Bought my first Rental Property! Anyone want a cool spreadsheet?

[amarowsky]

In the situation that we are all, I decided that it would be a great idea to buy apartments in Spain because I always wanted to have passive income and in this situation I noticed that in some areas the price on real estate went down, but not so much, for about 5-10%

i don't know weather to love or hate you for showing me this real estate site! I been on it all morning looking at houses. Found a really cool looking one in Portugal that is a decent price, good size, really aesthetically pleasing design, and best of all.... Overlooking the sea.

https://tranio.com/portugal/adt/1878246/ <---- For anyone interested. Feel free to beat me to the punch buying, "one of my MANY dream homes".

[Ronnii5]

In the situation that we are all, I decided that it would be a great idea to buy apartments in Spain because I always wanted to have passive income and in this situation I noticed that in some areas the price on real estate went down, but not so much, for about 5-10%

[~bs]

hindsight is 20/20, but the property purchase probably couldn't have come at a worse time. My suggestion, since you do own 4 units is to try to lock in 6 to 12 month contracts on good tenants, on deep discount if you have to. The good thing about vacation rentals and rentals near colleges is that those things fuel stronger than average demand during good times. But in crazy times like these, there's little or no demand. As opposed to normal residential property whose demand doesn't fluctuate as greatly (people need somewhere to live).

[LivingAlmostLarge]

It's really anyone's guess. My prediction probably isn't any more credible than my plumber's.

In terms of the overall economy, I don't see this sharp recovery everyone is talking about. There are too many businesses closed that are going to be closed for too long. There is no end-game being discussed. It's just an endless serious of lock-downs. The Fed's 14 days followed by the city's 14 days followed by the state's 30 days, etc.

I would guess that at least half of all businesses currently closed will never re-open, because there simply isn't the cash to re-open. Sure, a lot of businesses are going to get relief from the stimulus package, but take my business for example: Yes, it will help me with payroll for 10 weeks. But all of this started around March 1 and I'm not going to be open until a minimum of mid-May and probably more like July. So helping me with payroll isn't really doing anything, because we aren't an ongoing business concern any more; we are just a quasi-unemployment office. It will take my own savings to successfully re-open, and most businesses simply don't have the ammo to survive.

I fully agree. But at the same time I also don't see where I live recovering quickly. Too many people have lost jobs. Too many people will still be fearful and I suspect a lot more will be losing jobs asap. And how do you go out, travel, and spend if there is no income coming in even after we are all free to go on our way?

[TexasHusker]

How bad? Should rebound fast? Or do you think that people will be leery of traveling? Or have no money? And staycations will be the norm?

It's really anyone's guess. My prediction probably isn't any more credible than my plumber's.

In terms of the overall economy, I don't see this sharp recovery everyone is talking about. There are too many businesses closed that are going to be closed for too long. There is no end-game being discussed. It's just an endless serious of lock-downs. The Fed's 14 days followed by the city's 14 days followed by the state's 30 days, etc.

I would guess that at least half of all businesses currently closed will never re-open, because there simply isn't the cash to re-open. Sure, a lot of businesses are going to get relief from the stimulus package, but take my business for example: Yes, it will help me with payroll for 10 weeks. But all of this started around March 1 and I'm not going to be open until a minimum of mid-May and probably more like July. So helping me with payroll isn't really doing anything, because we aren't an ongoing business concern any more; we are just a quasi-unemployment office. It will take my own savings to successfully re-open, and most businesses simply don't have the ammo to survive.

[LivingAlmostLarge]

Things have slowed down substantially for even us.

How bad? Should rebound fast? Or do you think that people will be leery of traveling? Or have no money? And staycations will be the norm?

[TexasHusker]

Saw your "some markets are booming" post on the COVID-19 effects thread by Disney Steve. Glad you got your last minute bookings!

Things have slowed down substantially for even us.

[Milly]

we are suffering mightily in the vacation rental business. No one is going to go unscathed from Corona. We are planning on zero profit for several months.

Saw your "some markets are booming" post on the COVID-19 effects thread by Disney Steve. Glad you got your last minute bookings!

