Real Estate Investing

[bartletsamerica]

I may be shooting in the dark here, but wanted to see if anybody here had any books/programs/insights you could recommend for someone just beginning to think about investing in real estate.

Looking to build net worth and possibly develop a passive income - one house at a time. Just moved to a location that has a robust and healthy rental market (highly transitory population) but don't have any idea of the pitfalls or strategies that I should contemplate.

Any insight would be appreciated. If not, God bless and go Cats.

 

[BeAllied]

Is there an active "cancel rent" movement in that city? Is public housing being expanded?

You won't truly build net worth if the value of dollar is diminished through inflation.

A lot of real estate investors are going to be turned upside down when they realize that so many people under the age of 30 won't be able to afford to buy their price inflated home over the next couple of decades, nor do they want the trouble of actually owning one.

 

[JumperJack]

I agree. Why would you want to risk that when there is now a party in power that seems to want to take away the ability to make profit from anything they deem a “right”?

 

[UKRob 73]

Go to the website www.biggerpockets. it's the most comprehensive website for real estate investing. Start there.

 

[Deeeefense]

Most of the small time investors I know that made a really good return on real estate were house flippers. If you have time and the skills you can do a lot of the upgrades yourself, if you're like me and hate that kind of thing you can usually find people with carpenter and handyman skills that will work reasonably, or take on a partner - you float the deals, he does the work, then you split the profit. Look for distressed sales, or banks will give you lists of repos they want to move.

 

[birdforbogey]

Most of the small time investors I know that made a really good return on real estate were house flippers. If you have time and the skills you can do a lot of the upgrades yourself, if you're like me and hate that kind of thing you can usually find people with carpenter and handyman skills that will work reasonably, or take on a partner - you float the deals, he does the work, then you split the profit. Look for distressed sales, or banks will give you lists of repos they want to move.

This is really good advice. Being a landlord is a pain in the arse.

 

[gobigblue812_rivals29381]

Buy low, sell high.

 

[LineSkiCat14]

I own a duplex specifically for passive income. Ask me whatever.

I will say this.. I started out thinking I was going to make some collection of properties to just live off of. And every few months that passes, I become less and less interested. I was thinking of 10 to 15 properties over the next 20 or 30 years.. As of now? I MIGHT buy a second property.. and even typing this gives me agita. Where's the bourbon and tums?

 

[UK4number9]

If you are the kind of person who can fix things, it helps. If you have to pay someone every time something needs repairs it hurts. I would only buy property I can monitor. I had property 3 hours away from where I live now and it’s a pain. Finally sold it because not was too much trouble.

 

[Bill Cosby]

I own a duplex specifically for passive income. Ask me whatever.

I will say this.. I started out thinking I was going to make some collection of properties to just live off of. And every few months that passes, I become less and less interested. I was thinking of 10 to 15 properties over the next 20 or 30 years.. As of now? I MIGHT buy a second property.. and even typing this gives me agita. Where's the bourbon and tums?

Had the exact same plan. Buying a duplex when I was young and single, living in half and renting out the other half was one of the best financial decisions I’ve ever made. But at this point I don’t even have the time to manage one residential rental. Thankfully I’ve had two easy long term tenants. I charge below market simply so I don’t have to deal with any issues while staying break even.

 

[gobigblue812_rivals29381]

I bought a house to flip and thought worse case scenario I would rent it out if I couldn't make a nice profit. Luckily, I got full asking price and sold it. Looking back I would have regretted renting it. I don't want to deal with all of the headaches of being a landlord.

With that being said, I probably won't flip any other houses. I do have friends that rent and have established nice passive incomes. Good luck to you.

 

[Ineverplayedthegame]

For 30 years, I have had a rental apartment attached to my place of business. When I first started, we lived there. When we built our second home, we moved back in. I can’t fix anything and had to hire all repairs. There were multiple times when someone would move out and I would choose to leave it empty vs. the hassle of renting it. I have had excellent tenants (2), mostly average ones, and (1) Carter Hayes.
Even in normal times, it is a process to evict somebody. Now, hahaha, GFL.

