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02-15-2019, 09:38 PM | #16 |
Veteran
Join Date: Aug 2004
Location: Indiana
Casino cash: $4341183
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Seems like way to much hassle to me. What I’d like to get into is storage units. Where I’m at you have to get on a waiting list to rent one. I really missed the boat when a business wanted out and sold all their units for 500k.
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Posts: 1,806
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02-15-2019, 09:55 PM | #17 |
**** Off Pedro Protectors
Join Date: Dec 2018
Casino cash: $5330400
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There's nothing passive about owning a rental; unless you pay someone else to manage it for you.
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Posts: 8,442
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02-15-2019, 09:57 PM | #18 |
No Keys, No Problem
Join Date: Sep 2000
Location: Denver
Casino cash: $3533136
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Yeah it's not going to give you a prophet. It's a long-term investment strategy on the equity of the home. I have one rental now and once it reaches a certain threshold I'm ending my mortgage on any property by selling it.
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Posts: 31,770
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02-15-2019, 09:59 PM | #19 |
I missed '69!
Join Date: Jun 2018
Casino cash: $7110400
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We have 2 properties. One has done great one just ok. It’s a great way to acquire some value using other people’s money. Not only do they help you pay off a mortgage but they will normally gain value. We bought our first 6 years ago for 70k and it’s now worth over 120k.
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Posts: 1,726
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02-15-2019, 10:06 PM | #20 | |
Starter
Join Date: May 2009
Casino cash: $563198
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Quote:
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Posts: 235
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02-15-2019, 10:12 PM | #21 | |
Born to Ride
Join Date: Sep 2002
Location: NWA
Casino cash: $755377
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Quote:
It isn't for everybody but it has been very good to me. |
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Posts: 16,360
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02-15-2019, 10:54 PM | #22 |
Veteran
Join Date: Oct 2008
Casino cash: $9986835
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If you want it to be truly passive you will hire a property manager. Which cuts into your margin. Make sure your margin is wide enough to withstand it. I've known dozens of people who own property and basically subsidize their renter's housing cost, hoping appreciation will bail them out. That's a bad strategy.
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Posts: 1,606
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02-15-2019, 11:07 PM | #23 |
To the Game
Join Date: Oct 2003
Casino cash: $7073516
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Posts: 2,124
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02-15-2019, 11:11 PM | #24 |
To the Game
Join Date: Oct 2003
Casino cash: $7073516
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Posts: 2,124
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02-15-2019, 11:21 PM | #25 |
To the Game
Join Date: Oct 2003
Casino cash: $7073516
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Here's a simple rental property cash flow calculator: https://www.vertex42.com/Files/exclu...cash-flow.xlsx
When you research a deal, make sure to use something like this and make sure your data is accurate. Talk to a property manager in the area of the property, and get an idea about what you can expect to get out of rent for the place and what the vacancy rates are in that area. Check the public records for what the property taxes have been in recent years, and check with your insurance company about what it would be to insure the property as a rental. Check on HOA expenses that might be in the area, and plan to save about 10% for both general repairs as well as cap. ex. (larger repairs only needed every 10+ years). Basically, use the spreadsheet and make sure you consider ALL costs that will be associated. Everything mentioned above plus utilities (if you cover them), property manager, etc. If you come out with positive cash flow after all expenses are factored in, then that would be your profit. Acquire enough where this free cash flow profit can cover all your expenses and you're doing what you hear when you people say "financially free." You have to be willing and able to keep those cash reserves aside, though, and don't touch them. If the unit becomes vacant, for example, and you don't have that "vacancy rate" cash set aside in reserves to cover it for that time, you can get hurt. Especially if you've chained together a bunch of properties by leveraging their equity over and over again. Keep it simple. Do your due diligence. Plan on having a property manager, and learn how to manage your property manager. This will be checking in a couple of times per year, ensuring they're doing walk-through's and sending you pictures each year for record keeping, etc. |
Posts: 2,124
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02-16-2019, 05:27 AM | #26 | |
Fish are scared of me
Join Date: Nov 2001
Casino cash: $-29523
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Quote:
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Posts: 40,647
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02-16-2019, 05:44 AM | #27 |
Veteran
Join Date: Aug 2001
Casino cash: $3884900
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You were one busy hog farmer, evidently not a lazy one at that.
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Posts: 2,641
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02-16-2019, 06:00 AM | #28 |
I Like The Kansas City Chiefs
Join Date: Nov 2017
Location: Shawnee, KS
Casino cash: $1374400
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My wife and I own one rental. It was her house before we got married and she moved into mine. Here’s a few tips:
1. Hire a property management company. They’ll find good tenants and collect the rent/manage the lease. I’ve never once gotten a call at 2 am. Definitely worth it. 2. Keep every receipt from repairs. You’ll want them for tax time. 3. We only decided to rent it out, because we already owned the house. Had we needed to make a new down payment, it would’ve been too difficult to swing. 4. Take care of any minor repairs prior to renting it out. It’s usually cheapest and easiest to do as much of this stuff yourself as possible. |
Posts: 28,426
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02-16-2019, 06:02 AM | #29 |
Fish are scared of me
Join Date: Nov 2001
Casino cash: $-29523
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You got that right! Now the Hog Farms gone. Still $350K in debt on rental investments, so my plan now is to sell my two most expensive properties ,1 this year and 1 next year and that should pay off all my debt. That will leave me with 15 properties to live off of and then the rock yard will make enough each year to pay for my fishing pleasure( lot rent for my lake house, insurance, taxes and my boat payment).
Also guys, I found a little trick to making Real Estate Rentals a lot more productive and less invasive on your life. Consider doing "lease to owns" Purchase a property for say 100K , advertise it as a "Lease /Option to Buy". Do a 5 year contract with your renter at $140K. Just set the rent high enough to cover your mortgage,taxes and insurance with a little cash flow over the top. With this , your renter is responsible for all repairs and all you have to worry about is collecting rent. When the 5 year lease is up the renter has the option to get a mortgage and purchase the property "or not" In the mean time you've paid the property down to say 70K while giving the renter a monthly credit that gives them enough credit to cover their 5% down payment with the bank. It's a win/win for everybody. The renter who may have not had good enough credit initially to buy a home gets a win and you've created a nest egg that may throw a 50K lump sum in your pocket. |
Posts: 40,647
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02-16-2019, 06:18 AM | #30 |
Fish are scared of me
Join Date: Nov 2001
Casino cash: $-29523
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BTW, I did a Lease/Option to buy with a married couple 8 years ago on this particular property. I paid 40K for the property and did the LO with him at 85K. At the end of 5 years his credit still sucked so he couldn't get a mortgage so we did another 5 year contract. During this time they had 3 kids , he lost his job, tried to run his own business , failed, and finally got a really good job but 8 hours away. His wife left him and he gave up on buying the property. During the last year he put a new roof 12K, new CH&A 9K , a new Hot water heater and some beautiful Kitchen cabinets from Mexico. He also redid the living room and made a beautiful vaulted ceiling with recessed lighting.
I just got the property back 2 weeks ago, I lost 3 months rent payment but the property is paid off and is now worth around 120K. The only thing it needs is new windows which I'm in the process of replacing myself. |
Posts: 40,647
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