How many of you have rentals (i.e. you're a landlord)? Are they worth it?

[Eagle]

I have 2 rental properties now. I bought one last year and one this year. They are both on 15 year loans. I can make the mortgage payments on both of them with collected rents with an extra $472 in the pocket. I just save that for the next one. This of course excludes maintenance costs which has been minimal so far.

I became debt free and wanted a way to be financially free within 15 years so this is my direction.

Wow! That's amazing! What books did you read or websites did you do some research on?

[TexasHusker]

Very nice! Any suggestions for someone just starting out?

I think there are several things you need to identify:

1. How much available capital do you have?
2. Would you prefer to manage rentals yourself (you make a lot more $$$ and it's not that hard)
3. What are your financial goals?
4. Are there certain vacation spots that you are familiar with? For example, I know a lot about the eastern TN market, but would be lost as a goose in the southern Cal market.

[Fishindude77]

I've got a piece of commercial real estate that has been kicking back $4000 per month pre tax to me for 17 years. Was initially about a $350,000 investment, paid cash, no borrowed money. Lease is still locked in for another five years, or tenant can buy it at an agreed appraised value arrangement.

[Gailete]

Well that is a good return! Over a million in rent money for that place. You must have had a good eye when you found that piece of property!

[TexasHusker]

Well that is a good return! Over a million in rent money for that place. You must have had a good eye when you found that piece of property!

Rentals usually work out very well even if you over pay.

[97guns]

Rentals usually work out very well even if you over pay.

Just to throw out some real time numbers from the heated up market I'm in. You can buy a decent 3/2 single family for around $250k, ready to rent. $50k down payment with a $900 mortgage and rents for $1400, other expenses are prop tax $200, insurance $50 and property manager $150 leaves you with $100 in the green. Hardly worth the risk and not enough return for my investment, you would have to bank on appreciation of the property to realize any gains and it is already heating up

[97guns]

Another market I had looked at in my early planning stages was Albuquerque, I was curious and just looked. 3/2 for $125k, 25k down makes for a (generous number) mortgage Of around $400, rents for $1100, prop tax $100, prop manager $150, insurance $50, leaves you with $400 in the black, $4800 a year, in 5 or 6 years you get your 25k back and everything is pure gravy, works out to a 19% return on your $25k investment

[TexasHusker]

Another market I had looked at in my early planning stages was Albuquerque, I was curious and just looked. 3/2 for $125k, 25k down makes for a (generous number) mortgage Of around $400, rents for $1100, prop tax $100, prop manager $150, insurance $50, leaves you with $400 in the black, $4800 a year, in 5 or 6 years you get your 25k back and everything is pure gravy, works out to a 19% return on your $25k investment

Definitely an interesting market! Good to know! And I think Albuquerque has a pretty steady economy with the university, air base, Las Alamos, and related business concerns.

[Atretes1]

How much did you buy the house for and how much do you rent it for? That's the sort of rental I want. With a lot of positive cash flow. Hence why I don't think my house where i live is rental quality.

The first one I bought for $81,00 with about 3000 closing costs and added stuff so about 83k. I rent it for $875.

The second one, I have about the same in it, and it rents for $825.

Mortgage payments on both are around $614 on a 15 year loan. I would have more cash flow if they were on 30 year notes but I can not convince myself to do that. Plus 15 year notes now will get them paid of when I start hitting 55.

[Atretes1]

Wow! That's amazing! What books did you read or websites did you do some research on?

I have not really read any books. I go to this website or bogleheads. My realtor has rentals also so she has helped me a lot. I am really kind of winging it. Its worked out so far.

[TexasHusker]

The first one I bought for $81,00 with about 3000 closing costs and added stuff so about 83k. I rent it for $875.

The second one, I have about the same in it, and it rents for $825.

Mortgage payments on both are around $614 on a 15 year loan. I would have more cash flow if they were on 30 year notes but I can not convince myself to do that. Plus 15 year notes now will get them paid of when I start hitting 55.

That's a great plan. And it sounds like you did well on the price you paid versus yield. If the monthly rent is 1 percent of the sales price, you've done fine!

You can get 1.5% of the sales price if you become a "slum lord", but that is a whole different ballgame that I don't want to play in.

[LivingAlmostLarge]

Just to throw out some real time numbers from the heated up market I'm in. You can buy a decent 3/2 single family for around $250k, ready to rent. $50k down payment with a $900 mortgage and rents for $1400, other expenses are prop tax $200, insurance $50 and property manager $150 leaves you with $100 in the green. Hardly worth the risk and not enough return for my investment, you would have to bank on appreciation of the property to realize any gains and it is already heating up

These sort of investment properties turn my stomach. Your numbers for albequrque make a lot more sense. Atretes what areas did you buy in?

That too makes a lot of sense for me with something with a lot of positive cash flow works.

How do you find rentals away from where you are? And a management company?

[TexasHusker]

These sort of investment properties turn my stomach. Your numbers for albequrque make a lot more sense. Atretes what areas did you buy in?

That too makes a lot of sense for me with something with a lot of positive cash flow works.

How do you find rentals away from where you are? And a management company?

In my case, I did a lot of research of different resort areas around the country.
I wanted to find places that drew a lot of visitors year-round, had low taxes, and where vacation rentals were a common phenomenon.

I finally narrowed it down to the Smoky Mountains region of the country for several reasons:

1. The Smoky Mountains National Park has over 11 million visitors annually.
2. It is within a day's drive of much of the U.S.'s population.
3. Vacation homes and rental companies are plentiful.
4. Property taxes are super low.
5. Labor is cheap.

When we bought our first property in 2005, I went out there and spent a week and found two ladies that wanted to clean the cabin after each rental, and I found a handy man who would maintain the grounds and do various repairs.

We then put the home on VRBO.com, and we were off to the races. Basically my job was to answer emails, process payments, and let the housekeepers know when we were going to have checkouts. They could just look online and find out for themselves. Once a month I would send them payment via paypal.

I had to call the handy man about once or twice a month for something. No big deal.

My neighbor across the river asked me one day if I would do all of this for his cabin for a fee, and I said "yes." Fast forward a few years, and we have about 30 cabins under our management - 4 of which that we own.

In 2011 I hired a full time manager, and we have since added a full time assistant to her. So now, I not only receive $$ for the rentals for my cabins, but 32% of the rentals for other peoples' cabins. All total, it's a tremendous income for me.

We are experiencing growing pains - we are at the point where we will soon need to hire another staff person, but that's just part of the biz.

[LivingAlmostLarge]

Can you find me a property to buy?

[ndwilli6]

Real Estate Investing

Great question--

I'm excited about this thread. I own 3 properties--renting out two. I manage those myself. I do have my RE license. I'm looking to expand next and buy this multi-unit complex (8) apartments. I'll see how the multi-family unit goes. If everything goes smoothly, I'll continue and invest in two smaller multi-family units in the area. By the end of the year, I hope to own 10 properties. I'll continue to work my essential career for next year. balances on properties are--$135k (property worth $160k), -$80k (property worth $118,000.00 had appraised in March), -95k (property worth around $140k had appraised in May).

I earn about $800.00 per month from 2 single family homes. With careful planning, the multi-family unit should have me bringing in $2,000.00 per month. (if everything goes well--which it almost doesn't) haha.

I would love to help others stay motivated with saving enough for down-payments/closing costs and partner with you if you see any great deals!