 

[BlueVelvetFog]

Here ya go

Invest

 

[bartletsamerica]

Here ya go

Invest

You succeeded. I clicked the link. Hair in a can, remember when that was big.

 

[BlueVelvetFog]

You succeeded. I clicked the link. Hair in a can, remember when that was big.

They never talked about if it rained

 

[bartletsamerica]

I suppose you just scream "I'M MELTING" and run away?

 

[LineSkiCat14]

It's a quarter time job.. not enough to be a part time job.. at least not every week. But yet, you need to put some time in. Repairs, paying taxes, changing the lease, communicating with your tenants, handling the lawns. There's something that always needs to be done, and if you got a week without doing ANYTHING for the house, it's probably not wise.

Location is key. I own in the Albany, NY market, which is probably one of the worst in terms of taxes and landlord legality. I pay $7,000/year in property and school taxes, which very much makes being a landlord in a place like Albany tricky. Your margins are slimmer. One big ticket item that goes, like a washer or hot water heater, and I'm likely in the red that month. This home in many parts of Florida would only have $1-2k in taxes, and that makes a huge difference.

I prefer to own in urban areas.. places near a college or a hospital will always have renters. You go out to the suburbs or rural areas and it's a lot more "trash".

 

[LineSkiCat14]

Here's my numbers if you're interested:
$150k for the house
$1,050/month for a 15-year mortgage
$600/month for taxes
$100/month for insurance

I get $925 for the 1st floor unit, and my GF and I live in the top. She pays $400/month, i handle the utilities.

So in some ways, you can say I'm LOSING money.. $1,750 monthly costs and only bringing in $1,325. But, keep in mind that's with an aggressive 15-year mortgage, I'm building equity, my tax refunds are YUGE, and my living costs are essentially $425/month.

Now, when we move out, our unit will rent for $1,200, and the bottom will be brought up to probably $1,100 (once my tenant leaves). So $2,300 in rent minus $1,750.. makes me $550/month. When the 15 year mortgage is up, that then becomes $1,600/month.

So even in a **** market like upstate New York, there's still money to be made. And I'll tell you, being 34, going through TWO economic disasters already.. it's nice knowing you have some side income always coming in. That safety net, and the thought of the money making potential for retirement, is big.

 

[UKRob 73]

You didn't put maintenance, vacancy, capital expenditures, etc in your expenses.

 

[UKRob 73]

Just fyi there are LOTS of ways to invest in real estate. Vacation rentals, turnkey, flips, wholesaling, house hacking, multi family etc etc. All have pluses and minuses. But the one sure fire way, easiest, most doable, that I've put over a dozen people into the business with is the BRRRR method.
You Buy a duplex ( that needs rehab), you rehab, you rent it out, you refinance and use that money to repeat.
Buy
Rehab
Rent
Refinance
Repeat.

Lots of information on the BRRRR method. Research it.

 

[bartletsamerica]

Refinance, I am trying to understand what you mean by that. You buy low on a mortgage. Then once rehabbed and renters in, get a new mortgage for the higher value, permitting you to buy another property - better than the first? While maintaining first property?

 

[UKRob 73]

Yes, if you buy a duplex that needs rehab, when you are finished, with tenants, it's worth more. You use that equity to buy the next one, keeping the first one. Repeat, repeat, repeat.

 

[LineSkiCat14]

You didn't put maintenance, vacancy, capital expenditures, etc in your expenses.

This was just a basic look into the numbers. But yes, absolutely. I haven't had a vacancy yet, but I've put about 10k of work into the house in each of the last two years.

 

[LineSkiCat14]

Just fyi there are LOTS of ways to invest in real estate. Vacation rentals, turnkey, flips, wholesaling, house hacking, multi family etc etc. All have pluses and minuses. But the one sure fire way, easiest, most doable, that I've put over a dozen people into the business with is the BRRRR method.
You Buy a duplex ( that needs rehab), you rehab, you rent it out, you refinance and use that money to repeat.
Buy
Rehab
Rent
Refinance
Repeat.

