Author Topic: Examples of rentals you own that perform well financially?  (Read 57147 times)

greaper007

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Re: Examples of rentals you own that perform well financially?
« Reply #100 on: April 09, 2014, 12:45:59 PM »
arebelspy, how do you go about finding long distance properties?    Do you just research random markets, or do you have friends that live in other places with an inside track?    I'm really interested in RE investing but I can't make it work in most of Denver on my bankroll.

Thanks

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #101 on: April 09, 2014, 05:45:13 PM »
arebelspy, how do you go about finding long distance properties?    Do you just research random markets, or do you have friends that live in other places with an inside track?    I'm really interested in RE investing but I can't make it work in most of Denver on my bankroll.

Good question.

I start by identifying potential markets based on comments from other real estate investors.

Then I start to investigate those markets (demographics, economy, landlord laws, etc.) to narrow them down.

Once I've identified a market I'm interested in I start talking with local investors.  Nothing beats boots on the ground.  I identify potential neighborhoods and start digging further.

Basically think of it like those stupid maps you see on bad 90s movies where the FBI or whatever has someone on the phone and is like "keep him talking" and they "trace" the location, and it shows a map of the US, and then it zooms into a state, then zooms into a city, then a block, and then they're like "he's at the payphone at 94th street!" - I start with the macro view, identify and zoom in all the way down to the neighborhood and street view, and definitely connect with those who know the market.

Hope that helps!
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DoubleDown

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Re: Examples of rentals you own that perform well financially?
« Reply #102 on: April 10, 2014, 10:02:51 AM »
I'm down to one rental property now (former primary residence), and it kicks ass on the 0.6% and 100% rules. Those are the rules I just made up where your monthly rent equals 0.6% of the purchase price, and total expenses are 100% of gross rents. Yessssssss!

No worries though, I'm not hanging onto it for cash flow (obviously).

greaper007

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Re: Examples of rentals you own that perform well financially?
« Reply #103 on: April 10, 2014, 10:10:10 AM »
Fantatic, thank you.    Are you willing to divulge any hot markets right now?

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #104 on: April 10, 2014, 10:29:23 AM »
I'm down to one rental property now (former primary residence), and it kicks ass on the 0.6% and 100% rules. Those are the rules I just made up where your monthly rent equals 0.6% of the purchase price, and total expenses are 100% of gross rents. Yessssssss!

No worries though, I'm not hanging onto it for cash flow (obviously).

lol.  There can be reasons to hold, even if it's not something you'd have purchased initially.
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arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #105 on: April 10, 2014, 10:30:47 AM »
Fantatic, thank you.    Are you willing to divulge any hot markets right now?

I don't investing in "hot" markets.  I plan on holding for 30+ years, so what's "hot" is less relevant to me than what seems like it will be solid.  Even then I do bend that for cash flow purposes, but I also try to have a diversity of markets and categories of rentals in my portfolio.
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golfer44

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Re: Examples of rentals you own that perform well financially?
« Reply #106 on: April 10, 2014, 10:49:26 AM »
Hey RS, what % of your tenants are sec8/vouchers, if any? Any issues?

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #107 on: April 10, 2014, 11:03:07 AM »
Hey RS, what % of your tenants are sec8/vouchers, if any? Any issues?

Typically I run 10-20% Section 8.

No issues.  Some of my best tenants.
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tryan

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Re: Examples of rentals you own that perform well financially?
« Reply #108 on: April 10, 2014, 12:31:52 PM »
Quote

one rental property now (former primary residence)


Never seen one of those cash flow .... always bought - and rehabed - for non-investment purposes.

Zamboni

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Re: Examples of rentals you own that perform well financially?
« Reply #109 on: April 10, 2014, 08:17:57 PM »
I am enjoying this thread.  Thank you for starting it!

dan@themadrealworld

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Re: Examples of rentals you own that perform well financially?
« Reply #110 on: April 19, 2014, 09:41:25 PM »
Quote
Based on the numbers I'm seeing so far, it looks like there's a definite tendency toward $30k-$70k properties. Is that because they have the strongest possibility of having outsized returns? Or because it's "easier" to do that as an individual (doesn't take as long to save and buy)? I guess what I'm asking is, are the "2% rule" returns EQUALLY as possible with a $200k property? Or are there more opportunities in the $30k-$70k range?

