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  • Another real estate/investment thread

    I think it was either chase or chickenmonkey who posted a couple months ago about buying houses/condos and renting them out.  Can either of you provide any updates?  What about anyone else?  I seem to remember most people saying it was a PITA and not worth the return.

    What about buying vacant (residential) land and holding onto it for 10 plus years?  You won't be bringing in any rent and you will still have to pay yearly taxes on it, but if you can pay cash you should be able to make a profit if the land goes up over time.  Plus, you won't have to deal with any tenants. 

     

     

     

    http://www.reverbnation.com/thedubiouscapture

  • #2

    I think owning one or two is more of a pain in the ass than owning 10+. My wife and I have two (a duplex) that we have rented through section 8. Somehow, this duplex knows when we're starting to catch up financially because the second we think we're doing okay, the furnace will crap out or the roof will collapse or the tub will fall through into the kitchen or we'll get an infestation of giant zombie fire ants.

    It is a good tax write-off, though. 

    I think if you have enough units that the you can afford to have one or two empty for renovations or whatnot, you're in a better spot. Plus, with that many, you can hire a handyman to do most of the **************** instead of doing it yourself.

     

     

    www.kingsofthedrink.com







    Originally Posted by Prages


    I think everyone in the world has been lonely at some point in their life...and most of them could have probably written a more betterest song about it.









    Originally Posted by tiger roach


    Once my mom told me not to go outside because there was a bird fight going on. I thought, "Bird fight, WTF? She can't really think I would fall for that crap." So I went outside anyway and a bird pecked me on the head.









    Originally Posted by gennation


    Negatory, even dressed as a man I'm more of a man than you.

    Comment


    • Yer Blues
      Yer Blues commented
      Editing a comment

      Yeah... I hear you.  That is kind of what a lot of people have been saying.  Plus, I am not handy at all so I would definitely have to pay someone to do almost everything.  I was thinking a newer condo.  It would have a HOA, but that would be included in the rent price and take care of outside repairs.  The other stuff I would have to pay for. 

      Or, like I said... land. I am willing to payout for 10 years or so to get a greater return than my bank account will give me.

      I guess there is no sure thing and nothing is easy or everyone would be doing it.

       


    • Monson
      Monson commented
      Editing a comment

      fanuvbrak wrote:

      I think owning one or two is more of a pain in the ass than owning 10+. My wife and I have two (a duplex) that we have rented through section 8. Somehow, this duplex knows when we're starting to catch up financially because the second we think we're doing okay, the furnace will crap out or the roof will collapse or the tub will fall through into the kitchen or we'll get an infestation of giant zombie fire ants.

      It is a good tax write-off, though. 

      I think if you have enough units that the you can afford to have one or two empty for renovations or whatnot, you're in a better spot. Plus, with that many, you can hire a handyman to do most of the **************** instead of doing it yourself.

       

       


      lol @ "giant zombie fire ants"

      Do your laws make the owner responsible for all maintenance? Over here (Denmark) it varies a bit so that sometimes the tenant is responsible for the interior while the owner must maintain the exterior.


  • #3

    Buying anything that doesn't throw off cash on a regular basis but instead relies on resale at a higher price to pay off is a speculation, not an investment.  Nothing wrong with speculation per-se but the distinction is important IMO.

    To be worthwile, your selling price must be high enough to cover:

    - Your purchase price.

    - Property taxes.

    - Unknown risks of holding the property (didn't know it was a mercury dump in the 30s? Too bad.).

    - Time value of money.

    ... and still give you a better annual return than a risk-free investment.

     

    You may have good reasons to think this is likely to happen.  You may know more than the people who are selling the property at a low price.  If so, good for you.  You may have your hands on a worthwhile speculation.   But simply assuming that such an outcome is likely because it happened in the past is something else entirely (read: stupid).

    ____________________________________________
    The Homebrews!http://home.bellsouth.net/p/PWP-rupertamp

    "The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong it usually turns out to be impossible to get at or repair." -Douglas Adams, Hitchhiker's Guide to the Galaxy

    Comment


    • Yer Blues
      Yer Blues commented
      Editing a comment

      RupertB wrote:

      Buying anything that doesn't throw off cash on a regular basis but instead relies on resale at a higher price to pay off is a speculation, not an investment.  Nothing wrong with speculation per-se but the distinction is important IMO.

      To be worthwile, your selling price must be high enough to cover:

      - Your purchase price.

      - Property taxes.

      - Unknown risks of holding the property (didn't know it was a mercury dump in the 30s? Too bad.).

      - Time value of money.

      ... and still give you a better annual return than a risk-free investment.

