Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
When I was younger I too had a few rental properties. At first it was because I was reluctant to sell homes for that I had lived in and fixed up for less than I thought was fair. Later it became a strategy to boost income. It really never threw off so much cash that either I or my wife to could afford not to work, especially when you factor in things like healthcare coverage and 401k matching that no landlord ever gets, but the appreciation did allow us to have a nicer home than we otherwise could have comfortably afforded. That is about the best you can hope for...
The thing too is that the overall mix of folks looking to rent really is not the kind of people that are easy to deal with. Those with good jobs tend to have big issues with other things that make it hard for them to manage their money (drug and alcohol addictions are high on that list...) and those that don't have the skills / health to hold down a good job live with heart-breaking problems that really make it very tough to make "business decisions" when you know that eviction from your nice apartment building in a good area is going to mess up their already chaotic lives...
In a college town you can probably have a very fast turn over, but prices to acquire such buildings are often SKY HIGH if they are in OK shape and if they are trashed then you are inviting the sorta "unofficial annex to Bluto's Animal House" and the liability issues / mess of running an virtual unlicensed tap room...
REITs have the kind of on-site managers that renters here often call "unreasonable sticklers" but in my experience that is the kind of attitude need to keep things business like.
Quote:
Originally Posted by aragx6
Mike, FWIW, I actually do think I have the stomach for landlording, and I've talked about it on this forum before but SO and I have a plan to move to St. Louis and help replace my income with rental income over the next 5 years so that I can stay home with the kiddos when we get to that point.
It involves buying a 4-family in a stable neighborhood, living in 1 unit and renting out the other 3 until we have enough for another down payment and buying a 2-family to live in half of, at which point we'll be renting out 5 units. We'll live rent free and cash flow, even conservatively with expectations of rent losses and maintenance issues (which is a key thing I don't see you doing), of a few thousand a year.
Even in wildly-less-expensive-than-Chicago St. Louis, however, we're looking at properties that would require us to carry mortgages because anything near the price points you're talking about are uninhabitable as is and do not have the ability to attract the kind of tenants we want (students and/or blue collar types)
So it's not that I don't think landlording can be a solid business plan -- I've done a lot of research and a bit of dreaming and I think it can -- it's just I am unconvinced of your personal strategy.
Our landlord now is a lazy drunk. I figure if he can make money in this game anybody with half a brain can. I just don't want to buy a place like my apartment building now that has 100k worth of deferred maintenance (and this 4-family in Kansas City would still probably appraise a touch over 100k).
^I know you've been in the business a long time, but I've also been a renter for a long time and I just think you're a little hard on renters here. I've had far more great or good neighbors than bad ones, and I've always believed stringent screening can take care of most of those bad ones anyway. That might sound naive, but I don't have a strong naive streak. I'm just pretty well convinced of my ability to use things like employment and rental history, credit scores, and my own, historically reliable, judgment of character to pick the tenants who will be a good fit. And building 1 month's rent per unit of vacancy per year into any financial calculations.
Now the sadness and difficulty in evicting decent folks who've fallen down on their luck is absolutely something I've thought about and something that concerns me, but I'm a pretty tough cookie when I need to be. It's a business, it's an investment, and hell it's also my home. I'll have a mortgage to pay and I feel confident I'll do what needs to be done. That said, it's one reason I'd prefer 1 or 2 bedroom units over 3s. Fewer families.
^I know you've been in the business a long time, but I've also been a renter for a long time and I just think you're a little hard on renters here. I've had far more great or good neighbors than bad ones, and I've always believed stringent screening can take care of most of those bad ones anyway.
This is probably true, especially in a market where the landlord can afford to be picky, but it only takes one bad one to really mess things up for you. Also, the lower the market you're in, the less picky you can be about renters, and the bigger the risk you take on them being able to pay. If you're renting out a place you bought for $10K, you're going to be renting it to people who don't have the income and/or credit to rent elsewhere, and might not be able to pay you. Sure, you can evict them, but that takes time and effort, and you'll still not recover your money, not to mention the emotional toll. (I have a friend who got out of the business after he had to evict a single mother and her children to keep his property from being repossessed.)
people like you are dead and will continue to work for others your entire lives.
You call people cattle and say they're dead because they want to work for a paycheck and health benefits? You're incredibly naive.
Do you really believe you can buy uninhabitable properties, leave them sit empty, maybe for more than a decade, while waiting for gentrification and not have to work for others while you're waiting? You're investment return won't even keep up with inflation.
Do you really believe there is a profit in being a landlord of those kind of properties?
1. Buy an uninhabitable property for $10,000
2. Spend tens of thousands getting up to code, especially if you're expecting them to be sect8 approved.
3. Spends hours/whole afternoons in the worst neighborhoods in Chicago trying to get tenants to answer the door after they've messed up their sect8 status.
