Owning Rentals

[58-4ever]

Hey CP, we've got a bunch of big dick bandits on here with cash flowing out of their ears, so how many of you own a rental? I may need some advice. I'm looking to gain some passive income without pimping... #pimpin'ainteasy

[BWillie]

Originally Posted by ChiefsCountry

College town students or vacation rentals are your best bets. Regular rentals are the biggest pain in your ass and worthless ****s ever.

I think the opposite is true. I did air bnb for an attic loft space and it just sucks the life out of you for admin time. Now I just rent it month to month. Much better.

Have places in Olathe, Shawnee, KCK.

[Iowanian]

I don't own any rentals right now but I've been involved in a lot of them for quite a while. To make it work, you have to be a huge asshole. Don't buy sob stories and excuses and once they are late and behind, you'll rarely get back to even. If you do it, stick to higher end and stay away from govt pay.

I've seen shit that will make your head explode. Landlord stories would be an awesome YouTube/Snapchat/insta/website. While many tenants are good humans(and I've been a tenant and never been late with a payment)...many are ignorant sonnabitches.

Worst things I've witnessed:
Tentant of a friend had water shutoff due to nonpayment. By the time he had them removed, they had shit the toilet full like an ice cream cone, and had shit the bathtub full...house was so bad they had to strip it down to the studs.

Another acquaintance found that tenants had 4 pigs in an upstairs bedroom. They were probably cute as 10lb piglets....not cure at 120lbs shitting 2' up the walls.

I went to a rental where the tenant had disappeared...well, was a truck driver that was arrested and imprisoned out of state for drugs. Walked into the house and he had this real nice jack shack in the living room, mattress, porn, lube and a pile of socks.....and then there were the fish tanks with the dead snakes, birds, and the tarantula. One was empty and we assumed a snake got out...but it was winter and cold. The spider ended up being alive and we brought it back to life and tried to feed a mouse to it...but the country mouse killed and ate it.

Be ready to clean out the shit they leave behind and replace carpets. You'll never hate pets more than as a landlord.

[Mike in SW-MO]

Bought a foreclosure in 2016 from BOA that had been empty for 2 years. Spent a year putting it back together. On the second set of tenants. Did everything cash, no mortgage. As previously mentioned, insurance & taxes eat up a lot of the margin. Works out to about 5 months months of rent for costs & 7 months rent for profit. Every extra dime gets saved for future purchases or major repairs.

In process of buying second one right now. We'll see how #2 goes.

[MahiMike]

Decide up front how many you can afford to acquire. The best cash flowing properties are also the most hassle. Low rent folks are low rent people. After going through all those redneck properties I moved up to beach condos. Now I rent to Dr's and lawyers instead of people that can't pay when their car breaks down.

But for the best bang for your buck, buy trailers. Preferably in parks where you own the land. For $30-$40K you can cash flow like a mutha.

[MahiMike]

Another tip for a non-hassle approach, buy REITs. I'm putting $ into this now. 8-12% return w/no hassle.

https://fundrise.com/

You can be a part owner in multiple apartment complexes from LA to Virginia!

[MahiMike]

Originally Posted by Hog's Gone Fishin

BTW, I did a Lease/Option to buy with a married couple 8 years ago on this particular property. I paid 40K for the property and did the LO with him at 85K. At the end of 5 years his credit still sucked so he couldn't get a mortgage so we did another 5 year contract. During this time they had 3 kids , he lost his job, tried to run his own business , failed, and finally got a really good job but 8 hours away. His wife left him and he gave up on buying the property. During the last year he put a new roof 12K, new CH&A 9K , a new Hot water heater and some beautiful Kitchen cabinets from Mexico. He also redid the living room and made a beautiful vaulted ceiling with recessed lighting.

I just got the property back 2 weeks ago, I lost 3 months rent payment but the property is paid off and is now worth around 120K. The only thing it needs is new windows which I'm in the process of replacing myself.

I did several of these as well. Most properties I got back many times and the down payment is non-refundable. Make sure to get w/an attorney on this type of deal and keep the option separate from the lease.

[displacedinMN]

We have one. It is the family farm. Having to rent sucks.
And it is for rent if anyone wants to live in NW Iowa. PM me. Serious.

[Rain Man]

You guys with multiple renters are smart. I've always wanted to do that, and I think it's a great way to build wealth. I just didn't have the money or I had other priorities like building the company, and now I'm old enough that it doesn't make sense. I think if you're under 45 or so, it's a great strategy and I regret not figuring out how to do it.

I've got one rental and it's been great. It's actually in part of my house, so it requires almost no maintenance that I'm not doing anyway, and it generates great cash flow.

[58-4ever]

Originally Posted by 2bikemike

I own several properties. All are good cash flowing. I started with a 4 plex. That worked out well and we added a duplex. Over the years we added several single family homes. The thing with the multi units is even if you have a vacancy typically everything is still covered expense wise.

I only manage one property and use property managers to handle all the rest. Using a good property manager eliminates a lot of headache.

I like that real estate helps diversify our portfolio of investments

Man, that sounds very much what I'd like to do. Would you be open to chatting sometime? This sounds awesome. Where is the 4-plex?

