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Old 02-25-2021, 10:17 AM
 
Location: Scottsdale
2,658 posts, read 2,058,018 times
Reputation: 5036

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Quote:
Originally Posted by GreenBouy View Post
I’m curious what your idea of a cash cow is, I think you said earlier your margins are 10% after costs, what does that equate to in real dollars for your current holdings?
If I buy a house for 100K, all in, fix-up, closing etc with cash and it nets 10K per year in tax friendly rental income. That's a 10% cash-on-cash return for year one. At this rate the house will pay for itself in 7-10 years. It's the benchmark I've used for anything I've bought.

You could fudge the number to require 8% cash-on-cash and it'd still be a good deal, just take more time to turn bigger numbers as you're starting slower.

The numbers change if you use a mortgage but I'm staying out of that rabbit hole for simplicity.

$100K purchase & fix-up
$1800 per year property tax
$500 per year insurance (ins on rentals is cheap because you're not insuring your personal property, dwelling/liability only)

>Monthly rent:$1025
>minus $191 monthly expense
>= $834 X 12 months = $10,008



Rents will rise as time goes on and that cash-on-cash will increase.

That's the cash component, but the equity build-up is where the real wealth is made.

See the link below:

https://www.calculator.net/rental-pr...ype=&x=64&y=18

Last edited by tommy64; 02-25-2021 at 11:06 AM..
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Old 02-25-2021, 02:03 PM
 
Location: Texas
1,282 posts, read 333,837 times
Reputation: 1874
Quote:
Originally Posted by tommy64 View Post
If I buy a house for 100K, all in, fix-up, closing etc with cash and it nets 10K per year in tax friendly rental income. That's a 10% cash-on-cash return for year one. At this rate the house will pay for itself in 7-10 years. It's the benchmark I've used for anything I've bought.

You could fudge the number to require 8% cash-on-cash and it'd still be a good deal, just take more time to turn bigger numbers as you're starting slower.

The numbers change if you use a mortgage but I'm staying out of that rabbit hole for simplicity.

$100K purchase & fix-up
$1800 per year property tax
$500 per year insurance (ins on rentals is cheap because you're not insuring your personal property, dwelling/liability only)

>Monthly rent:$1025
>minus $191 monthly expense
>= $834 X 12 months = $10,008



Rents will rise as time goes on and that cash-on-cash will increase.

That's the cash component, but the equity build-up is where the real wealth is made.

See the link below:

https://www.calculator.net/rental-pr...ype=&x=64&y=18
That’s not what I asked you, and it’s irrelevant because you hold mortgages on your properties.
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Old 02-25-2021, 02:57 PM
 
Location: Scottsdale
2,658 posts, read 2,058,018 times
Reputation: 5036
Quote:
Originally Posted by GreenBouy View Post
That’s not what I asked you, and it’s irrelevant because you hold mortgages on your properties.
It's between me and the IRS.
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Old 02-26-2021, 12:39 AM
 
49 posts, read 35,759 times
Reputation: 191
Quote:
Originally Posted by aslowdodge View Post
Stupid statement that just parrots a stereotype. Why don’t you speak of something you actually know about.
When I was a tenant, I called the landlord whenever there was a serious problem regardless of the time of day or night. Water pouring through a ceiling would qualify. That is a fact that I know of firsthand, not a "stereotype."

Now, if you'd like to talk about "stupid statements," explain yours.
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Old 02-26-2021, 10:54 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
8,497 posts, read 5,994,953 times
Reputation: 12383
Quote:
Originally Posted by robocall View Post
When I was a tenant, I called the landlord whenever there was a serious problem regardless of the time of day or night. Water pouring through a ceiling would qualify. That is a fact that I know of firsthand, not a "stereotype."

Now, if you'd like to talk about "stupid statements," explain yours.
Stupid statement.
I have been a landlord for 40 yeArs. Never got a call in the middle of the night. A serious problem is a broken water main with water shooting out and flooding the house. Not a malfunctioning toilet unless it was flooding.

I now have a property manager for my rentals which is over 20. I don’t ever get calls when things go wrong at night unless the house burned down.

