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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 Chas863
How long have you been in the rental business? How much of your own money have you invested in it? How many properties do you own?
My story on my rentals is here on CD in many places.
Currently have 18 rentals myself and my Self directed Retirement accounts own 5.
On the 18, I have 5 cash out refinances
On those 5, I paid $294,383 to buy and repair upon purchase
I have cash out refinance loans for a total of 456,796 meaning I got all my money invested in them plus pocketed 162,413.
after servicing the mortgages plus all other expenses the 5 properties net cash flow $1305 a month or 15,660 per year.
The return is how you want to figure it since there is no money invested since I got it all back and then some. But if you want to call it one dollar instead of zero, then it's a 15,660x roi.
The other 13 have no loans, paid cash.
The 5 in my roth SDI are also paid for in cash. I won't factor those in since they are tax free cash cows I haven't bothered taking any distributions from.
The 18 for myself including factoring in the cash out loans leave me with 455K invested of my money.
My story on my rentals is here on CD in many places.
Currently have 18 rentals myself and my Self directed Retirement accounts own 5.
On the 18, I have 5 cash out refinances
On those 5, I paid $294,383 to buy and repair upon purchase
I have cash out refinance loans for a total of 456,796 meaning I got all my money invested in them plus pocketed 162,413.
after servicing the mortgages plus all other expenses the 5 properties net cash flow $1305 a month or 15,660 per year.
The return is how you want to figure it since there is no money invested since I got it all back and then some. But if you want to call it one dollar instead of zero, then it's a 15,660x roi.
The other 13 have no loans, paid cash.
The 5 in my roth SDI are also paid for in cash. I won't factor those in since they are tax free cash cows I haven't bothered taking any distributions from.
The 18 for myself including factoring in the cash out loans leave me with 455K invested of my money.
Sounds like you're doing well. I understand about the cash out refinancing. But I would still like to know how long you've been in the rental investment business? A person doesn't accumulate that many single family rental houses unless they've been in the business for quite a while or sunk a lot of their own money into acquiring them, or both. Or, I suppose a third way would be to inherit them or marry someone who owns them.
And when you said you don't have a job, that's not true. Taking care of 23 houses is one hell of a job!
As for your cash flow, netting about $16K per year is not a hell of a lot of money for taking care of 23 houses. That's less than $700 per year per house. It wouldn't take more than a handful of additional expenses (roof replacement, HVAC replacement, all new flooring, etc) to wipe out that $16K.
Of course, looking on the bright side, if you can just break even on the cash flow and the houses are in nice areas, then you'll make money off the appreciation in price... which is where the real money is on SFH's anyway.
But then, the downside to that is that if you sell a house, you have to recapture ALL the depreciation you've taken to date on that house (which can be substantial) by reporting that as Ordinary Income to the IRS. Uncle Sugar is going to get his cut any way you go. Been there, done that, got the tee shirt.
If they are indeed buying 20% of the homes that come up on the market, that will support prices and keep prices from falling.
That's a lot of money to put into real estate, so they won't be able to keep it up for too long.
That's also a heck of a lot of rentals to keep track of and manage.
I do know of one guy who owns about 20,000 homes, but in a city like Phoenix, with a population of 1.6 million, that's not enough houses to control the housing market.
That's what I think...the hard part is managing the properties. It isn't like apartment buildings where there's an economy of scale and much simpler to manage and much less chance a tenant can wreck a property. It just seems like beyond a certain scale, it's going to be much harder to prevent the proverbial "Changing the Harley Davidson's oil in the living room."
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,574,670 times
Reputation: 16698
Quote:
Originally Posted by Chas863
Sounds like you're doing well. I understand about the cash out refinancing. But I would still like to know how long you've been in the rental investment business? A person doesn't accumulate that many single family rental houses unless they've been in the business for quite a while or sunk a lot of their own money into acquiring them, or both. Or, I suppose a third way would be to inherit them or marry someone who owns them.
And when you said you don't have a job, that's not true. Taking care of 23 houses is one hell of a job!