I purchased my first property in 2011: 6-unit property for $168k.  Rents were $3600.  Had a lot of turnover and small repairs and improvements and rent is now $4500.  I just did a cash out refinance for a new value of $300k.  So percentage of rents to price went down but I got a big chunk of cash to invest. Still over 1%

My philosophy is buy cash flowing properties and leverage as much as possible while maintaining good cash flow.

Quote
I was going to work with an experienced broker who does turnkey in Texas, but it started to smell like a bad deal all over, so I ran away from it.   (I had to pay a deposit to even get property info, (red flag)

Lot of shady characters in this industry.  Find a realtor you can trust.


fixer-upper

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Re: Examples of rentals you own that perform well financially?
« Reply #111 on: April 20, 2014, 01:39:56 AM »
Lot of shady characters in this industry.  Find a realtor you can trust.

I trusted a realtor to be greedy the other day, and it saved me at least $5k on an under-priced repo.  It's amazing how fast they'll slam the door shut to new offers once they're assured of getting both  sides  of the commission.



 






Blindsquirrel

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Re: Examples of rentals you own that perform well financially?
« Reply #112 on: April 20, 2014, 08:16:27 AM »
   Good point Fixer upper, giving the listing agent both halves of the commission can really make your offer stand out. :) I have done that a couple of times and it does seem to be true.

greaper007

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Re: Examples of rentals you own that perform well financially?
« Reply #113 on: April 20, 2014, 03:40:03 PM »
Fantatic, thank you.    Are you willing to divulge any hot markets right now?

I don't investing in "hot" markets.  I plan on holding for 30+ years, so what's "hot" is less relevant to me than what seems like it will be solid.  Even then I do bend that for cash flow purposes, but I also try to have a diversity of markets and categories of rentals in my portfolio.

Yes, I wasn't refering to a market you can flip in a year, I'm just curious where you're able to find decent places for a ~$30,000.     I don't think I've ever seen anything like that in my travels around the country and I've lived in a lot of places.

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #114 on: April 20, 2014, 07:13:17 PM »
A number of places.  Much of the South (Memphis, Atlanta, etc.), the Midwest (Indy, Chicago, Michigan), and certain parts of the Southwest (NV, AZ, TX).  Plenty of rural or suburban parts in other states as well (and certain urban parts as well, but that may be when you get into areas you may not want to invest in).

You won't find it it downtown NYC, SF, or DC.  But there's opportunity in pretty much every market.

I don't know how you don't find places, if you're looking.  My guess is you haven't been looking with a real estate investor's eye.  Give some places a fresh look, and you might be surprised, once you know what you're looking for.  :)
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dan@themadrealworld

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Re: Examples of rentals you own that perform well financially?
« Reply #115 on: April 20, 2014, 07:17:46 PM »
I have tried that method of not using a buyer's agent but it hasn't worked out yet.  It should work in theory, more money for the realtor so they should want seller to sell to you.  It hasn't worked and now I am friends with a good realtor so I will just use him and let him get the commissions.  I could become a realtor myself, but no interest.

Prices are pretty high in my area.  Money can still be made but you have to expect a lower return or you could be looking a very long time.  I looked for about 2 years, sent letters to owners, etc.  i eventually just accepted that I have to pay higher than I would like.  Still a good investment.

greaper007

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Re: Examples of rentals you own that perform well financially?
« Reply #116 on: April 21, 2014, 01:20:21 PM »
A number of places.  Much of the South (Memphis, Atlanta, etc.), the Midwest (Indy, Chicago, Michigan), and certain parts of the Southwest (NV, AZ, TX).  Plenty of rural or suburban parts in other states as well (and certain urban parts as well, but that may be when you get into areas you may not want to invest in).

