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Old 08-25-2014, 10:22 PM
 
62 posts, read 120,838 times
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I have this dream of owning 8-10 properties in a college town (having lived in two college towns, I know it's never hard to find tenants) and having the rental income both pay off the mortgages on those properties and provide me a livable monthly income ($2000-$3000).

When I asked, my last landlord claimed he was was close to accomplishing what I was talking about. When I asked my current landlord, she just laughed at me. She said that her 6 duplexes were a nightmare to maintain, and every time she got $10,000 ahead, a tenant would wreck the place or there would be an unexpected repair, and she would be back in the hole.

Any thoughts from current or prospective owners of investment rental properties?
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Old 08-25-2014, 11:39 PM
 
28,455 posts, read 85,157,040 times
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Default The latter is closer to reality...

Quote:
Originally Posted by Nolegator View Post
I have this dream of owning 8-10 properties in a college town (having lived in two college towns, I know it's never hard to find tenants) and having the rental income both pay off the mortgages on those properties and provide me a livable monthly income ($2000-$3000).

When I asked, my last landlord claimed he was was close to accomplishing what I was talking about. When I asked my current landlord, she just laughed at me. She said that her 6 duplexes were a nightmare to maintain, and every time she got $10,000 ahead, a tenant would wreck the place or there would be an unexpected repair, and she would be back in the hole.

Any thoughts from current or prospective owners of investment rental properties?
Having owned rental houses the perspective of current landlady is closer to my experience. That said,mi mostly did make money on the places by buying very cheap, improving prudently and selling once the homes appreciated to a higher price than I could hope to net by continuing to rent them out.

I vaguely recall some landlords in college towns that had mid-sized multi-unit buildings (more than 4 less that 20 apartments) that seemed to do pretty well, but they largely "climbed the property ladder" of suffering through smaller buildings where even a few bad checks from tenants could really wipe out a year or more of profit...

I don't really discourage folks from trying to "get their feet wet" with a smaller units in a moderately priced builiding with good local employment and high demand, but honestly the difference between what you describe, as having thousands of dollar a month in postive cash flow, and the reality of being constantly on the brink of ruin is closer to what most landlords find...
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Old 08-26-2014, 09:41 AM
 
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Quote:
Originally Posted by Nolegator View Post
I have this dream of owning 8-10 properties in a college town (having lived in two college towns, I know it's never hard to find tenants) and having the rental income both pay off the mortgages on those properties and provide me a livable monthly income ($2000-$3000).
You are going to have to work for that 2-3K income...

If you outsource maintenance and leasing of your properties you probably won't make anywhere close to this...but if you are okay interviewing potential tenants and running credit/background checks as well as doing some of the handyman/maintenance duties yourself you will save/make more money.

It won't be a passive income if that's what you are going for.
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Old 08-26-2014, 10:04 AM
 
Location: WA
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I know more than one person that have a number of rental units. Between managing vacancies and maintenance both tell me it can be a real job without benefits and vacation. It is a small business opportunity.
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Old 08-26-2014, 10:07 AM
 
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Quote:
Originally Posted by Eastcoasting View Post
You are going to have to work for that 2-3K income...

If you outsource maintenance and leasing of your properties you probably won't make anywhere close to this...but if you are okay interviewing potential tenants and running credit/background checks as well as doing some of the handyman/maintenance duties yourself you will save/make more money.

It won't be a passive income if that's what you are going for.
I don't expect to just sit on my couch collecting that money. I am an attorney so I can handle my own leases, and I am fairly handy and can manage most minor to moderate problems before needing to hire someone. I would also do yard maintenance and spray for bugs.

That being said, all of this work combined should be less than 40 hours a week, even with multiple properties. That's my goal; not to do nothing, but rather not to have to clock in 8-5 Monday-Friday while still having a livable income.
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Old 08-26-2014, 10:26 AM
 
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You don't have to clock in 8-5 Monday - Friday - but you will be on-call 24/7. Air conditioners seem to fail at 11pm on Saturday nights, and ovens or dishwashers will break down on Thanksgiving Day....just something to consider.....
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Old 08-26-2014, 10:39 AM
 
Location: southwestern PA
22,419 posts, read 47,402,095 times
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Quote:
Originally Posted by Nolegator View Post

That being said, all of this work combined should be less than 40 hours a week, even with multiple properties. That's my goal; not to do nothing, but rather not to have to clock in 8-5 Monday-Friday while still having a livable income.
That 8-5 Mon-Fri will look like heaven after a few years of perpetual on-call.... weekends shot, no vacations, etc.

Unless you hire people to do that for you, and that's yet another expense.
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Old 08-26-2014, 10:45 AM
 
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Quote:
Originally Posted by Pitt Chick View Post
That 8-5 Mon-Fri will look like heaven after a few years of perpetual on-call.... weekends shot, no vacations, etc.

Unless you hire people to do that for you, and that's yet another expense.
You make it sound like your tenants are deliberately burning down your properties or something. Unless you have like 20-30 properties full of Section 8 tenants, I cannot imagine that there is as much work as people are claiming. My landlord comes out 2-3 times a month, and in over 7 years of renting in 3 different places, I think I have called for emergency maintenance less than a half dozen times.
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Old 08-26-2014, 11:02 AM
 
Location: The Triad
34,090 posts, read 82,716,942 times
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Quote:
Originally Posted by Nolegator View Post
I have this dream of owning 8-10 properties in a college town
and having the rental income both pay off the mortgages on those properties

My landlord comes out 2-3 times a month...
Is your plan based on buying 8-10 properties that an attorney with choices will rent from you?
In a college town that translates to senior faculty and admin types... NOT students.
That class/quality won't come cheap.

In any case... the market rate rent MUST BE enough to cover ALL the ownership expenses
including but not lmited to the obvious items like mortgage interest, principle, insurance, taxes, all the year to year turnover work and an improvement or two that will help the FMV rise at no less than equal to the market as a whole in that town..

That's the **minimum**
Then you have the unscheduled repairs and unplanned vacancies to allow for.
(whoever may get the 2AM call that the basement is flooding cause the sewer is backing up)

In twenty years the tenant will have paid off the mortgage and paid for all those other expenses.
You get the depreciation and other paper operating loss against your attorney work income.

Quote:
...and provide me a livable monthly income ($2000-$3000).
Maybe after 10 years and with some refinancing along the way.
But until then it'll be about impossible to clear much (in any) actual cash.
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Old 08-26-2014, 12:33 PM
 
17,170 posts, read 21,830,506 times
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Quote:
Originally Posted by Nolegator View Post
I have this dream of owning 8-10 properties in a college town (having lived in two college towns, I know it's never hard to find tenants) and having the rental income both pay off the mortgages on those properties and provide me a livable monthly income ($2000-$3000).

When I asked, my last landlord claimed he was was close to accomplishing what I was talking about. When I asked my current landlord, she just laughed at me. She said that her 6 duplexes were a nightmare to maintain, and every time she got $10,000 ahead, a tenant would wreck the place or there would be an unexpected repair, and she would be back in the hole.

Any thoughts from current or prospective owners of investment rental properties?

Fantasy is better than reality.......

Renting to students is probably one of the worst scenarios (rough on the places and kids have no money).

8-10 properties (let's average and say 9), livable income (let's say $2700) which means each property nets $300 a month (not much). It would very easy to have a minor $300 repair eat up that revenue on a monthly basis, a roof/AC issue would probably negate the earnings for a single property for the whole year!
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