Try again.
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Old 02-26-2021, 11:07 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
8,497 posts, read 5,994,953 times
Reputation: 12383
Quote:
Originally Posted by GreenBouy View Post
That’s not what I asked you, and it’s irrelevant because you hold mortgages on your properties.
You do realize holding a mortgage lowers cash flow, but often increases roi?
In the above example if you add in a mortgage for 80k, you add a payment of 367 per month at 3.67% which is 4,044 per year
Subtract that from the example cash flow of 10,008 it leave you with a net of $5604.
You no longer have 100k invested, but 20 k invested
At 100k you have about. 10% roi per year.
At 20k and carrying a mortgage you have a 28% roi.

I have done this. Paid cash, refinance, buy another with the proceeds from the refinance.
Mine are a bit different. I put in about 50k, pulled out about 75k on the refi, but still cash flow a few hundred a month. Took the 75k and bought another 50k house and pocketed the extra 25k. Do this twice and tAke the pocketed 50 k and get a third house basically for free.
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Old 02-26-2021, 04:46 PM
 
13,262 posts, read 15,867,762 times
Reputation: 20187
I do not have the mindset to be a landlord............I'm very black and white, pay your rent, live there another month. I don't want excuses, I don't want headaches and letting other people's problems creep into my life (and balance sheet).

House flipping, sign me up. I've done a few, some were short term holds (13 months), some were 45 day deals. I'll take profits and move on vs. dream on a longer/future score. The eviction moratorium imposed during Covid would have given me a stroke if the tenants didn't pay.
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Old 02-26-2021, 05:13 PM
 
3,345 posts, read 4,769,346 times
Reputation: 4392
Quote:
Originally Posted by City Guy997S View Post
I do not have the mindset to be a landlord............I'm very black and white, pay your rent, live there another month. I don't want excuses, I don't want headaches and letting other people's problems creep into my life (and balance sheet).

The eviction moratorium imposed during Covid would have given me a stroke if the tenants didn't pay.
I am of this mindset. Having non paying tenants and then eventually having to pay to evict them and clean up their %$#@$ would cause me sleepless nights. I had a cousin who had several houses . The stories that she told and that was way before COVID.

I am not talented to flip but if you can do it, more power to you.
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Old 02-26-2021, 05:19 PM
 
49 posts, read 35,759 times
Reputation: 191
Quote:
Originally Posted by aslowdodge View Post
Stupid statement.
I have been a landlord for 40 yeArs. Never got a call in the middle of the night. A serious problem is a broken water main with water shooting out and flooding the house. Not a malfunctioning toilet unless it was flooding.

I now have a property manager for my rentals which is over 20. I don’t ever get calls when things go wrong at night unless the house burned down.

Try again.
It doesn't matter what your experience is; to call real concerns "stupid" is just plain, well - stupid. You have told us already how you are not a typical landlord, you have many expensive and exotic cars, retired early, make a lot of money and take fancy vacations at a whim. As if anyone here cares about your lifestyle. The topic of this thread, if you were to refer to the title, is that there is something wrong with flipping houses, rather than keeping them in a rental portfolio, that it is "nuts." I disagree completely but you have all the answers for everyone, not just yourself.

I disagree because not every landlord has a manager for their properties and many need to deal with flooding problems, electrical failures, HVAC problems, fires and other health and safety issues that must be dealt with immediately. I find it extremely hard to believe that in forty years of owning rental properties you have "Never got(sic) a call in the middle of the night," you must be very lucky.

I haven't even mentioned those problems that do not require immediate attention but must certainly be addressed such as broken windows and doors, failed appliances, tenants who do not pay, make a nuisance for others, damage property or disappear in the middle of the night leaving destruction in their wakes. Not everyone cares to do this and would simply prefer to make money by flipping a property and moving on to the next than to tie themselves to a long term lifestyle they want no part of as testified to by many writers here including the two directly above.

Last edited by robocall; 02-26-2021 at 06:25 PM..
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Old 02-26-2021, 05:36 PM
 
4,268 posts, read 8,166,055 times
Reputation: 4384
Both rentals and rehabs are a part of my business model and have been for over 15 years. Some houses that I rehab would make bad rentals, but I can clear a quick profit by rehabbing it and quickly getting it on the market.
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