You won't find it it downtown NYC, SF, or DC.  But there's opportunity in pretty much every market.

I don't know how you don't find places, if you're looking.  My guess is you haven't been looking with a real estate investor's eye.  Give some places a fresh look, and you might be surprised, once you know what you're looking for.  :)

Thanks, do you find re on the mls, or do you use guerrilla marketing?

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #117 on: April 21, 2014, 01:54:50 PM »
I use lots of methods to find real estate.  Networking is my #1 acquisition source.
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daverobev

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Re: Examples of rentals you own that perform well financially?
« Reply #118 on: April 21, 2014, 03:12:37 PM »
I use lots of methods to find real estate.  Networking is my #1 acquisition source.

Any pointers for TX? Looking for another place right now, but the ones that look ok seem to be selling too quickly. Patience, I guess!

How do you feel about having a few properties in one town vs all over - thinking of management fee discounts..?

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #119 on: April 21, 2014, 05:08:20 PM »
Any pointers for TX? Looking for another place right now, but the ones that look ok seem to be selling too quickly. Patience, I guess!

Nothing specific to Texas, just the usual stuff.  Definitely patience - a good deal is worth waiting for.

How do you feel about having a few properties in one town vs all over - thinking of management fee discounts..?

Having them together gives the big advantage of management, not necessarily a fee discount, but only needing to find one good management company, instead of multiple in different locations.  It's already a tough enough task to find a good one, now you're looking for several? 

I mean, by all means, go where the deals are.  But if you do find a great management company, and there are deals in that area, that'd definitely a plus for me.
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dan@themadrealworld

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Re: Examples of rentals you own that perform well financially?
« Reply #120 on: April 21, 2014, 05:57:07 PM »
Quote
It's already a tough enough task to find a good one, now you're looking for several? 
Lol.

I would definitely recommend keeping your properties near eachother.  If you do get to a point where you have many units, you will appreciate the short driving distance between them all.  Also would be easier to find one property manager for all units.

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #121 on: April 21, 2014, 07:42:57 PM »
If you do get to a point where you have many units, you will appreciate the short driving distance between them all.

I personally don't care so much about this.  I try not to visit my properties 20 minutes away (and I manage those!), why would I care if they're a few hour plane flight away (especially when someone else is managing them)?
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dan@themadrealworld

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Re: Examples of rentals you own that perform well financially?
« Reply #122 on: April 21, 2014, 08:57:34 PM »
Well for one, if it is closer to your other properties, you are probably familiar with the area.  Also, even with properties I don't visit much, I like knowing they are close just in case some emergency did happen.

My rental properties are all an hour away from where I live but I like them all to be close so when I take trips out I can see them all if i want.

S0VERE1GN

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Re: Examples of rentals you own that perform well financially?
« Reply #123 on: April 22, 2014, 08:58:21 AM »
  Meant to list recent deals.
purchase 25K, $180 in rehab (used fridge) rented at $700 a month we pay no utilities. Tenant has stayed 2.5 years so far.
purchase 20K, $7K in rehab  rented at $720 a month we pay no utilities.
purchase 42K, $6K in rehab  rented at $1100 a month we pay no utilities.
purchase 55K, $15K in rehab Lease option at $1200 a month we pay no utilities or taxes, buyer to close by Feb 2015, at 119K or lose 4K option fee.
I know Arebelspy will cough at my foolishness but all were cash deals, no payments on any of them.

holy shit. what's your preferred tactic for digging up leads on homes like that? walk streets, realtor contact etc.

Blindsquirrel

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Re: Examples of rentals you own that perform well financially?
« Reply #124 on: April 22, 2014, 04:41:12 PM »
     House 1- guy who works for me wanted a house, he found that one for me, it was a foreclosure that had not sold, in a long time he said he would fix everything if I let his family stay for a long time at a decent rent, the rent is actually steeply discounted for the house. They will probably stay forever.

House 2- a wholesaler I know had a contract on this house estate sale, he emailed me about it, saw it on his website, checked it out in person, bought it. Rented to a guy I have known for years and years who is a convicted felon (he had a tough time finding a nice place to rent) and he needed a house to rent in the school district for his kid.  Rent is still below market by a fair bit but having a long term, low hassle tenant is worth it to me.
 