As for your cash flow, netting about $16K per year is not a hell of a lot of money for taking care of 23 houses. That's less than $700 per year per house. It wouldn't take more than a handful of additional expenses (roof replacement, HVAC replacement, all new flooring, etc) to wipe out that $16K.
Of course, looking on the bright side, if you can just break even on the cash flow and the houses are in nice areas, then you'll make money off the appreciation in price... which is where the real money is on SFH's anyway.
But then, the downside to that is that if you sell a house, you have to recapture ALL the depreciation you've taken to date on that house (which can be substantial) by reporting that as Ordinary Income to the IRS. Uncle Sugar is going to get his cut any way you go. Been there, done that, got the tee shirt.
I’ve been doing rentals for 30 years plus. Lost everything banking on appreciation at the crash except for my own place. Next time around I went for cash flow first.
About 7 years ago i started again. I bought a rental which doubled in value. 1031 exchanged it into 6 houses in a cheaper market which cash flowed.
At the same time I converted sold my 150k in mutual funds in my Ira after converting to a sdira. Bought more houses and over time took the profits they made to buy more rentals. Now there’s five in it .
A year after that I sold the place I was living and moved to a lower col area. Rented a house and Took the proceeds and bought 6 more rentals. Etc etc.
I spend about 1-2 hours a month tracking the revenues and expenses on all the properties. If you want to call that a job so be it. My property manager handles everything else. I live about 800 miles from my properties so not a lot I can do personally to run them. I like overwatching my numbers. Realistically the software my property manager uses generates reports so if I wanted I could just skip the few hours I do every month and hand the report to my cpa at the end of the year.
Also as far as income, you are looking at only the 5 that carry mortgages. Those already have expenses factored in. Yes those 5 have a small cash flow, but remember I got them for free plus an additional 164k. A small cash flow of 15k a year on something you didn’t pay for is pretty good. Would you turn down 15k a year for free? Plus the 164k in addition for free?
Btw that is not 700 per home, it is about 3,000 per home.
You are also not adding the other 18 houses I have,free and clear that generate cash flow.
As far as depreciation recapture, I’m not worried about that. I bought these not to resell, but as cash cows for the rest of my life to live off of. So no taxes will ever be paid. My heirs will get them when I die.
Selling and paying taxes . . if I want a lump sum I do what I did with the 5, cash out refinance and not pay capital gain taxes. Plus they still cash flow a small amount.
All in all starting with my home I lived in and cashing out for the 6 homes and then selling the one rental for 6 more took me about 5 years. Rental proceeds helped buy more.
I have a few friends that took about 5 years and did things the same way and they are all retired traveling the world. They did it buying for cash flow and not appreciation and are living off that cash flow using property managers.
Sounds like you're doing well. I understand about the cash out refinancing. But I would still like to know how long you've been in the rental investment business? A person doesn't accumulate that many single family rental houses unless they've been in the business for quite a while or sunk a lot of their own money into acquiring them, or both. Or, I suppose a third way would be to inherit them or marry someone who owns them.
And when you said you don't have a job, that's not true. Taking care of 23 houses is one hell of a job!
As for your cash flow, netting about $16K per year is not a hell of a lot of money for taking care of 23 houses. That's less than $700 per year per house. It wouldn't take more than a handful of additional expenses (roof replacement, HVAC replacement, all new flooring, etc) to wipe out that $16K.
If I read his answer right, that's for five houses. The other 13 are owned free and clear.
I’ve been doing rentals for 30 years plus. Lost everything banking on appreciation at the crash except for my own place. Next time around I went for cash flow first.
About 7 years ago i started again. I bought a rental which doubled in value. 1031 exchanged it into 6 houses in a cheaper market which cash flowed.
At the same time I converted sold my 150k in mutual funds in my Ira after converting to a sdira. Bought more houses and over time took the profits they made to buy more rentals. Now there’s five in it .
A year after that I sold the place I was living and moved to a lower col area. Rented a house and Took the proceeds and bought 6 more rentals. Etc etc.
