Any real estate investors around?

[MrWunderful | 2,927]

Ive been kicking around investing in rental properties, out of state. Starting an LLC and all that, just for the passive income. Pure turnkey with property management, minimal effort except for supplying capital. 
 

Curious if anyone else manages a portfolio, or has any advice/tips/stories etc. 

[spacepup | 2,412]

Advice: Please don't buy in my city.  Outside investors are buying all the available homes and renting them, such to the extent it is actually getting difficult for homeowners in lower price ranges to buy houses here.

Apparently this is a phenomenon that is occurring nationwide and is getting quite popular.  At first I thought it was just anecdotal, but after talking with realtors and going through the process of selling and buying a house last year, I became aware that is actually a major issue.  Buyers in higher price ranges are usually fine, but people looking to buy affordable housing are having a much harder time because of supply.

Having said all that, obviously it's your money and you're not doing anything illegal, but if you can buy local, that'd be cool hah!  Or just buy up the McMansions!

[Reed Rothchild | 9,584]

Do not try to do the property management yourself.  What a nightmare that was.

[fox | 1,673]

Stay out of my neighborhood.  Don’t need a wannabe slum lord muscling out families and home owners and letting in a bunch of derelict renters.

[FireHazard51 | 2,052]

1 hour ago, MrWunderful said:

Ive been kicking around investing in rental properties, out of state. Starting an LLC and all that, just for the passive income. Pure turnkey with property management, minimal effort except for supplying capital. 
 

Curious if anyone else manages a portfolio, or has any advice/tips/stories etc. 

The only thing I've heard that is close to what your saying is a co-worker who's husband is in the military.  So every 2-4 years they hop around the country because of his job with the military.  When they move they always buy a house.  When they move again they have the house looked over by an agency who manage the property and the income they receive covers the mortgage and taxes.  After he retires from the military they plan to sell the homes.  Sounds like something that has been done frequently with military personnel who can afford to buy the houses and rent them out.  Given they are around bases I take it they assume there is a market for renting to people who plan on moving in a couple years.  Also since they live in the home they are very well informed buyers when they do the purchase since they will be living in it and know it will be a rental in a couple years.

There are a lot of risks with investing in rental properties just like there are risk with almost any investments.  But the way the market is going I really do feel like the houseing market is in another bubble.  Not as bad as before but shit just nuts and I can't see it being sustained. 

[MrWunderful | 2,927]

@Reed Rothchild I am figuring on 10% cost per rental to sub out property management. I want to do the minimal amount. 
 

@ everyone else, while I most likely won’t be buying “in your neighborhood” the entire blame doesn't fall on outside investors. 50% of the blame should fall on your local agents and sellers, who also try to reap the maximum profit, screwing over their neighborhoods in the process. 
 

A lot of people bitch about Californians and New Yorkers buying in places like Idaho, but local Idaho agents blanket our airwaves with how cheap the property is and investment opportunity. 
 

The easiest way to stop out of town investors is to pass legislation to require residency or enact rent control. 
 

Without that its just pure capitalism baby. 

[FireHazard51 | 2,052]

8 minutes ago, MrWunderful said:

Without that its just pure capitalism baby. 

This reminds me of a statement that Kai Ryssdal always says on his podcast Make Me Smart, "Capitalism doesn't care if you live or die."  Basically Capitalism has no morals/ethics so be weary of blindly following it and sure as shit don't expect companies to do the "right thing".  

[fcgamer | 4,753]

27 minutes ago, MrWunderful said:

Without that its just pure capitalism baby. 

At least use proper grammar, dude.

[Reed Rothchild | 9,584]

It's famously bad here.  I'm the only native Montanan on my street, with people selling their homes in places like Denver and California, and then buying with cash offers.  Many of the locals have already fled after being priced out.  Even the rural towns 30 miles away have been engulfed.

It's slowed down with the hikes in interest rates, but I don't really see Humpty Dumpty being put back together again.  Buying a house going forward is not going to be feasible for many people.

When we sold our rental it was bought sight unseen by an investor.

[Code Monkey | 2,013]

I've been trying to get into investment properties recently and I didn't know you could buy somewhere else in the country and have someone else manage it. Thanks for letting me know.

[Tabonga | 2,337]

1 hour ago, MrWunderful said:

 

The easiest way to stop out of town investors is to pass legislation to require residency or enact rent control. 
 

 

[Daniel_Doyce | 477]

Sounds like a recipe for disaster. Have you looked into REITs? That's a safer way to generate rental income by proxy without all the headaches and lack of diversification implicit in owning properties yourself.

