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Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,574,670 times
Reputation: 16698
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Quote:
Originally Posted by Berteau
What kind of rentals do you have and how did you get them?
Mostly sfh. I bought for cash flow and not appreciation about 7 years ago. I figured they would appreciate with the rate of inflation. They’ve gone up about 120 to 150 percent so that was an unexpected perk. I was just banking on them to bring in enough to live comfortably on and retire.
At the time it was toward the end of being able to get short sales and vacant houses so I was gett8ng them with cash and fixing them up. Typically the house was 30 to 45k and about 8 to 15 to get rent ready. Rent ran from 900 to 1200 per house. I had a great property management company which is rare. They found the house, fixed it up and managed them.
A bout 3 years ago I was pulling cash out on refinancing and using the money to buy more.
Now the numbers aren’t making sense but if housing drops I will look at more to buy.
I recently bought a few near my house that should net about 35k a year net which to me is good money.
I would like to invest 100k savings but not sure what are the best options right now. I have no huge debts and have emergency funds. And also, I don't foresee using these funds in near future. Therefore, I am fine with moderate risk (not high risk). Please provide your suggestions.
I would just invest in a plain old vanilla low fee no load S and P 500 index fund if you can go 5 to 10 years without using the money.
I really think it depends on who you talk to. I have a friend that couldnt sell his properties quick enough because of the tenant headaches and upkeep as you mentioned and he strongly advises people to stay far away from being a landlord. On the flip side, I have family that owns close to 10 rental properties and they are making a killing. They work with one real estate agent, one contractor, and after the house has been renovated, they let a property management company take over. The tenants are paying the mortgages, the values are increasing, and if they lost their jobs today its passive income for them.
You forgot NEW ROOF, NEW HVAC, NEW WATER HEATER, NEW CARPET, NEW PAINT, etc. etc.
I've personally never understood the infatuation with real estate as an investment, it seems like a major headache that I would rather avoid.
There are tax benefits where you can depreciate those expenses offsetting income and reduce the taxes you pay. Then you can sell the property in a 1031 exchange and defer taxes further. Using leverage, you can own a much more expensive property and hopefully accelerate income.
Rental real estate helped me increase my net worth and the tenants helped pay off the mortgage on the home I'm in now since it was a past rental unit. The rental income also helped pay the car I'm driving.
Only you can decide if the juice is worth the squeeze. At the time it was for me. Today I'm no longer a landlord and I don't expect that to change.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,574,670 times
Reputation: 16698
Quote:
Originally Posted by mathjak107
the problem with tenants is no matter how well you screen , eventually one of the big three will get you .
DIVORCE ILLNESS JOB LOSS
The trinity from hell can happen at any time and then their problems become your problems .
it can take months in some places to get a tenant out
so you need deep pockets and not need that rent to live on while you absorb the lost rent , damages , legal fees and expenses still come in.
don’t think you will collect anything due you either . all the tenant has to do is declare bankruptcy or threaten to declare .
so while it was a good run for us , we did have one tenant turn bad …
that was enough to not want to own rentals in retirement
By the same token you can have a bad streak in the market. Both of them you have to look at the overall result over time. Oath of them will have good runs and bad runs.
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