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Old 02-15-2019, 07:03 PM  
58-4ever 58-4ever is offline
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Owning Rentals

Hey CP, we've got a bunch of big dick bandits on here with cash flowing out of their ears, so how many of you own a rental? I may need some advice. I'm looking to gain some passive income without pimping... #pimpin'ainteasy
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Old 02-15-2019, 09:38 PM   #16
wheeler08 wheeler08 is offline
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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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Old 02-15-2019, 09:55 PM   #17
RetiredSeniorChief RetiredSeniorChief is offline
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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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Old 02-15-2019, 09:57 PM   #18
Garcia Bronco Garcia Bronco is offline
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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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Old 02-15-2019, 09:59 PM   #19
Redbled Redbled is offline
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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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Old 02-15-2019, 10:06 PM   #20
The Bunk The Bunk is offline
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Originally Posted by 2bikemike View Post
I own several properties. All are good cash flowing. I started with a 4 plex. That worked out well and we added a duplex. Over the years we added several single family homes. The thing with the multi units is even if you have a vacancy typically everything is still covered expense wise.

I only manage one property and use property managers to handle all the rest. Using a good property manager eliminates a lot of headache.

I like that real estate helps diversify our portfolio of investments
Agreed. I have nine units now. A fourplex, two duplexes and a sfh. Best advice I can give is don’t over leverage and find a good property manager. I don’t want my mortgage payments to be more than 50% of rents. Gives you some wiggle room for vacancies. I budget 10% for repairs and upkeep. Don’t be a slumlord. Keep things tightened up and find good tenants and you’ll be good. I’ve gone through two evictions. While they aren’t fun if you have systems in place to protect yourself, you’ll be fine. A good PM is a must though. I couldn’t do it on my own while working a full time job. Self managing is not passive income. It’s a second job.
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Old 02-15-2019, 10:12 PM   #21
2bikemike 2bikemike is offline
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Originally Posted by Garcia Bronco View Post
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.
That is correct it won't give you a prophet! However you can earn a profit by selecting the right property. All of my properties are earning a profit on the rent they bring in. Some months are better than others. But there is a monthly income that we take to replace my wife's income since she quit working. Some of the money is reinvested. They are also a long term investment strategy. The values have gone up nicely and the ones with mortgages are getting paid down, increasing the equity.

It isn't for everybody but it has been very good to me.
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Old 02-15-2019, 10:54 PM   #22
Cornstock Cornstock is offline
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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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Old 02-15-2019, 11:07 PM   #23
DRU DRU is offline
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Originally Posted by ChiefsCountry View Post
College town students or vacation rentals are your best bets. Regular rentals are the biggest pain in your ass and worthless ****s ever.
and...I would say exactly the opposite.
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Old 02-15-2019, 11:11 PM   #24
DRU DRU is offline
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Originally Posted by RetiredSeniorChief View Post
There's nothing passive about owning a rental; [b]unless you pay someone else to manage it for you.
Uh...yeah. That's why you have a property manager.
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Old 02-15-2019, 11:21 PM   #25
DRU DRU is offline
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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.
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Old 02-16-2019, 05:27 AM   #26
Hog's Gone Fishin Hog's Gone Fishin is offline
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Originally Posted by The Bunk View Post
Agreed. I have nine units now. A fourplex, two duplexes and a sfh. Best advice I can give is don’t over leverage and find a good property manager. I don’t want my mortgage payments to be more than 50% of rents. Gives you some wiggle room for vacancies. I budget 10% for repairs and upkeep. Don’t be a slumlord. Keep things tightened up and find good tenants and you’ll be good. I’ve gone through two evictions. While they aren’t fun if you have systems in place to protect yourself, you’ll be fine. A good PM is a must though. I couldn’t do it on my own while working a full time job. Self managing is not passive income. It’s a second job.
I worked a full time job ,run a side business selling flagstone and still managed and did all repairs on 20 properties by myself.
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Old 02-16-2019, 05:44 AM   #27
R Clark R Clark is offline
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You were one busy hog farmer, evidently not a lazy one at that.
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Old 02-16-2019, 06:00 AM   #28
smithandrew051 smithandrew051 is offline
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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.
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Old 02-16-2019, 06:02 AM   #29
Hog's Gone Fishin Hog's Gone Fishin is offline
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Originally Posted by R Clark View Post
You were one busy hog farmer, evidently not a lazy one at that.
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.
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Old 02-16-2019, 06:18 AM   #30
Hog's Gone Fishin Hog's Gone Fishin is offline
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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.
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