This is (IMO) a bad time to buy any real estate. Mortgage delinquencies are going up slightly and higher interest rates all point to house prices going south in the next few years.

 

[a3quit4s | 4,125]

Real estate? Pssshhh buy more graded games!

[RH | 4,966]

I'm into rental real estate investing. I own some REITs.

[MrWunderful | 2,927]

31 minutes ago, Daniel_Doyce said:

Sounds like a recipe for disaster. Have you looked into REITs? That's a safer way to generate rental income by proxy without all the headaches and lack of diversification implicit in owning properties yourself.

This is (IMO) a bad time to buy any real estate. Mortgage delinquencies are going up slightly and higher interest rates all point to house prices going south in the next few years.

 

Reit looks interesting, I will research more. And my goal is to save the capital I have sitting here from inflation by investing in RE, and am looking at taking advantage of market cool off. 

[MrWunderful | 2,927]

6 minutes ago, RH said:

I'm into rental real estate investing. I own some REITs.

Do you see dividends based on appreciation as well?

[RH | 4,966]

1 minute ago, MrWunderful said:

Do you see dividends based on appreciation as well?

I drip them back into the REITs.   I wanted to put my extra cash for a time into investments with reasonably high dividends.  The values of the stocks over the past couple of years has gone down, mostly with the market but my share base (I guess, whatever you call it) is growing.

Anyway, I was selective and I think investment in rental property long-term makes sense.  People have to have places to live.  I'm not expert in this stuff but so far I've not been unhappy with my decisions.

[phart010 | 1,708]

4 hours ago, MrWunderful said:

@Reed Rothchild I am figuring on 10% cost per rental to sub out property management. I want to do the minimal amount. 
 

@ everyone else, while I most likely won’t be buying “in your neighborhood” the entire blame doesn't fall on outside investors. 50% of the blame should fall on your local agents and sellers, who also try to reap the maximum profit, screwing over their neighborhoods in the process. 
 

A lot of people bitch about Californians and New Yorkers buying in places like Idaho, but local Idaho agents blanket our airwaves with how cheap the property is and investment opportunity. 
 

The easiest way to stop out of town investors is to pass legislation to require residency or enact rent control. 
 

Without that its just pure capitalism baby. 

The thing about property management is that it’s great when everything is smooth sailing. 10% is a fair price to automate the operation for you. The problem is when things break, the property management company can fix them for you and they can do it fast, but you have to pay big for it. So much that so, that it may totally change the financial outlook of the rental.  You can save money by handling the repairs yourself, but in order to do this timely, you’d have to either live close to the rental or arrange travel to get there. Or you have to know a handyman that lives close to the rental. Look at how much the property managers charge for repairs… it’s not included in the 10%

Antoher thing is you want to get a rental in a place where the resident population is growing, not shrinking. As more people enter the locality, they will need places to live which creates the competitive environment for annually increasing rents. If the population is shrinking, you may be able to buy a property for cheap, but you also be competing with other landlords at lowering your rent prices, and it could even get to the point where there is surplus housing and at that point you might not even find a renter at all

Edited October 31, 2022 by phart010

[MrWunderful | 2,927]

7 minutes ago, phart010 said:

The thing about property management is that it’s great when everything is smooth sailing. 10% is a fair price to automate the operation for you. The problem is when things break, the property management company can fix them for you and they can do it fast, but you have to pay big for it. So much that so, that it may totally change the financial outlook of the rental.  You can save money by handling the repairs yourself, but in order to do this timely, you’d have to either live close to the rental or arrange travel to get there. Or you have to know a handyman that lives close to the rental. 

Antoher thing is you want to get a rental in a place where the resident population is growing, not shrinking. As more people enter the locality, they will need places to live which creates the competitive environment for annually increasing rents. If the population is shrinking, you may be able to buy a property for cheap, but you also be competing with other sellers at lowering your rent prices, and it could even get to the point where there is surplus housing and at that point you might not even find a renter at all

Solid advice. My initial thought is to retain 25% of the property value to cover maintenance costs. Because not everything is going to work forever, and as a homeowner who takes meticulous care of his house-things still break and need to be maintained. Especially because people Care far less about rentals than they would their own property.

[phart010 | 1,708]

4 hours ago, MrWunderful said:

The easiest way to stop out of town investors is to pass legislation to require residency or enact rent control. 
 

Without that its just pure capitalism baby. 

I recognize the problem with outside investors scooping up all the real estate. I have no problem with you buying as you are one single data point among a systematic problem. You not buying rental properties does nothing,  the problem has to be solved at a systematic level.