Lots of information on the BRRRR method. Research it.

That's next level stuff. And you're right, it's a great way to get yourself to 10-15 properties and then likely walk from your current job. But this takes a lot of work and a lot of time, and you almost need to run through a minefield, completely unscathed, to come out ahead. One bad tenant that eats up your day, or a missed item on an inspection costing 15k, could totally derail you.

The mistake I'm kind of regretting.. because I do want to get like 5-6 properties I think.. is that I went with that aggressive 15-year mortgage.. Totally ate into my cash flow.

 

[GnarlsBarkley]

Think about joining a local real estate investment club. Also helps to have a mentor, someone who is on their way to where you want to be.

I bought my first BURRRR in December

85k duplex with one unit rented for 600. The seller said the larger unit rented for 800 but idk if I’ll be able to get that seems high for the area but definitely could get 750. 20% down on a 30 year, payment is 4 something so I should have good cash flow. It’s also on a double lot that could fit another duplex the same size

 

[LineSkiCat14]

Think about joining a local real estate investment club. Also helps to have a mentor, someone who is on their way to where you want to be.

I bought my first BURRRR in December

85k duplex with one unit rented for 600. The seller said the larger unit rented for 800 but idk if I’ll be able to get that seems high for the area but definitely could get 750. 20% down on a 30 year, payment is 4 something so I should have good cash flow. It’s also on a double lot that could fit another duplex the same size

Just curious.. and I already know it's gonna piss me off.. but what are your taxes (property and school)?

 

[GnarlsBarkley]

Don’t have a school tax, I think school funding comes out of property taxes those are gonna be about 12-1300 a year, same for insurance.

 

[arasco]

I bought my first rental a couple years ago mostly as an inflation hedge and some diversification. Also, I wanted to test the waters on the idea of owning a few places and liked the idea of having the rental income for early retirement down the road. I had the perfect tenant who came with the place who basically never cared or noticed about any small issue and paid his rent on time every month. All has been fine. Paid cash for the place and figured I’d leverage later if I ever wanted.

2 years in and the tenant moved out and I’ve only broken even. New HVAC system, couple appliances biting the dust, and rehab after he moved out ate up all profits.

I’ve had it easy and realize I didn’t buy the best place, but I’ve also kind of lost the spark to build it into multiple properties while working 50 hours per week at my real career. I do have some interest in buying a nicer place and turning it into an Airbnb and fully outsourcing it.

if you have the time and desire, real estate is a great way to build assets while someone else pays for it, just make sure you truly have the time and desire.

 

[Chuckinden]

Good thread.

I own a good sized lot that is just sitting there that I pay someone to mow every week, as well as property taxes. I have been thinking about building some apartments on it, but want to wait to see if building materials go back down.

 

[LineSkiCat14]

Don’t have a school tax, I think school funding comes out of property taxes those are gonna be about 12-1300 a year, same for insurance.

God, I hate New York.. An 85k duplex here would still be like $4k in taxes and likely the same rent. It would also likely be in a ******** part of town being only 85k. Decent two-families up here basically start at $150k, and in a city like Albany, NY.. likely start at $225k.

 

[LineSkiCat14]

I bought my first rental a couple years ago mostly as an inflation hedge and some diversification. Also, I wanted to test the waters on the idea of owning a few places and liked the idea of having the rental income for early retirement down the road. I had the perfect tenant who came with the place who basically never cared or noticed about any small issue and paid his rent on time every month. All has been fine. Paid cash for the place and figured I’d leverage later if I ever wanted.

2 years in and the tenant moved out and I’ve only broken even. New HVAC system, couple appliances biting the dust, and rehab after he moved out ate up all profits.

