Rental Property Chat

brij2006 · July 2016

We have been throwing around the idea of getting a couple of rental properties. This has been something we've talked about for a while now and multiple times. We just wanted to sit and think on it for a while before acting on it.

So tell me if we are missing something here with our thinking.

In our area, rent is pretty cheap. Here's about what we can get for rent: 1 bedroom $450/month, 2 bedroom $500-550/month, 3+ bedrooms $650-700/month.

One of the properties we're looking at is considered 2 bedrooms, but the 2nd bedroom is tiny and the house is relatively small at 700sq ft. We would charge $450/month in rent for it. We would need to put aside $100/month for taxes and insurance. That brings us down to $350/month. Since we currently do not need the income from this, we were thinking to take the rental income and put it all aside each month to build a good sized savings. H was thinking that we would do this until it reaches $5,000, then after that we would pull 50% of the net income from it each month to bring home in income.

Should we think of this differently? Have a larger buffer? Is there something we're missing?

short+sassy · July 2016

I'm here, haha!

A standard bedroom size is 10'x10'. If the small bedroom is even as small as 9'x9' (maybe smaller), I would charge on the lower end for 2 bedrooms ($500). Basically, if there is enough room to fit a double bed and a dresser, that is large enough for a bedroom. Especially if you rented to a family and they'd be using that second bedroom as a child's room.

Here are some expenses you are missing on your calculations. They are not "set" expenses you will have every month and/or year, like taxes/insurance, but they are expenses you will have at some point in time:

Maintenance/Repairs -- the general rule is to put aside 10% of the rent for maintenance/repairs. However, I personally put aside at least $100/month, regardless of the rental amount. Or sometimes I'll do less than 10% if the rents are especially high. Because a roof or water heater is pretty much the same cost for a 700 square foot house, whether it is renting for $100/month or $10K/month.
Future vacancy -- the general rule is to put aside 8% of the rent to cover time when the property is vacant. 8% equates to the home being vacant 1 month out of each year. Personally, I think 8% is very conservative, though it is the number I use. Usually, you will have a one year lease...so that is 12 months of rent in a row. And it's not unusual for tenants to potentially stay much longer than that anyway. But still, you will have vacancies at some point in time. Plus, there is usually a bit of money needed to freshen paint, fix minor repairs, etc. between tenants.
Opportunity cost -- This is actually an expense I made up and have not really seen mentioned on my real estate investing forum. But I think it is an important one if you are buying a house with cash (my assumption). In a nutshell, what are you missing out on by using that money for real estate? If nothing else, pretend you are a bank loaning yourself money and charge yourself 4% interest. That amount should be counted as an expense also. But just for yourself and your calculations! Don't try and pull that with the IRS, lol.
And speaking of taxes, you also need to account for those on your approximate NET profit. From your gross rental income, you can generally deduct the taxes, insurance, repairs/upgrades, advertising costs, and depreciation (for both the house and appliances/furnishings). I know it sounds weird you can depreciate rental real estate but, yeah, you can.

Here are my new monthly calculations:

Rental Income: $500

Taxes/Insurance -$100

Repairs/Maintenance -$100

Vacancy -$ 45

Opportunity Cost ???

Monthly cashflow after expenses $255

Taxes 15%* $38

Net cashflow $217

*I assume taxes around 15% of the rental income. It at least gets me in the ballpark without having to do extensive calculations.

I'm also assuming your tenants will be responsible for all their own utilities (water, trash, electricity, etc.). Otherwise, subtract those expenses also.

It never looks NEARLY as good when you consider the whole she-bang does it? Yeah, boy do I know!!! BUT, that's an extra $200/month...which is great considering the low rent...that is ALREADY taking into consideration repairs and vacancies.

Were you talking about $5,000 being the amount put aside just for that house (ie for repairs, vacancies, etc.)? Assuming the major systems (HVAC, plumbing, electrical, roof) are in decent condition and still have a long life left, I'd only keep about half that in reserves. However, if you know the HVAC will need to be replaced in about 3 years and/or a new roof will be needed in 5...than save extra accordingly. Or if you are more comfortable with $5K, nothing wrong with that either!