House 3- found off the MLS foreclosure , after a woman I know looked at a bazillion houses with the thought that they would rent it from me, she flaked out but the house was underpriced by about 10 K I think even with the amount of rehab needed, repairs were mostly busted plaster, paint and a hideous amount of junk and there was a lot of it that made the house show horribly. Now it looks stunning, 1934 brick Craftsmen style and the narrow plank oak floors have a mirror finish. House is huge. Ad was on Craigslist for less than 12 hrs, phone rang off the GD hook and I had a cash in my hand and a signed lease.  I probably underpriced this one a bit at $1100 a month when I placed the ad but the tenant pays like a clock and the place is spotless, (I mean lawn is manicured, you could eat off the floors, and the inside is so well decorated it looks like a magazine ad). She loves this house and has said on many occasions that she wants to stay forever, I hope she does.

House 4- MLS foreclosure, I did not find it, tenant found it for me. The 55K was more than I wanted to spend but a tenant of mine who rented from me for 10 years in the same house got married and he and the new wife wanted another house. They looked at a bunch and they fell in love with this one. Since he bought the other house he rented for me 2x over by paying me rent for 10 years, how could I say no. He found this one and they fell in love with it, it was soo neat in layout and so huge, on 3 lots and 2600 sq Ft ft ranch. Unfortunately, tweekers had stolen almost all of the copper, the HVAC system, and a good chunk of the wiring. I hope they buy it, they are on track as it stands and the 119k sales price is a good 10-21K less than an honest appraiser would say it is worth. If not, oh well,  will rent it out or sell it to someone else, I am not going to get hurt on it. (I play the RE game first and foremost in a fashion where it is hard for me to get hurt). I had to paid 4k over the list price to get it and there were multiple cash offers on the place, I mainly did this deal because my tenants wanted it so badly. I would live in this house gladly if I did not love the house we are in. Also, jacked up the rent a hundred a mo on the tenants old house when I re rented it.

S0VERE1GN

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Re: Examples of rentals you own that perform well financially?
« Reply #125 on: April 25, 2014, 06:35:05 AM »
For those of you who have bought homes in the 30k-75k range and then rented in the 1k-1500 range:

What methods do you use to find leads on homes? preforeclosure? do you have friends that are foreclosure attorneys, pound the pavement looking for empty houses etc.

any insight would be appreciated. I want to start generating some quality leads for homes I can rehab and rent.

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #126 on: April 25, 2014, 08:44:57 AM »
For those of you who have bought homes in the 30k-75k range and then rented in the 1k-1500 range:

What methods do you use to find leads on homes? preforeclosure? do you have friends that are foreclosure attorneys, pound the pavement looking for empty houses etc.

any insight would be appreciated. I want to start generating some quality leads for homes I can rehab and rent.

http://www.mrmoneymustache.com/forum/real-estate-and-landlording/real-estate-shopping-beyond-mls/

http://www.mrmoneymustache.com/forum/real-estate-and-landlording/any-tips-for-finding-desirable-investment-properties-(aside-from-the-usual-mlsr/

http://www.mrmoneymustache.com/forum/real-estate-and-landlording/what-is-your-best-technique-for-finding-real-estate-deals/

:)
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zurich78

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Re: Examples of rentals you own that perform well financially?
« Reply #127 on: April 25, 2014, 09:08:04 AM »
I just don't understand how the renter market, in any location, is big enough to consistently rent at 2% or better.  I mean, why aren't these renters just buying?  I can understand certain situations where maybe they have income but poor credit and can't get a loan, or maybe there are renters who are only living there temporarily, but I can't imagine why any sensible person would rent a $100K property for $2K/month.