I’ve had it easy and realize I didn’t buy the best place, but I’ve also kind of lost the spark to build it into multiple properties while working 50 hours per week at my real career. I do have some interest in buying a nicer place and turning it into an Airbnb and fully outsourcing it.

if you have the time and desire, real estate is a great way to build assets while someone else pays for it, just make sure you truly have the time and desire.

A solid inspector, just like having a great plumber, electricion, etc.. was key for me. He found about $15k in "majors", and I was able to get a seller's credit at the closing for like $10k. But there's always something that goes. In 2020 our steam furnace went.. had to fix a cracked tub for the tenant which led to a bathroom remodel.. took two weeks to repair, clean and stain the deck.. several clogs.. a fridge repair.

I usually tell people.. every few months that pass, I want less and less properties from when I first started. I wanted like 50 and figured I'd just be doing light property management.. I'm at the point where I think 3 max.

The AirBNB/VRBO route is the way to go, especially now that we got a large scale pandemic out of the way.. I have to imagine there are some deals on vacation properties, just from foreclosures and people wanting to get out. I was very close to buying a 3-bedroom cabin on an Adirondack lake, that needed about $50k of work done to it. Had a dock slip but no lake rights. It would have been a $1,500/month mortgage.. and weekly summer rentals could fetch up to $2,000. You could rent this thing out for like 8-9 weeks and it would pay for itself. Kicking myself for not jumping on it.

 

[mktmaker]

I agree. Why would you want to risk that when there is now a party in power that seems to want to take away the ability to make profit from anything they deem a “right”?

Thanks for bringing political BS to this thread.

Will we see you on the news next week?

Go to parler to mix with "your kind"

 

[LineSkiCat14]

Thanks for bringing political BS to this thread.

Will we see you on the news next week?

Go to parler to mix with "your kind"

TBH.. if you're a landlord, highly unlikely you're a democrat, or in favor of what a lot of big-city Dems are doing with tenant law. Good luck evicting someone in NYS. It will be months. The power is very much in the hands of the Tenant in states like New York and California. We could be looking at forms of rent control in upstate, simply because we're joined at the hip with NYC.

For example: One of the stipulations upsate NY is trying to add (a dem-run machine of a city) is to limit Security Deposits to no more than 1-months rent. I'm sorry, but as a landlord, hard pass. A SD isn't a way for me to collect money like I'm the Monopoly Man (although it IS there in case a tenant totally wrecks the place, as they often do).. a large security deposit can be used to deter tenants from being careless. If my tenants stands to lose $1,800 instead of $1,200.. that could be all the difference in how she treats the place I own. That's just one of many pro-tenant laws they are trying to enact, that would further reduce my margins.

I don't want to make things too political, and obviously there are plenty of times where we need to protect tenants, especially from the greedy 1,000 unit slum lords of the larger cities. But yeah, I can tell you first hand how liberal policies, law-making and taxation are hurting us smaller landlord's ability to make a profit.

https://dailygazette.com/2019/06/13/upstate-rent-control-set-to-become-an-option/

Just some food for thought.

 

[UKRob 73]

It's hard to talk about real estate right now without bringing up politics. All the real estate investing web sites are all totally fixated on it.
Biden has proposed to take away the property exchanging, raising capital gains and extending the no evictions through September.
As an example, It has costed me a little over $40k not being able to evict. I pay all utilities in my units, so it's not just lost rent, it's actual loss.
The no evictions has been going on now almost a year, if Bidens Sept deadline passes, thats exactly 1 1/2 years that I will have to provide free housing and utilities to people. Have you had to work for free for a year and a half? Anybody else have to give a product away for free?
I'm sorry that hurts your feelings, but you can't talk about real estate right now without addressing it.

 

[LineSkiCat14]

It's hard to talk about real estate right now without bringing up politics. All the real estate investing web sites are all totally fixated on it.
Biden has proposed to take away the property exchanging, raising capital gains and extending the no evictions through September.
As an example, It has costed me a little over $40k not being able to evict. I pay all utilities in my units, so it's not just lost rent, it's actual loss.
The no evictions has been going on now almost a year, if Bidens Sept deadline passes, thats exactly 1 1/2 years that I will have to provide free housing and utilities to people. Have you had to work for free for a year and a half? Anybody else have to give a product away for free?
I'm sorry that hurts your feelings, but you can't talk about real estate right now without addressing it.