I don’t agree with required residency or rent controls though. Rent controls will totally destroy the market for everyone, including the local residents. The best approach would be to create additional taxes for outside investors at such a level that it would make it a competitive disadvantage and remove the financial incentives for investing outside of their locality. This way, you are not explicitly  prohibiting outsiders from doing anything or pulling any new levers on the economy. Outsiders would simply say it’s not worth it for them

[MrWunderful | 2,927]

1 hour ago, RH said:

I drip them back into the REITs.   I wanted to put my extra cash for a time into investments with reasonably high dividends.  The values of the stocks over the past couple of years has gone down, mostly with the market but my share base (I guess, whatever you call it) is growing.

Anyway, I was selective and I think investment in rental property long-term makes sense.  People have to have places to live.  I'm not expert in this stuff but so far I've not been unhappy with my decisions.

After doing a little bit of research online, I’m curious how the normal benefits of property ownership stack up against the lack of risk for reit. 
 

Property ownership pros:

appreciation

depreciation

amortization

debt to income benefits

write offs etc. 

[MrWunderful | 2,927]

8 minutes ago, phart010 said:

I recognize the problem with outside investors scooping up all the real estate. I have no problem with you buying as you are one single data point among a systematic problem. You not buying rental properties does nothing,  the problem has to be solved at a systematic level.

I don’t agree with required residency or rent controls though. Rent controls will totally destroy the market for everyone, including the local residents. The best approach would be to create additional taxes for outside investors at such a level that it would make it a competitive disadvantage and remove the financial incentives for investing outside of their locality. This way, you are not explicitly  prohibiting outsiders from doing anything or pulling any new levers on the economy. Outsiders would simply say it’s not worth it for them

Fair enough. For anyone who has a problem with outside investors, do a research on “Blackstone”. It wilL open your eyes to the real problem. 
 

Taxes would work great too, anything at all. But I think the states want the property turnover from out of state investors, its the people that get priced out of their own markets that dont like it. 

[ThePhleo | 2,185]

I thought about investing in rental real estate, and I just thought of one hypothetical scenario that's a very real part of being a landlord.

What if I have to evict a tenant one day?

I have a soft and squishy heart, and I can't imagine having to actually go through with, and evict someone because they can't give me money, to pay down my mortgage on a home that they live in.

I even debated with myself and said "I'll just make them pay the interest and not the principle if they can't pay" and then I thought, well, what if they don't pay even that? Then what? If I start eviction during the winter, I'm the devil for kicking them out in the cold, and if I evict them in the summer...well by the time it actually takes hold I'm actually kicking them out in the cold.

Nope....too hard, especially if I can just eat the cost. I refuse to evict someone ever.

That being said, I do plan on buying real estate for rentals one day. But it'll be in Orlando only, and for short stay vacationers.

[final fight cd | 187]

My coworker got married and bought a house with her husband around the time of the housing market crash.  She decided to keep the house she lived in prior to the move, as she could not justify selling at the then current prices.
 

She has nothing but horror stories of who she rented it out to.  She said she was diligent about the interviews and references but nobody treated the house with respect and everyone pretty much trashed it.  She said the 15ish years she rented it out she likely lost money or at the very best broke even from all the times she had to pay to have the carpet replaced, walls painted, maintenance, etc, etc.  

 

with that being said, my aunt and uncle own commercial property and they make mad BANK.   I’m guessing you probably have to be in decent financial position to go that route.  My uncle says all he does is smoke pot and collect the monthly checks .

[MrWunderful | 2,927]

1 minute ago, final fight cd said:

My coworker got married and bought a house with her husband around the time of the housing market crash.  She decided to keep the house she lived in prior to the move, as she could not justify selling at the then current prices.
 

She has nothing but horror stories of who she rented it out to.  She said she was diligent about the interviews and references but nobody treated the house with respect and everyone pretty much trashed it.  She said the 15ish years she rented it out she likely lost money or at the very best broke even from all the times she had to pay to have the carpet replaced, walls painted, maintenance, etc, etc.  

 

with that being said, my aunt and uncle own commercial property and they make mad BANK.   I’m guessing you probably have to be in decent financial position to go that route.  My uncle says all he does is smoke pot and collect the monthly checks .

Thats my biggest fear, and if it gets to be that much of a nightmare, I can always sell. Im ina Little bit different situation than your co-worker, though.  This investment property isnt my primary residence and will be my 3rd property. 
 

just remembered, @MrMark0673 is big time probably managing a monster portfolio now. Any advice?