Roland of Gilead

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Re: Examples of rentals you own that perform well financially?
« Reply #128 on: April 25, 2014, 09:32:19 AM »
I just don't understand how the renter market, in any location, is big enough to consistently rent at 2% or better.  I mean, why aren't these renters just buying?  I can understand certain situations where maybe they have income but poor credit and can't get a loan, or maybe there are renters who are only living there temporarily, but I can't imagine why any sensible person would rent a $100K property for $2K/month.

Worst than that in the above example someone purchased for $20K, rehabbed for $7k and rents for $720 a month.  A $27K house (less than the price of most cars) renting for $8,640 a year.  Renter must have failed math.

zurich78

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Re: Examples of rentals you own that perform well financially?
« Reply #129 on: April 25, 2014, 09:44:27 AM »
I just don't understand how the renter market, in any location, is big enough to consistently rent at 2% or better.  I mean, why aren't these renters just buying?  I can understand certain situations where maybe they have income but poor credit and can't get a loan, or maybe there are renters who are only living there temporarily, but I can't imagine why any sensible person would rent a $100K property for $2K/month.

Worst than that in the above example someone purchased for $20K, rehabbed for $7k and rents for $720 a month.  A $27K house (less than the price of most cars) renting for $8,640 a year.  Renter must have failed math.

Yeah.  And I'm not saying it isn't feasible (and I'm in Southern California so my perspective on RE is all out of whack), I'm just trying to understand how there are enough people out there who are willing to pay 2% of the home's value each and every month in rent.

S0VERE1GN

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Re: Examples of rentals you own that perform well financially?
« Reply #130 on: April 25, 2014, 09:46:06 AM »
Indeed. I've been reading through the book list stickied on this sub, and from what I've read it seems as though a house purchased from a distressed buyer 10% below a market price is a great grab as you'll be slightly net positive on cash flow in rent.

However finding these 30k homes that turn around to rent for 1k? seems strange to me. I can understand a 30k CASH investment turning that (leverage) but I'm not seeing where these houses are in any market, at least in the US.

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #131 on: April 25, 2014, 11:45:46 AM »
Look higher in the thread.  I gave examples of multiple places in the US where it exists:
A number of places.  Much of the South (Memphis, Atlanta, etc.), the Midwest (Indy, Chicago, Michigan), and certain parts of the Southwest (NV, AZ, TX).  Plenty of rural or suburban parts in other states as well (and certain urban parts as well, but that may be when you get into areas you may not want to invest in).

You won't find it it downtown NYC, SF, or DC.  But there's opportunity in pretty much every market.

I don't know how you don't find places, if you're looking.  My guess is you haven't been looking with a real estate investor's eye.  Give some places a fresh look, and you might be surprised, once you know what you're looking for.  :)

As far as why, many of the renters can't buy.  Most people can't deal with a $1000 emergency.  You think they can come up with 30k?  Banks won't usually lend on a loan that small, and even if they would, the borrowers wouldn't qualify.

If you don't understand why they aren't buying, you may be out of touch with the bulk of American's financial situations and what the lower middle class life is like.  :)

But yes, there's millions of people willing to rent at $800-1000/mo. for a house bought and rehabbed for a total cost of 30-50k.
« Last Edit: April 25, 2014, 11:47:17 AM by arebelspy »
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Roland of Gilead

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Re: Examples of rentals you own that perform well financially?
« Reply #132 on: April 25, 2014, 11:53:41 AM »

As far as why, many of the renters can't buy.  Most people can't deal with a $1000 emergency.  You think they can come up with 30k?  Banks won't usually lend on a loan that small, and even if they would, the borrowers wouldn't qualify.

If you don't understand why they aren't buying, you may be out of touch with the bulk of American's financial situations and what the lower middle class life is like.  :)

But yes, there's millions of people willing to rent at $800-1000/mo. for a house bought and rehabbed for a total cost of 30-50k.

I can't wrap my head around how someone who can't scrape together $1000 to cover an emergency would make a good reliable tenant on a $800-$1000 a month lease.  They are just one fender bender or stubbed toe away from being in default and a lengthy 60 day eviction.

If OTOH they have good credit and can handle several $1000 in emergencies, then why would they pay $8,000 a year to stay in a $27,000 house?

