my stuff up and me not flip on tenants.

It appraises for 117 and I owe 84K on it......but as mentioned Im like several that are interested in renting in that I don't care as much today as long as when tenants move out I made enough to cover most fixing up costs. It's long term that I'm after so when I'm 55 if I had 4-5 houses paid off collecting close to 900-1000 a month rent it's the same as a 401K essentially just without my base value going down.

 

[buckethead1978]

https://louisville.craigslist.org/search/apa

Here is the link I looked at, looks spot on to me. What am I missing?

Your purchase price is all wrong. Pony up a subscription to the PVA and see what people are purchasing these homes for.

 

[krazykats]

Ah, gotcha. I was thinking listed value regardless of purchase price that's what I've always been told 750 a month per 100K in value.

 

[blueboy08]

If you are only getting $750 for a $100k house, you are a terrible investor.

 

[krazykats]

If you are only getting $750 for a $100k house, you are a terrible investor.

Really? How so? I am saying value not debt owed. Considering $750 a month comes to 9K a year that is a 9% ROI each year. Please explain how that is bad?

 

[Get Bucket$]

Really? How so? I am saying value not debt owed. Considering $750 a month comes to 9K a year that is a 9% ROI each year. Please explain how that is bad?

Gross rents doesn't equate to return on investment. You have expenses.

 

[krazykats]

I get that, takes a lot of expenses to overcome a gross 9% ROI though!

 

[Get Bucket$]

I get that, takes a lot of expenses to overcome a gross 9% ROI though!

Not really. Property taxes, insurance, repairs and maintenance etc.

 

[krazykats]

Thanks, I got all that. Even with that your talking maybe 4K, if your smart and charge a month deposit, your still on top 5750 a year. 5 properties on hand come retirement and you got an income above the state avg with a nest egg that isn't disappearing as you draw nor is it affected by the stock market.

Add any other retirement income and your set if you lower your expenses like your supposed to.

Long term planning is the goal, not just living off this money today like some do. Nothing wrong with either strategy.

 

[blueboy08]

Expenses are 50% of your gross, minimum. If they aren't that high, you aren't properly escrowing for repairs, taxes, sufficient insurance, etc.

So, that means your ROI is now like 5%. Factor in the pain of management, and you are at like 4%.

Congratulations, you're keeping up with inflation.

Meanwhile that 401k you are trying to replace should be earning that 9% you were shooting for before you decided to set up a huge pain in the ass investment.

As an asset class, the risk associate with real estate dictates very high returns should be required. 20% return on equity is reasonable.

Then, you are talking about doing this with your property unleveraged? So can have $100k of your worth tied up in real property? Read a book or something.

Don't listen to me though, I only do this for a living.

 

[AlbanyWildCat]

Expenses are 50% of your gross, minimum. If they aren't that high, you aren't properly escrowing for repairs, taxes, sufficient insurance, etc.

So, that means your ROI is now like 5%. Factor in the pain of management, and you are at like 4%.

Congratulations, you're keeping up with inflation.

Meanwhile that 401k you are trying to replace should be earning that 9% you were shooting for before you decided to set up a huge pain in the ass investment.

As an asset class, the risk associate with real estate dictates very high returns should be required. 20% return on equity is reasonable.

Then, you are talking about doing this with your property unleveraged? So can have $100k of your worth tied up in real property? Read a book or something.

Don't listen to me though, I only do this for a living.

This is the biggest POS I have read on here in a while...you can talk about ideals all you want, but that is not how real life works.

Having an asset class (rentals) during the market crash of 07/08 was an ideal hedge....not many making that 9% you are tlaking about during that time frame. Yet rents have only been exploding since then.

Financial advisors are fcuking idiots...

 

[krazykats]

i believe they are trying to troll me bud, I would t sweat it.

 

[AlbanyWildCat]

i believe they are trying to troll me bud, I would t sweat it.

The guys above do make sense, but their idealism somtimes clouds their reasoning. Trolling is the Paddock way.

 

[Get Bucket$]

This is the biggest POS I have read on here in a while...you can talk about ideals all you want, but that is not how real life works.

Having an asset class (rentals) during the market crash of 07/08 was an ideal hedge....not many making that 9% you are tlaking about during that time frame. Yet rents have only been exploding since then.

Financial advisors are fcuking idiots...

Really? I agree with him aside from some small discrepancies. Your counterpoint of picking one downturn in the market is comical at best.

 

[UKRob 73]

He is definitely correct about assuming that 50% of your gross rent goes toward expenses. People find that hard to believe, but insurance, taxes, repairs and vacancy add up.

 

[krazykats]

That part I get and agree with.

 

[blueboy08]

The guys above do make sense, but their idealism somtimes clouds their reasoning. Trolling is the Paddock way.

Idealism? You are an idiot.

Krazykats deal is a bad one. But hey, go ahead and do the crappy deal, that way you can tell your buddies you are getting into real estate development.

 

[PTI (pti)]

this thread has been very entertaining. if nothing else, you can ABSOLUTELY tell who is experienced and knowledgeable vs those of you who dont have a gd clue.

(krazykats = the latter, not suprisingly)

 

[80 Proof]

9% gross is a terrible deal for an investment property

When I'm looking at something, if it doesn't pro forma at a minimum 14% net (which includes maintenance budget) then I move on. My two most recent purchases pro forma'ed net at 18% for an 11-plex and 26% for a 5-plex.

 

[krazykats]

Not doing anything to brag. I'm not looking for an investment rental, I'm looking to rent out my current house when I move. See how that goes and then possibly look to dive into rentals.

 

[B.B.d.K.]

Based on your posts in this thread, I'd wade in w/ floaties if I were you, bud. I need you to stay in good shape so I can GAMBOL

 

[krazykats]

Don't worry when I make decisions I will have BBdK gambol at the top of my "make sure everything else is sustainable" list.

 

[anthonys735]

I have 2. 1 was a former house that I had for year and didn't want to sell when we got married so I rented. Mainly because I had no equity, the market was down and taxes would've cost me more than just putting someone in it. Also, the agent loves us so we got a 5% management fee rather than 10%. So we knowingly take a shot on that. The other is a condo we bought from family to help them out. It's been sitting empty for about 6 months and I can't find anyone who wants to manage it or get it rented. We break close to evenish on the one property, which is fine. On the other we haven't made a penny.

Unless you're going all in, and by all in I mean actually learning the business by working in it first or getting educated in some manner, I would highly suggest against it. It's like anything else. Unless you hit the lottery there's no get rich quick formula. Rental biz is hard ass, annoying, sometimes soul crushing, work. Do you have the heart to properly evict a family?

If you really think it's your calling I'd spend some time in the industry in some capacity. Me, I'd hate dealing with crazy renter phone calls at all hours. Eff that noise.

Also, MAX OUT YOUR 401K. Don't listen to that idiot who took a 3 year span of market and compared it. For the normal person maxing out your 401k is light years before jumping into real estate investing. Throw some money in a REIT if you're feeling that froggy.

 

[B.B.d.K.]

I thought about slangin houses for a little bit

 

[GrandePdre]

I thought about slangin houses for a little bit

Good stuff right there!