I spend about 1-2 hours a month tracking the revenues and expenses on all the properties. If you want to call that a job so be it. My property manager handles everything else. I live about 800 miles from my properties so not a lot I can do personally to run them. I like overwatching my numbers. Realistically the software my property manager uses generates reports so if I wanted I could just skip the few hours I do every month and hand the report to my cpa at the end of the year.
Also as far as income, you are looking at only the 5 that carry mortgages. Those already have expenses factored in. Yes those 5 have a small cash flow, but remember I got them for free plus an additional 164k. A small cash flow of 15k a year on something you didn’t pay for is pretty good. Would you turn down 15k a year for free? Plus the 164k in addition for free?
Btw that is not 700 per home, it is about 3,000 per home.
You are also not adding the other 18 houses I have,free and clear that generate cash flow.
As far as depreciation recapture, I’m not worried about that. I bought these not to resell, but as cash cows for the rest of my life to live off of. So no taxes will ever be paid. My heirs will get them when I die.
Selling and paying taxes . . if I want a lump sum I do what I did with the 5, cash out refinance and not pay capital gain taxes. Plus they still cash flow a small amount.
All in all starting with my home I lived in and cashing out for the 6 homes and then selling the one rental for 6 more took me about 5 years. Rental proceeds helped buy more.
I have a few friends that took about 5 years and did things the same way and they are all retired traveling the world. They did it buying for cash flow and not appreciation and are living off that cash flow using property managers.
Sorry. I missed the part about the cash flow being for just these 5 houses. Also, the property managers sound like a great idea provided you have good ones, and it sounds like you do. Good job!
The vultures snapping up homes at a bargain to rent out are making it very hard for people of modest means to purchase one that is affordable to them. It forces them to continue to rent and pay a higher percentage of their income towards housing than if they bought a home and paid less for a mortgage. It's greed, pure and simple.
The vultures snapping up homes at a bargain to rent out are making it very hard for people of modest means to purchase one that is affordable to them. It forces them to continue to rent and pay a higher percentage of their income towards housing than if they bought a home and paid less for a mortgage. It's greed, pure and simple.
No one is buying anything at a bargain right now...
BlackRock is the world’s largest asset manager with some $7 trillion, yes, trillion, under management invested in over 100 countries. That’s more than the combined GDP of Germany and France. They dominate the stock ownership of every major exchange in the world, top shareholders of the major oil companies and world largest coal companies.
This particular article is talking about how the world's elite are using climate change agenda as an investment vehicle, which is off-topic, but I'm referencing it in relation to their influence.
The relevance to our discussion here is that those people, buying up single-family homes, are behind the global urban design agenda, which includes destroying single-family homes and putting up large apartment complexes. You buy a single family home, and put in a 40-unit apodment. That $600K investment is now worth millions.
The $2 trillion dollar stimulus package that Biden is pushing (at the behest of those elites) REQUIRES that localities eliminate single family housing if they want any money for infrastructure or transportation.
BlackRock is the world’s largest asset manager with some $7 trillion, yes, trillion, under management invested in over 100 countries. That’s more than the combined GDP of Germany and France. They dominate the stock ownership of every major exchange in the world, top shareholders of the major oil companies and world largest coal companies.
This particular article is talking about how the world's elite are using climate change agenda as an investment vehicle, which is off-topic, but I'm referencing it in relation to their influence.
The relevance to our discussion here is that those people, buying up single-family homes, are behind the global urban design agenda, which includes destroying single-family homes and putting up large apartment complexes. You buy a single family home, and put in a 40-unit apodment. That $600K investment is now worth millions.
The $2 trillion dollar stimulus package that Biden is pushing (at the behest of those elites) REQUIRES that localities eliminate single family housing if they want any money for infrastructure or transportation.
You are absolutely correct, especially in the last sentence. The government will deny state and local municipalities funding, if they do not comply with changing their zoning laws accordingly. Most don't bother to read or educate themselves on the fine print. But hey, don't worry, the government will take care of us all!
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Been there, done that, got the tee shirt.