Edit:  Maybe we are in section 8 territory here though?  That would make a difference in them having monthly cash flow but no accumulated assets.
« Last Edit: April 25, 2014, 11:55:23 AM by Roland of Gilead »

$200k

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Re: Examples of rentals you own that perform well financially?
« Reply #133 on: April 25, 2014, 01:11:29 PM »
Quick question to ARS or others with multiple properties (say +5).  Are you holding title to all of your properties individually (including with spouses and revocable trusts), or through an entity like an LLC? 

I would probably start thinking about limited-liability strategies if I held multiple properties.

Blindsquirrel

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Re: Examples of rentals you own that perform well financially?
« Reply #134 on: April 25, 2014, 05:02:29 PM »
 @200k  the properties are titled to an LLC

@Roland
Quote
If OTOH they have good credit and can handle several $1000 in emergencies, then why would they pay $8,000 a year to stay in a $27,000 house?
.   In this case the guy works very hard, however, he has a giant chunk of cash to pay for child support every month. He is also a convicted felon so the number of land lords willing to rent to him is greatly reduced.  The house is large, very nice, and not in a bad neighborhood at all. He is actually paying below market rent by about $180-250 a month for the house and he knows it as he looked at/tried to rent a number of places before asking me to find one for him. He has jack for credit, and has been kicked very hard by both the child support folks and the insane US justice system that incarcerates people at a rate 4X the rest of the world.  ARebelspy is right,  it is terrible just how F'D the average American is in the finance department. Shameful actually. Also, when you say to a person I will pay cash, as is and close as soon as the title work is done and show them proof of funds it goes a long way as far as getting your offer accepted. The rental market for nice single family homes is generally very strong. If you rent big ones 3-5 bedrooms, the market is shockingly strong most of the time.

fixer-upper

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Re: Examples of rentals you own that perform well financially?
« Reply #135 on: April 25, 2014, 06:52:06 PM »
Also, when you say to a person I will pay cash, as is and close as soon as the title work is done and show them proof of funds it goes a long way as far as getting your offer accepted.

+1

Cash can get you a good deal on a decent house, or a screaming deal on fixer-uppers that won't qualify for a loan.

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Re: Examples of rentals you own that perform well financially?
« Reply #136 on: April 25, 2014, 07:10:47 PM »
Quick question to ARS or others with multiple properties (say +5).  Are you holding title to all of your properties individually (including with spouses and revocable trusts), or through an entity like an LLC? 

I would probably start thinking about limited-liability strategies if I held multiple properties.

Do what makes you feel comfortable. 

Umbrella insurance makes me more comfortable than companies, but consult with a lawyer (several, actually) and insurance agent and see what fits your situation best.
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arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #137 on: April 25, 2014, 07:11:06 PM »
Also, when you say to a person I will pay cash, as is and close as soon as the title work is done and show them proof of funds it goes a long way as far as getting your offer accepted.

+1

Cash can get you a good deal on a decent house, or a screaming deal on fixer-uppers that won't qualify for a loan.

I didn't realize you were for sale.  ;)
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arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #138 on: April 25, 2014, 07:13:01 PM »

As far as why, many of the renters can't buy.  Most people can't deal with a $1000 emergency.  You think they can come up with 30k?  Banks won't usually lend on a loan that small, and even if they would, the borrowers wouldn't qualify.

If you don't understand why they aren't buying, you may be out of touch with the bulk of American's financial situations and what the lower middle class life is like.  :)

But yes, there's millions of people willing to rent at $800-1000/mo. for a house bought and rehabbed for a total cost of 30-50k.

I can't wrap my head around how someone who can't scrape together $1000 to cover an emergency would make a good reliable tenant on a $800-$1000 a month lease.  They are just one fender bender or stubbed toe away from being in default and a lengthy 60 day eviction.

If OTOH they have good credit and can handle several $1000 in emergencies, then why would they pay $8,000 a year to stay in a $27,000 house?

Edit:  Maybe we are in section 8 territory here though?  That would make a difference in them having monthly cash flow but no accumulated assets.

