Own a residential rental?

[sv2007]

So I read a lot of posts on getting into rental/landlording here; maybe the folks who's actually done it before can post their experiences for the benefit of those looking to get involved.

How did you first get involved?
How many did you end up?
Rental locations?
Price/tenant types?
Like landlording?

[MooseBucks]

I'm pretty sure within the past 2 months there were multiple threads on this.

[feh]

The poll should have a "never have, not interested" option.

[TexasHusker]

My dad has Alzheimer's and we originally got into landlording by accident by buying a house near our house intended for him. Upper middle class neighborhood but a home kind of on the fringe of the neighborhood.

Long story short dad never moved in. I bought it for $150K in 05 (overpaid) and rented it for 11 years for an average rent of $1450 per month. I think I had 4 months of vacancy over 11 years.

Property taxes and insurance ran around $4500 a year, and I probably spent $8-9K in R&M over that time.

Here is the real beauty: I financed the house with $30K down. I had monthly positive cash flow of several $ hundred for 11 years, and then I sold it for $170K in 2016.

I figured my total return on that $30K investment to be around 184 percent in 11 years. I started clueing in on the magic of real estate in around 2006 and begin buying more.

I used the combined equity of several rentals to invest in a franchise, which now produces around $130K annual but I am hopeful that this year it will do more like $150.

I eventually converted from residential rentals to vacation rentals for several reasons. I then ended up launching a vacation management company (www.CabinsNearGatlinburg.com) to manage my cabins and other peoples'.

I am now fully self employed/semi retired with a yearly income of roughly $275-300. It all started from that first $30K investment. Amazing really.

[97guns]

I own 5 single families now, I have owned a triplex but it didn't work out. I picked them up in 2009 when interest rates started falling and i needed a better return on my money. Now 7 years later I have recovered my entire investment through rents and now all the equity and future rents are all gravy, free money.

It's the best move of my life that has turned my net worth of less than $300k into 1.5mil in the 7 years, the $280k investment generates around $68k a year, more than I've ever made punching a clock

[james.hendrickson]

Just wanted to weigh in on this debate.

Owning real estate is a terrific way to build wealth. Why? Several reasons.

First, typically real estate improves your net worth in three ways.

1. Income in the form of rents.
2. Capital gains - increases in the value of your property
3. Tax benefits. You are typically able to claim partial self-employment and you can take depreciation on the properties to offset your rental income.

Second, the more you own, the more flexibility you have. For example, if you have equity in your real estate, you can always borrow against it to exploit investing opportunities.

Third, real estate is typically not subject to technological change risk. Compare owning rental property to being a supplier for iPhone parts. If the model of iPhone you are selling parts for goes out of date, then the demand for your business will decline. This is less the case for real estate. People always need housing.

Real estate isn't a panacea. To be successful at it, you'll need to be smart about selecting the right property, negotiating, getting rental agreements set up properly, doing accounting, executing good customer service, managing your taxes and cash flow.

Real estate is also subject to political risk. Well-meaning politicians often seek to impose caps on rents to make housing affordable, which typically results in disinvestment in real estate markets which serve the poor.

Finally, don't get property in a bad part of town. Low SES (Socio-Socioeconomic Status) neighborhoods typically have more vermin (roaches, rats, etc.), less creditworthy tenants and more problems with repairs. Stay away from bad neighborhoods. It's just not worth the hassle.

[james.hendrickson]

I own 5 single families now, I have owned a triplex but it didn't work out. I picked them up in 2009 when interest rates started falling and i needed a better return on my money. Now 7 years later I have recovered my entire investment through rents and now all the equity and future rents are all gravy, free money.

It's the best move of my life that has turned my net worth of less than $300k into 1.5mil in the 7 years, the $280k investment generates around $68k a year, more than I've ever made punching a clock

Totally outstanding 97, great job!