[TexasHusker]

we are suffering mightily in the vacation rental business. No one is going to go unscathed from Corona. We are planning on zero profit for several months.

[james.hendrickson]

Milly, I think everyone is worried about coronavirus to some degree.

Personally, I have faith that we'll get through this. The country has experienced a civil war in the 1860s, a great depression in the 1920s, social turbulence in the 1960s and inflation in the 1970s . So, we'll make it through. Its just a matter of time.

[Milly]

... and now the college is closed for the trimester due to COVID-19. So much for my thoughts of a 1% vacancy. The tenants did sign a 1 year contract that is fairly expensive to get out of (I think the fee goes to the management company) and most of them aren't actually students, but there's going to be a lot of vacant apartments in the area desperate for tenants. Not to mention I know at least one of my tenants works at a fastfood restaurant and probably will struggle keeping up.

Getting a little worried. Anyone else worried about rents?

[Milly]

Seems like a good deal all around! .85% is still decently good, and married-student housing that's Incorporated into the college system is probably lower risk than other options. Also nice that family is on either side & can check in on it for you.

I'm impressed by your 6% management fee! Normally I only see 10%, maybe as low as 8%. I've never gotten into multiplexes yet, but it seems like a very good way to have steadier income, with multiple units to level things out. Your dynamics at the college are interesting & seem pretty advantageous for you.

Congrats on the new acquisition! It makes me want to jump into rentals again. I look forward to when I'll be able to focus more of our money toward rentals again (planning for after our home is paid off).

Management wanted to charge more, but the three of us banded together, making 12 units. Since they already manage the other units on the block, it made sense for them to accept our offer at only 6%.

It's funny. I was really worried we would finish off our house mortgage before finding the next step. We're set on our investment strategy for the next decade now unless we pick something else up on the way.

[kork13]

Seems like a good deal all around! .85% is still decently good, and married-student housing that's Incorporated into the college system is probably lower risk than other options. Also nice that family is on either side & can check in on it for you.

I'm impressed by your 6% management fee! Normally I only see 10%, maybe as low as 8%. I've never gotten into multiplexes yet, but it seems like a very good way to have steadier income, with multiple units to level things out. Your dynamics at the college are interesting & seem pretty advantageous for you.

Congrats on the new acquisition! It makes me want to jump into rentals again. I look forward to when I'll be able to focus more of our money toward rentals again (planning for after our home is paid off).

[LivingAlmostLarge]

What city is it? Send me a PM. i"m dying to buy something.

[Milly]

Hey savers!

I did something crazy that I've been wanting to do for years. I bought my first rental property. I've been extremely chicken in this decision. I didn't want to invest far away since I wouldn't know much about the area and I'd want to keep an eye on it. I didn't want to invest in my local town either because I don't think the market's that great. So it has taken me way too long to get here, but here I am.

Finally, I found something I love. Due to some family connections, we were invited to purchase a new construction 4plex near where much of our extended family lives in a little college town that has really been growing and will likely only pick up pace now that it's big sister college is getting too full and even more competitive to get in. The 4plex is to be used as married student housing. There is such a need for married student housing there! We got all 4 units signed the week we listed and they were moved in the following week! What's more is there isn't a drop in rent prices or increase in vacancies during the summer like in other college areas due to the college's assigned 3 track system (3 semesters, the college chooses which is your "summer" break). If rent isn't collected, our management company has a deal with the college to withhold grades until we are paid. The two 4plexes on either side of our building are owned by my sister-in-law and father-in-law. My father-in-law lives close and checks in on them from time to time.

The margins aren't very great. It doesn't meet the rule of 1%, but it's not too far off either (0.85%). I think it would take stacked extenuating circumstances to loose money.


Anyways, I thought I'd share that big news as well as a spreadsheet I developed to analyse how long it would take to pay the property off.

Assumptions include:
profits rollover to paying down the loan (otherwise it's just the simple amortization you get from the bank)
you pay off the down payment loan first while paying the minimum on the mortgage
every year is like the current (no increasing fees or rent)

Here's the link: https://drive.google.com/file/d/15jO...ew?usp=sharing

I modified the numbers a little for privacy, but it's still pretty close to my loan information.