4. Spends hours/whole days in court trying to get tenants evicted. Evictions can take months.
5. Spends hundreds, maybe thousands, getting the apt's back up to code after the last ******* left the place unbelievably trashed.
6. Start all over again with a new tenant.
After adding in all the upkeep, the plumbers, paying a handyman etc...Where's the profit in all this?
About 12 years ago my grandma left me 2 multi-unit properties when she died. The deal was as long as I take responsibilty for them I could keep all the profit. If/when I decided to sell I had to split the money up with my siblings and cousins. After about 18 months of dealing with the above and being sickened and disgusted with how tenants treated the property I sold them all, took my cut of the money and moved to Chicago.
The properties I owned were in a lower middle class neigborhood in eastern Iowa. You couldn't pay me to even be a property manager in the neigborhoods you're talking about investing in.
You will not turn a profit off of the property you say you bought.
Fact - If there was a profit to be made, the property would have been snatched up before you even knew it was for sale.
There is a lot of truth in ChiNaan's comment regarding the folks that are shopping for lower priced rentals. It is NOT that they are "bad people" it simply that even in a "tight" rental market there are a finite number of renters with solid work history and good credit. Believe me, if I could've only rented to folks that had stellar credit history I would have still gotten stiffed for a several months of rent and had periods where NO ONE wanted to rent a place for the goofiest of reason -- I honest remember going through a period where one house had three or four potential tenants decided against it for reasons like "it has too many trees in the yard" "it has too BIG a garage" (meaning the yard was kinda small, but hey it is a rental...) "there are no ceiling fans" (but it did have central AC and windows that open...) "too close to the train" (honest it was two blocks away, I consider that ideal). I eventually sold that place to a builder and he made a mint on the new construction he put on it...
My b-i-l in San Diego has gotten stiffed on rent from people with STELLAR background check -- one gal was an attorney with a great job for a well known telecom firm. She just "went flakey" and left town. Damaged his garage door too. That cost him about 2 months of rent by itself, as well time that he went w/o a tenant, so the "profit" was wiped out for about 2 years worth of rent...
Maybe timing is big part of it, with there being an oversupply of "easy money" making so many folks consider home ownership instead of renting leaving a really hard core group of un-landlord friendly renters, but it is my experience that having even 11 months of every year long lease paid on time / in full is a rarity. On average it was pretty common for renters to be late /partial payers about 2 months out of every 12, with the occaisional really sad case going 4 or more months like that...
You call people cattle and say they're dead because they want to work for a paycheck and health benefits? You're incredibly naive.
Do you really believe you can buy uninhabitable properties, leave them sit empty, maybe for more than a decade, while waiting for gentrification and not have to work for others while you're waiting? You're investment return won't even keep up with inflation.
Do you really believe there is a profit in being a landlord of those kind of properties?
1. Buy an uninhabitable property for $10,000
2. Spend tens of thousands getting up to code, especially if you're expecting them to be sect8 approved.
3. Spends hours/whole afternoons in the worst neighborhoods in Chicago trying to get tenants to answer the door after they've messed up their sect8 status.
4. Spends hours/whole days in court trying to get tenants evicted. Evictions can take months.
5. Spends hundreds, maybe thousands, getting the apt's back up to code after the last ******* left the place unbelievably trashed.
6. Start all over again with a new tenant.
After adding in all the upkeep, the plumbers, paying a handyman etc...Where's the profit in all this?
About 12 years ago my grandma left me 2 multi-unit properties when she died. The deal was as long as I take responsibilty for them I could keep all the profit. If/when I decided to sell I had to split the money up with my siblings and cousins. After about 18 months of dealing with the above and being sickened and disgusted with how tenants treated the property I sold them all, took my cut of the money and moved to Chicago.
The properties I owned were in a lower middle class neigborhood in eastern Iowa. You couldn't pay me to even be a property manager in the neigborhoods you're talking about investing in.
You will not turn a profit off of the property you say you bought.
Fact - If there was a profit to be made, the property would have been snatched up before you even knew it was for sale.
Still though. Couldn't he just sell it and not rent it? 10k is pretty low no matter what the property.
Still though. Couldn't he just sell it and not rent it? 10k is pretty low no matter what the property.
He could probably sell it for the same price he paid for it, if he can find someone like him to buy it. Of course, he still doesn't break even because of closing costs, taxes, and any other money he put into it. Unless you mean he could wait until gentrification comes to Englewood, and sell it as an empty lot, in which case maybe his great-grandchildren will make a profit from it someday.