Because they have cash flow via a job.  Most people live paycheck to paycheck.  And they do that for decades.  They could never save up 30k, cause they'd spend it on stuff along the way.  But they can pay rent from cash flow.

But yes, it's quite true that most tenants are just a job loss away from being able to pay their rent (and most homeowners are a job loss away from not being able to pay their mortgage).  But when they prioritize rent and are making enough to pay the rent, you're okay.
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Another Reader

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Re: Examples of rentals you own that perform well financially?
« Reply #139 on: April 25, 2014, 07:34:20 PM »
And when they DON'T prioritize the rent, you have to explain it to them through the notice and eviction process.  I have one now that pays late fees every month and occasionally has gotten far enough into the process to pay attorney fees.  She's a nurse of some kind and met the "verified income of at least three times the rent" criterion.  She will be looking for a new place to live in the not too distant future....

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #140 on: April 25, 2014, 09:27:10 PM »
And when they DON'T prioritize the rent, you have to explain it to them through the notice and eviction process.  I have one now that pays late fees every month and occasionally has gotten far enough into the process to pay attorney fees.  She's a nurse of some kind and met the "verified income of at least three times the rent" criterion.  She will be looking for a new place to live in the not too distant future....

Yup.  If you have the 3x income versus rent (hopefully more), they pay fairly regularly (and if they've got a decently long history at the job, you're looking better in terms of stability).  I have plenty of tenants who make 50k/yr, rent a house for 1000-1200 that they could have bought for 60-80k within the last few years, but they couldn't qualify for a loan, nor save up enough to buy.  They can afford the rent, even though they have no savings. 
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GrayGhost

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Re: Examples of rentals you own that perform well financially?
« Reply #141 on: April 26, 2014, 01:10:23 AM »
Hi all, it's been a while! Anyway, here are some basic numbers on our properties.

~100k total cost for downpayment, closing, rehabilitation and repairs, et cetera
Rent is currently $3900 total, but it will get up to $4200 starting May 1st.

~90k total cost for downpayment, closing, rehabilitation and repairs, et cetera
Rent was $3350, we have a vacancy that brought it down to $2450, but it should be rented out within a week or so

Cash flow is pretty good, even with the vacancy. The next action point is to get a live-in handyman or something and give him free housing in exchange for a predetermined amount of work per month. What do you guys think of that?

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #142 on: April 26, 2014, 08:10:11 AM »
What do you guys think of that?

Sounds like multifamily.

Not my thing, but can definitely have its advantages.  :)
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rachael talcott

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Re: Examples of rentals you own that perform well financially?
« Reply #143 on: April 26, 2014, 12:01:28 PM »
My first deal was a short sale, listed as "prequalified" for the short sale.  Owners paid 100, and then paid for a new roof and HVAC.  It was listed for 75 and I offered 72 cash, which the owners accepted, but the bank would also need to approve.  I then waited and waited (months) and finally did some research on the bank's website.  It said that it would only consider one offer at a time and if that offer backed out, would go all the way back to the beginning and the owners would have to start the process to "prequalify" all over again if they couldn't get another offer within a few days.  So I withdrew the offer of 72 and offered 65.  The sellers don't care what the price is because they just want to walk away, and the bank took it.  It now rents for 820 to people with 800 credit scores.  It would rent for a lot more if I took renters with low credit, but I have a job and don't want to hassle with evictions.  For people who do real estate investing full time, this is a meh deal, but it's 12% return after expenses (taxes are low here and I have a high deductible on the insurance) and it would sell for about 80 now.  So I consider this a good investment for me.  The house is in my neighborhood and so I can easily manage it myself while working full time. 


dan@themadrealworld

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Re: Examples of rentals you own that perform well financially?
« Reply #144 on: April 26, 2014, 10:32:15 PM »
The next action point is to get a live-in handyman or something and give him free housing in exchange What do you guys think of that?