[LivingAlmostLarge]

I own 5 single families now, I have owned a triplex but it didn't work out. I picked them up in 2009 when interest rates started falling and i needed a better return on my money. Now 7 years later I have recovered my entire investment through rents and now all the equity and future rents are all gravy, free money.

It's the best move of my life that has turned my net worth of less than $300k into 1.5mil in the 7 years, the $280k investment generates around $68k a year, more than I've ever made punching a clock

97guns do you think you could do it now?

TH i think it's interesting that you've moved into vacation rentals from SFH.

[97guns]

97guns do you think you could do it now?

TH i think it's interesting that you've moved into vacation rentals from SFH.

No, the window has closed. Homes I paid 80k for are going for $250k now. It can be done but the numbers will not be as good, maybe in other markets numbers will work. I'm getting around 25% return on my money just through rents not factoring any equity gains

[StormRichards]

The poll should have a "never have, not interested" option.

Also really not sure what the purpose is of the poll and how it actually relates to the first post.

[TexasHusker]

Just wanted to weigh in on this debate.

Owning real estate is a terrific way to build wealth. Why? Several reasons.

First, typically real estate improves your net worth in three ways.

1. Income in the form of rents.
2. Capital gains - increases in the value of your property
3. Tax benefits. You are typically able to claim partial self-employment and you can take depreciation on the properties to offset your rental income.

Second, the more you own, the more flexibility you have. For example, if you have equity in your real estate, you can always borrow against it to exploit investing opportunities.

Third, real estate is typically not subject to technological change risk. Compare owning rental property to being a supplier for iPhone parts. If the model of iPhone you are selling parts for goes out of date, then the demand for your business will decline. This is less the case for real estate. People always need housing.

Real estate isn't a panacea. To be successful at it, you'll need to be smart about selecting the right property, negotiating, getting rental agreements set up properly, doing accounting, executing good customer service, managing your taxes and cash flow.

Real estate is also subject to political risk. Well-meaning politicians often seek to impose caps on rents to make housing affordable, which typically results in disinvestment in real estate markets which serve the poor.

Finally, don't get property in a bad part of town. Low SES (Socio-Socioeconomic Status) neighborhoods typically have more vermin (roaches, rats, etc.), less creditworthy tenants and more problems with repairs. Stay away from bad neighborhoods. It's just not worth the hassle.

James do you own rental property ?

[StormRichards]

James do you own rental property ?

Now this is where a poll could have come in handy HAD the OP set it up properly.

"Make votes public: Displays all users who voted, and what choice they voted for."

Knowing what level of experience someone is speaking from would be very helpful for this type of conversation.

[TexasHusker]

I am curious about James's dogmatic assertion to avoid "the bad side of town... it's just not worth the hassle."

According to whom? Does James speak from experience?

I know people who do very well with low income housing. Their returns are much greater than mine, and there are some distinct advantages to low income housing.

Just curious on what basis James is declaring this.

[james.hendrickson]

I am curious about James's dogmatic assertion to avoid "the bad side of town... it's just not worth the hassle."

According to whom? Does James speak from experience?

I know people who do very well with low income housing. Their returns are much greater than mine, and there are some distinct advantages to low income housing.

Just curious on what basis James is declaring this.

Hey Texas,

Yep - used to own several properties in DC and a couple here in Oregon. Most of my comments about owning in low SES neighborhoods are based on my experience in DC.

[StormRichards]

I am curious about James's dogmatic assertion to avoid "the bad side of town... it's just not worth the hassle."

According to whom? Does James speak from experience?

I know people who do very well with low income housing. Their returns are much greater than mine, and there are some distinct advantages to low income housing.

Just curious on what basis James is declaring this.

And that is where setting up the poll properly could have helped answer that question. Knowing who voted for what would have provided some insight to that.

I know two brothers that have experience with owning low income housing. One has down very well with it. The other owned for a little over a year and got out because of the hassles. Brand new stove ruined, plumbing issues, always late, and other repairs exceeding the security deposit after eviction. His brother has a knack for dealing with the issues that arise from people that don't give two craps about someone else's property.