Mike, FWIW, I actually do think I have the stomach for landlording, and I've talked about it on this forum before but SO and I have a plan to move to St. Louis and help replace my income with rental income over the next 5 years so that I can stay home with the kiddos when we get to that point.
It involves buying a 4-family in a stable neighborhood, living in 1 unit and renting out the other 3 until we have enough for another down payment and buying a 2-family to live in half of, at which point we'll be renting out 5 units. We'll live rent free and cash flow, even conservatively with expectations of rent losses and maintenance issues (which is a key thing I don't see you doing), of a few thousand a year.
Even in wildly-less-expensive-than-Chicago St. Louis, however, we're looking at properties that would require us to carry mortgages because anything near the price points you're talking about are uninhabitable as is and do not have the ability to attract the kind of tenants we want (students and/or blue collar types)
So it's not that I don't think landlording can be a solid business plan -- I've done a lot of research and a bit of dreaming and I think it can -- it's just I am unconvinced of your personal strategy.
Our landlord now is a lazy drunk. I figure if he can make money in this game anybody with half a brain can. I just don't want to buy a place like my apartment building now that has 100k worth of deferred maintenance (and this 4-family in Kansas City would still probably appraise a touch over 100k).
sounds like a good plan go for it. Although we have different strategies are goals are quite similar. Although i have a nice paying gig i dont want to work anymore....nothing against it its just life is short and i can think of tons of other things i can do with that time. Im 27 by 35 im quite confident i will never work again. My first taste of getting rent money came when i purchased my 3 bed room condo and rented one room to a student for 600 a month it payed my mortgage, I was hooked ever since.....
You call people cattle and say they're dead because they want to work for a paycheck and health benefits? You're incredibly naive.
Do you really believe you can buy uninhabitable properties, leave them sit empty, maybe for more than a decade, while waiting for gentrification and not have to work for others while you're waiting? You're investment return won't even keep up with inflation.
Do you really believe there is a profit in being a landlord of those kind of properties?
1. Buy an uninhabitable property for $10,000
2. Spend tens of thousands getting up to code, especially if you're expecting them to be sect8 approved.
3. Spends hours/whole afternoons in the worst neighborhoods in Chicago trying to get tenants to answer the door after they've messed up their sect8 status.
4. Spends hours/whole days in court trying to get tenants evicted. Evictions can take months.
5. Spends hundreds, maybe thousands, getting the apt's back up to code after the last ******* left the place unbelievably trashed.
6. Start all over again with a new tenant.
After adding in all the upkeep, the plumbers, paying a handyman etc...Where's the profit in all this?
About 12 years ago my grandma left me 2 multi-unit properties when she died. The deal was as long as I take responsibilty for them I could keep all the profit. If/when I decided to sell I had to split the money up with my siblings and cousins. After about 18 months of dealing with the above and being sickened and disgusted with how tenants treated the property I sold them all, took my cut of the money and moved to Chicago.
The properties I owned were in a lower middle class neigborhood in eastern Iowa. You couldn't pay me to even be a property manager in the neigborhoods you're talking about investing in.
You will not turn a profit off of the property you say you bought.
Fact - If there was a profit to be made, the property would have been snatched up before you even knew it was for sale.
that was your experience i have section 8 tenants already and yes i have been through the court system for an eviction but the fees were no where near the profit i made. no one said making extra money was easy maybe you should have screened your tenants more careful or maybe you shoudnt have given up so easily you might have had better luck the next time. Im young enough to have the energy to deal with these obstacles not to mention no kids or wife. If renting to sec 8 was that horrible there wouldnt be any owners renting to them but guess what there are lots including myself. By the way everyone has not given up on these neighborhoods you should find out who John Edel is. This guy invested half a million in the back of the yards neighborhood by purchasing an abandoned factory. Now thats lots of money not so good neighborhood it all depends on your motivation. And also you make it seem like all the people in these neighborhoods are horrible people or those that are on sec 8 are all destructive my tenants are great.
Still though. Couldn't he just sell it and not rent it? 10k is pretty low no matter what the property.
Quote:
Originally Posted by ChiNaan
He could probably sell it for the same price he paid for it, if he can find someone like him to buy it. Of course, he still doesn't break even because of closing costs, taxes, and any other money he put into it. Unless you mean he could wait until gentrification comes to Englewood, and sell it as an empty lot, in which case maybe his great-grandchildren will make a profit from it someday.
wow guy im starting to think youre upset you dont have 10k you never told me your ideas of investment do you have any???
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Of course, he still doesn't break even because of closing costs, taxes, and any other money he put into it. Unless you mean he could wait until gentrification comes to Englewood, and sell it as an empty lot, in which case maybe his great-grandchildren will make a profit from it someday.