       

      You may have good reasons to think this is likely to happen.  You may know more than the people who are selling the property at a low price.  If so, good for you.  You may have your hands on a worthwhile speculation.   But simply assuming that such an outcome is likely because it happened in the past is something else entirely (read: stupid).


      Rubert, very informative.  What would you recommend looking into?  My goal is to retire as soon as possible. 


  • #4
    This site just let me type a thoughtful, lengthy response without being signed in, so that when I hit submit, it vaporized. Short version--we've just bought a second rental, we're in the black on the first and have an even better margin set up for the second. We draw a very modest income from them (as in, there are sometimes when my band out earns the rental). Small potatoes, but we're using someone else's money to build equity, which we've tapped at times to make further investments (or to redo our kitchen...)
    Jukejoint Handmedowns (my band)

    Find our album on iTunes!

    A Month of Songs (Songwriting blog)







    Originally Posted by gennation


    Neither of us is gay or anything, it just happened.

    Comment


    • Blues In Me
      Blues In Me commented
      Editing a comment
      I'm currently renting my house out (I moved into my wife's house when we got married). The rent covers my mortgage, taxes and insurance plus about $100/mos profit.

      We can't sell right now due to the market conditions. Worse case scenario is we hold onto it, let our tenants pay it off and have another asset under our name that brings in some income.

      Being a landlord can be a PITA though. But still better than taking a huge on a sale or killing hard earned credit ratings by letting the bank take it.

  • #5

    In the era of cheap mortgage money, there were a lot of people buying rental properties, then leveraging them to buy more...and more.

    Many did quite well for quite awhile. The ones who survived the crash are now holding numerous upside-down properties, scrounging for cash to keep the banks away. In a few years, if prices rise, they will probably be okay.

    I ventured into the rental market just prior to the crash. I bought a nice old late 19th century duplex townhouse in a crumbling industrial town where the prices of property were low, and the rents were high enough to provide "cash flow" (which is part of the model that RupertB is talking about). I even got a section 8 renter in a "turnkey" property so that I had no problem covering the mortgage every month.

    Everything looked great on paper.  

    But then:

    The renter started calling & complaining about everything, including the other renters. 

    The "management company" I hired did not do a goddamn thing thing. 

    The renter my manager found for me & supposedly vetted turned out to be an old scam artist known locally for moving into people's places, paying no rent, answering no phones, and then waiting for eviction (which took 3+ months). I had to bring a couple of goons and throw that old gold-digging bitch out in sub zero weather. 

    The heater died on Christmas in the middle of a snowstorm. I had to abandon my own family and go solve my renter's (completely legit) problem.

    Sewage from the city line backed up into the basement routinely (you haven't lived until you've waded through four inches of **************** with green-peppers floating in it). This happened every month or so and would have cost me $10,000 to fix if I hadn't unloaded the place.

    The renter set up an illegal pool in the backyard, forcing me to pay a fine. She also set up a washing machine on the second floor, which leaked into my first floor unit. (I couldn't evict her because it threatened my Section 8 money)

    The city set up routine "inspections" that I had to pay for -- and always found something small to complain about so I had to pay for more inspections.

    The Section 8 agency began to demand that I do unimportant **************** like pay to re-painting of the exterior.

    The refrigerator died and had to be replaced. 

    On and on.

    When I sold it after 1.5 years at a $20,000 loss (after the real estate bubble crashed) I counted myself lucky. I got far more for that $20,000 than I ever got from books in grad school.

    Here are the lessons I took away.

    1. Everything can look great on paper, and still go to ****************.
    2. Be prepared to be "hands on" your property: no one else gives two ****************s about it, even if you pay them to do so.

    3. Be a landlord near where you live so you can "drop in" any time and let workers in the door etc. (I was about an hour away, which was too far)

    4. Don't buy property where you have to rent to poor people: you will spend so much time fighting for rent that it won't be worth it.

    5. Don't buy property where you have to rent to poor people: you will out of necessity become a slum landlord because there is no incentive to drop tens of thousands into a unit that earns you a few thousand a year.

    6. Do not expect to buy a place and let it "run itself" because it probably won't. If you buy 1 property like I did, you get a LOT of hassle and a small profit. If you play the game right and buy lots of properties, you get hassles of scale: it increases with each unit until your entire life is consumed by it. (A co-worker of mine has 30+ properties and although he is rich on paper, he is VERY stressed)

    7. Be prepared to be handy yourself. You will save a lot of money in the long run.

    8. Watch "The Queen of Versailles" to learn about how NOT to leverage yourself into a place where, if the market falls out from under you, you go from riches to rags.

     

    Comment


    • harold heckuba
      harold heckuba commented
      Editing a comment

      ^^^^^  Although I was too lazy to type in a long response, the above mimics

      a lot of my experience (except the beach property).

       

      Very good and smart synopsis.



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