Sounds like a bad idea. Why lose rent on one of your units ever month? Just find a good local handyman that can handle a monthly list of projects or whatever and work out payment.  How many units are the properties?

arebelspy

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Re: Examples of rentals you own that perform well financially?
« Reply #145 on: April 26, 2014, 10:41:50 PM »
The next action point is to get a live-in handyman or something and give him free housing in exchange What do you guys think of that?

Sounds like a bad idea. Why lose rent on one of your units ever month? Just find a good local handyman that can handle a monthly list of projects or whatever and work out payment.  How many units are the properties?

Not necessarily, you have to run the numbers.  "Losing" the rent on that unit may save you money overall by getting you cheap labor.  Bakari, for example, is a live in handyman and gets reduced rent, and I think he's drastically underpaid based on the market, his landlords are getting a steal on a full time available handyman.
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clifp

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Re: Examples of rentals you own that perform well financially?
« Reply #146 on: April 27, 2014, 12:18:24 AM »
Sorry I missed this thread for long.

All these in Vegas and I used the terrific Realtor that Arebelspy suggested.

Condo 53K+3K  Rent 700-750 current value 89K
SFR 67K+3K+3K Rent 850 current value $115K
SFR 97+4K Rent 1015 current value $155K

I am in the process of selling the condo, the $195 condo fee really kills the return (it was my first property and will probably never buy another condo).

However, none of the properties are in the 1% range anymore and I'm wondering do I sell them. I had terrific appreciation in the last 2-3 years.
I have also found it very hard to find either a good property manager or good tenants.  3 evictions (including one for 4 plex I owned briefly) and the condo was on the second eviction for the same tenant before he dropped of the keys and said I'm out of here. Also when tenants have moved out they have typically inflicted 3 month of damage and only have 1 months security deposit.

I do think if you can find properties in the 1% rental range you can do well with real estate, below that I think the stock market is better and certainly less hassle.

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Re: Examples of rentals you own that perform well financially?
« Reply #147 on: April 27, 2014, 06:40:31 AM »
I do think if you can find properties in the 1% rental range you can do well with real estate, below that I think the stock market is better and certainly less hassle.

For sure on that last one I could get you $1000 a month on $155,000 in the stock market with fairly low risk.  That is only a 7.7% return. 

Blindsquirrel

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Re: Examples of rentals you own that perform well financially?
« Reply #148 on: April 27, 2014, 07:55:22 AM »
Quote
For sure on that last one I could get you $1000 a month on $155,000 in the stock market with fairly low risk.  That is only a 7.7% return.
   Stocks are zero hassle and very liquid, RE not very liquid and it can be some hassle/involvement but the level is up to you.  Good rentals for me have a P/E in the 4-5 range which I greatly prefer at present to the 15.5x mean P/E of the SP500. The beta of SFRs in most areas is probably .2-.3 or less. The cash flow from rental real estate can turn into an absolute fire hose of loot headed into your accounts every month after only a few years of taking it seriously. You also should end up with a much higher safe withdrawal rate.  Like stocks, you do not have to be a wizard to be very successful, just need to keep at it and not be a total knuckle head. Personally, I am a partial knuckle head so have ended up in a very good way.

Roland of Gilead

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Re: Examples of rentals you own that perform well financially?
« Reply #149 on: April 27, 2014, 08:01:04 AM »
Quote
For sure on that last one I could get you $1000 a month on $155,000 in the stock market with fairly low risk.  That is only a 7.7% return.
   Stocks are zero hassle and very liquid, RE not very liquid and it can be some hassle/involvement but the level is up to you.  Good rentals for me have a P/E in the 4-5 range which I greatly prefer at present to the 15.5x mean P/E of the SP500. The beta of SFRs in most areas is probably .2-.3 or less. The cash flow from rental real estate can turn into an absolute fire hose of loot headed into your accounts every month after only a few years of taking it seriously. You also should end up with a much higher safe withdrawal rate.  Like stocks, you do not have to be a wizard to be very successful, just need to keep at it and not be a total knuckle head. Personally, I am a partial knuckle head so have ended up in a very good way.

Well I would be all over real estate with a PE of 4 too!  That would be $3200/month in rent on that $155,000 house.