[58-4ever]

Originally Posted by Iowanian

I don't own any rentals right now but I've been involved in a lot of them for quite a while. To make it work, you have to be a huge asshole. Don't buy sob stories and excuses and once they are late and behind, you'll rarely get back to even. If you do it, stick to higher end and stay away from govt pay.

I've seen shit that will make your head explode. Landlord stories would be an awesome YouTube/Snapchat/insta/website. While many tenants are good humans(and I've been a tenant and never been late with a payment)...many are ignorant sonnabitches.

Worst things I've witnessed:
Tentant of a friend had water shutoff due to nonpayment. By the time he had them removed, they had shit the toilet full like an ice cream cone, and had shit the bathtub full...house was so bad they had to strip it down to the studs.

Another acquaintance found that tenants had 4 pigs in an upstairs bedroom. They were probably cute as 10lb piglets....not cure at 120lbs shitting 2' up the walls.

I went to a rental where the tenant had disappeared...well, was a truck driver that was arrested and imprisoned out of state for drugs. Walked into the house and he had this real nice jack shack in the living room, mattress, porn, lube and a pile of socks.....and then there were the fish tanks with the dead snakes, birds, and the tarantula. One was empty and we assumed a snake got out...but it was winter and cold. The spider ended up being alive and we brought it back to life and tried to feed a mouse to it...but the country mouse killed and ate it.

Be ready to clean out the shit they leave behind and replace carpets. You'll never hate pets more than as a landlord.

Jesus Christ. I can be an asshole, and I'm prepared for some weird shit. the renters across the street from me basically have a halfway house going on with people climbing on the roof at times during ice storms... and this is considered a GOOD neighborhood.

[58-4ever]

Originally Posted by Rain Man

You guys with multiple renters are smart. I've always wanted to do that, and I think it's a great way to build wealth. I just didn't have the money or I had other priorities like building the company, and now I'm old enough that it doesn't make sense. I think if you're under 45 or so, it's a great strategy and I regret not figuring out how to do it.

I've got one rental and it's been great. It's actually in part of my house, so it requires almost no maintenance that I'm not doing anyway, and it generates great cash flow.

I'm 37 and I feel like I'm starting late... maybe not. I want to own at least one property by the time I'm 38, and two by 40. *outside the house I live in, which I owe a relatively small amount on based on how much I owe*

[58-4ever]

Originally Posted by displacedinMN

We have one. It is the family farm. Having to rent sucks.
And it is for rent if anyone wants to live in NW Iowa. PM me. Serious.

Serious question: Would you lease the farmland to hunt on? I would be interested if so...

[2bikemike]

Originally Posted by 58-4ever

Man, that sounds very much what I'd like to do. Would you be open to chatting sometime? This sounds awesome. Where is the 4-plex?

Sure we can chat. The 4 plex is in Olathe. I also own a single family home in Olathe. The Duplex is and 2 houses are in Calif. and 2 are in Arizona.

I was fortunate that I was able to take advantage of the downturn in the market. I picked up a couple of the properties as foreclosures and one on a short sale.

[whoaskew]

A word of advice coming from a 20 year veteran - there is no "perfect" business model when it comes to real estate investing, you truly have to pick your poison.

In my case, I prefer lower end free and clear rentals.

Mortgages suck, especially when the unit is vacant Plus, I'd much rather receive a $600 rent payment with no mortgage to pay, than to receive a $1300 rent payment with an underlying $1150 mortgage - that's complete insanity to me.

But of course, my goal was to never have to work for anyone else ever again (I left corporate America for good back in February 2005 at age 26). I had no interest in waiting until I was in my 60's or 70's before I could begin enjoying life, but everyone's situation is different, so you have to figure out what is right for you...

[Amnorix]

A former paralegal I worked with had the best damn real estate / wealth building retirement plan ever. No kids and their particular circumstances helped so it can’t easily be repeated but its such a damn good plan I want to share anyway.

Both worked full time jobs, husband was a full time firefighter for a suburb of Boston. Like many do, he could switch shifts etc and work 48 hours straight, leaving him five days “off”. His off days were spent as a contractor. He ran a contracting crew doing other folk’s work, but also his own projects discussed below.

The couple, the firefighter and my paralegal, would buy a house (or duplex or whatever) that was in rough shape. They bought it as their primary residence and moved in. HUGE advantage as they could get a 30 year mortgage with a lower interest rate (commercial priperty usually has a five year term and a higher rate). They would move in and spend the next couple years renovating and getting it into good shape, then move on to the next fixer-upper, and rent out the place they fixed up, sometimes turning what had been a large but dilapitated single family home into a place with two or more units.

Of course she was a paralegal so she understood the eviction process very well and could handle it herself. Her boss handled real estate closings and permitting issues (for the renovations) at a discounted rate.

So they improved the condition of the property, improved the value of it as a commercial prospect, and then would rent it out after moving out while paying a lower monthly amortization and interest rate for 30 years.

They built a hell of a commercial empire doing this, though they sacrificed a hell of a lot of leisure time to do it for many years before they got the whole thing to a point where they quit their “regular” jobs.

But yeah, millionaires quite a few times over now.