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Keep in mind that Bankrate.com once had an article that stated one of the quickest ways to bankruptcy was to have one rental property. You really need several to make any money, or have a high end luxury unit in a place w/ lots of demand. Between maintenance, increased insurance costs, property taxes, possible damage due to tenants or normal wear and tear on the house, advertising costs, along w/ state and federal taxes if you do show a profit, it's often not worth the candle. Especially if you have trouble collecting rent, or some time in between tenants w/ no rental income coming in. This is why multiple rentals helps average things out. It also presents multiple problems though.
Obviously someone in the Bay Area or Hawaii has a better chance to make a little money because of the high demand for rental property and the amount of money you can get for that rental. But don't forget the lesson of the last housing bubble. What goes up must come down at some point. The rental prices in the two places I mentioned are unsustainable, and I sure wouldn't want to be caught holding a big mortgage when the prices drop, along w/ demand. And trust me, that will happen. It's not if, but when. Even if you are making serious money on the rental, the other factors I mentioned above are still in place, especially taxes and insurance costs. Be careful when selling too. Again, taxes, realtor fees and title fees always take out a big chunk of change, especially if you get hit w/ capital gains taxes. Now might be a good time to sell in the markets I mentioned. NO one should be in real estate w/ the intention of making a profit that is based on a 10 year from now guess. Doing back of the envelope calculations is one thing, actually renting or selling the property in the real world is another. Don't ask me how I know :}
I really hope people are taking this misinformation floating around on the web to heart. If I believed and followed this stuff my net worth would be substantially lower right now. Just the last rental I bought is generating a 12% return BEFORE I even count tax advantages of depreciation or the appreciation on the property. None of the things that you listed in the first paragraph are major issues if your halfway competent enough to deal with rentals like a business.
OP I would tread with caution because your area is a different beast then the average rental around the country. Between rent control and other numerous laws; I would highly advise you to do a ton of local research before deciding if managing a rental would be the right move for you. A lot of people here gave you some solid advice to start with.
I really hope people are taking this misinformation floating around on the web to heart. If I believed and followed this stuff my net worth would be substantially lower right now. Just the last rental I bought is generating a 12% return BEFORE I even count tax advantages of depreciation or the appreciation on the property. None of the things that you listed in the first paragraph are major issues if your halfway competent enough to deal with rentals like a business.
OP I would tread with caution because your area is a different beast then the average rental around the country. Between rent control and other numerous laws; I would highly advise you to do a ton of local research before deciding if managing a rental would be the right move for you. A lot of people here gave you some solid advice to start with.
Yup! I Own 5 homes with 2 of my childhood friends and 2 with another longtime friend for a total of 7. The last one we paid cash for it (71k). It generates 1k a month, taxes and insurance are $2450 per year. We may have a total of 75k in it because we replaced the roof and built a porch over the front door. My buddy is a carpenter so that certainly helps. They also pay us cash! So after paying taxes we clear over $9500 a year on a 75k investment. And if I wasn't honest 😃😃, I would only have to claim half of that, plus the banks, irs and other professionals only figure it's going to be rented for 10 months a year. I like bankrate.com but that is absolutely wrong about having only one rental.
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