Thankfully, my tenant has paid.. but she's also at about 10-12% under market value for rent, I took off 1-month rent for COVID reasons as a gift (Only her portion of the rent as she's Section 8.. so 1/3rd), and I'm a pretty reasonable landlord who is responsive.. so her not paying rent would just mean that she'd be evicted the minute that ban is up and would wind up in a worse situation. I made it so she has no option but to pay rent and not try any funny stuff.

My question though: If a tenant were to not pay rent, knowing they can't be evicted, don't tenants still have to pay the amount they missed at the end, as in, this is just a temporary freeze more or less? I was under the impression that landlords are still entitled to this money and can sue for it, just not until the ban is lifted.

Not that this helps. Landlords still have mortgage, expenses, taxes, etc.

 

[GnarlsBarkley]

It's hard to talk about real estate right now without bringing up politics. All the real estate investing web sites are all totally fixated on it.
Biden has proposed to take away the property exchanging, raising capital gains and extending the no evictions through September.
As an example, It has costed me a little over $40k not being able to evict. I pay all utilities in my units, so it's not just lost rent, it's actual loss.
The no evictions has been going on now almost a year, if Bidens Sept deadline passes, thats exactly 1 1/2 years that I will have to provide free housing and utilities to people. Have you had to work for free for a year and a half? Anybody else have to give a product away for free?
I'm sorry that hurts your feelings, but you can't talk about real estate right now without addressing it.

Did you have any of your tenants sign up for the relief program? I’m in Indiana (Louisville Metro) and the guy I bought my duplex from said he had all his renters sign up for some sort of COVID related program and he got a few months rent from each deposited directly into his account.

Also what property management software do you recommend

 

[Lexie's Dad]

Buy low, sell high.

Last time I bought high I got a shitload of Cheetos.

 

[UKRob 73]

Did you have any of your tenants sign up for the relief program? I’m in Indiana (Louisville Metro) and the guy I bought my duplex from said he had all his renters sign up for some sort of COVID related program and he got a few months rent from each deposited directly into his account.

Also what property management software do you recommend

Yes I've gotten funds from Community Ministries, St.Vincent Depaul, LIHEAP, Office of Community and Resilience, etc etc. Most tenants are good and decent and apply for available funds. It's the ones gaming the system that are messing everything up. I have over a 100 units, with some tenants paying $1000 a month. Doesn't take long for one tenant to get $10k behind. It's only a handful of tenants causing all my losses.

For software, try Cozy.

 

[UKRob 73]

Thankfully, my tenant has paid.. but she's also at about 10-12% under market value for rent, I took off 1-month rent for COVID reasons as a gift (Only her portion of the rent as she's Section 8.. so 1/3rd), and I'm a pretty reasonable landlord who is responsive.. so her not paying rent would just mean that she'd be evicted the minute that ban is up and would wind up in a worse situation. I made it so she has no option but to pay rent and not try any funny stuff.

My question though: If a tenant were to not pay rent, knowing they can't be evicted, don't tenants still have to pay the amount they missed at the end, as in, this is just a temporary freeze more or less? I was under the impression that landlords are still entitled to this money and can sue for it, just not until the ban is lifted.

Not that this helps. Landlords still have mortgage, expenses, taxes, etc.

Yes you can certainly get a judgement for the back rent. But it's then up to you to collect. I learned 20 years ago that you will always spend more in trying to pursue that money, than what you will actually receive. And that's IF you ever receive it.

 

[MychalG]

At one time I owned 5 rental houses. They are time consuming and money consuming. Sold them all, invested the money in other areas. Every time I mention getting back into it, my wife tells you are on your own. She would probably file divorce if I ever dragged her back into that business.