I thought I was doing good with my rental...?

[MarcusCorvus]

I have a rental valued at 600k. I bought it for 525k 5 years ago.
I put down 200k cash. My remaining mortgage is 220k
My current mortgage is 2k @4% PITI
Current rent is 4k/month net that includes a huge buffer for repairs non occupancy etc of around $500/month

After reading around I feel like something is missing?
Yes, it's great I can live off of 2k a month and one day pay it off and have 4k in my pocket....or do I sell it for a better investment, and if so what suggestions?

Thanks
Marcus

[YttriumNitrate]

You can generally get a better return with five 100k properties than one 500k property, but it's also more work.

If things are going well with the tenants, and you haven't had many issues with the property, I'd probably just keep things the way they are.

[Papa bear]

Write up all your gross numbers on this place.  Net numbers don’t help us, since you may have different assumptions than the rest of us.

At first glance, if you net 4k, your PITI is 2k, and you have a 500$ allowance, your gross rent is 6500/month? 

Or if, when reading more, it says you are getting 2k /month. So 4k isn’t your net? 

We need clarification. 


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[clarkfan1979]

Real estate had a major boom during the last 5 years. Appreciation of 525K to 600K (14.3%) over the past 5 years is kind of on the lower end. I'm ok with lower cash flow as long as you get the appreciation. You seem to be on the lower end for cash flow and appreciation. It's a good start, but there is room for improvement.

I go against the grain a little on this forum. I put a premium on location. As a result, I get slightly lower cash flow, but it gets counter balanced with slightly higher appreciation.

Rental #1 (Fort Collins, CO)
Purchase price of 182K + 10K of repairs in 2007
Current rent of $2,500/month
Appreciation since 2015 of 275K to 390K (41.8%)

Rental #2 (Fort Myers, FL)
Purchase price of 95K + 16K of repairs in 2012
Current rent of $1850/month
Appreciation since 2015 of 170K to 250K (47.1%)

Rental #3 (Koloa, HI)
Purchase price of 603K + 57K of repairs in June 2018
Current rent of $4,500/month
Appreciation since June 2018 660K to 815K (23.5%)

I did buy foreclosures and fixed them up, so my appreciation might be a little higher than normal

[MarcusCorvus]

@Papa bear

Some of this ties into what @clarkfan1979 had stated.  I'm not sure the best place to find out the price of my home. Some online sites show it was as high as 645k a few months ago.  If it's one thing that I'm good at it's home pricing where I live as I'm always looking at property/land and 645k does sound about right @28% appreciation.

So my gross numbers are and some corrections:
I have a rental valued at 600-645k. I bought it for 525k 5 years ago.
I put down 200k. My remaining mortgage is 220k
My current mortgage is 2k @4% PITI
Current rent is 4500k/month that doesn't include any repairs, non occupancy etc.
So, it would be 4500-2000 for PITI.

Thanks for any guidance!

[clarkfan1979]

If you are good at estimating the current price, ignore the websites and focus on the comps.

For example, for rental #3, I had my real estate agent do a comparative market analysis in June 2019. She said if I listed for 799K, it would sell in a week for asking. I think zillow had it priced around 670K at the time.

[Tyler durden]

If I did my math right you are getting a 13% rate of return on your invested cash. I dabble in real estate compared to some around here but I would call that a win all day long.