Long post! But I hope it has been helpful. And those are also just guidelines to keep in mind. If you all prefer to just keep a $3K-$5K rental house e-fund for vacancies/repairs and not so much think of subtracting it off the monthly rent, that's fine also. I'm starting to lean that way a little more myself. As long as you keep in mind that those are hidden expenses, as well.

brij2006 · July 2016

@short+sassy You're awesome! I knew there were some other things we weren't accounting for and I was trying to think of what the percentages they were.

Yeah, in the long run it doesn't look like much income for a rental, but we have enough cash to purchase 2 of them if that's what we want to do, and even if we only bring home $200/month on each of the properties, that really does help our month if I stay home.

The property we looked at last week immediately needs some work done to it, so we wouldn't have a tenant right away. The purchase price is $18k. The realtor thinks we could easily offer a $12k cash offer with closing in a week and the sellers would jump on it. However, it needs a new roof, new furnace, gutters, and windows. It's a small house, so we could easily do this work ourselves, but our budget for all of it would still be around $5-6k. Yet at least then we know all of that stuff is updated. The siding is only a few years old as well. BIL is also looking for a place to rent long term and looked at it with us. We told him it would be a 1 year lease and the rules if he were to rent from us, and he was good with all of it. He also said he doesn't mind if we do the work while he's living there since it's just him and he works weekends. So that's an option as well.

We were leaning toward just putting the whole rental income aside until we have $5k in savings. Then once we have that $5k, dialing it down to $100/month to add to it.

We figure that since there isn't a mortgage on it, we wouldn't necessarily have to budget in for vacancies. Even if it's empty for 3 months out of the year we will still have enough in rental income to pay for the taxes and insurance. I'll probably show H this figure anyways though. I'd rather put too much aside each month rather than not enough.

Your point about opportunity cost is really where I stand at. I keep telling H that if we want a stress free investment, we could put this money into a mutual fund and just pull the interest off each year and use that to help supplement my loss in income if we needed to. He didn't like that statement so well, but it is something that I'm not 100% sure about. This would mean taking some of our cash and putting it into rental real estate rather than the market for retirement. Granted, the rentals will make us income now and well into retirement.
Like H said though, if we end up putting $20k into the 2 bedroom house and we receive a total of $5,400/year in income off of it, that's a 24% return on investment. We can't get that in the market.

csuave · July 2016

@short+sassy the economist in me loves that you consider opportunity cost

short+sassy · July 2016

brij2006 said:

@short+sassy You're awesome! I knew there were some other things we weren't accounting for and I was trying to think of what the percentages they were.

Yeah, in the long run it doesn't look like much income for a rental, but we have enough cash to purchase 2 of them if that's what we want to do, and even if we only bring home $200/month on each of the properties, that really does help our month if I stay home.

The property we looked at last week immediately needs some work done to it, so we wouldn't have a tenant right away. The purchase price is $18k. The realtor thinks we could easily offer a $12k cash offer with closing in a week and the sellers would jump on it. However, it needs a new roof, new furnace, gutters, and windows. It's a small house, so we could easily do this work ourselves, but our budget for all of it would still be around $5-6k. Yet at least then we know all of that stuff is updated. The siding is only a few years old as well. BIL is also looking for a place to rent long term and looked at it with us. We told him it would be a 1 year lease and the rules if he were to rent from us, and he was good with all of it. He also said he doesn't mind if we do the work while he's living there since it's just him and he works weekends. So that's an option as well.

We were leaning toward just putting the whole rental income aside until we have $5k in savings. Then once we have that $5k, dialing it down to $100/month to add to it.
We figure that since there isn't a mortgage on it, we wouldn't necessarily have to budget in for vacancies. Even if it's empty for 3 months out of the year we will still have enough in rental income to pay for the taxes and insurance. I'll probably show H this figure anyways though. I'd rather put too much aside each month rather than not enough.

Your point about opportunity cost is really where I stand at. I keep telling H that if we want a stress free investment, we could put this money into a mutual fund and just pull the interest off each year and use that to help supplement my loss in income if we needed to. He didn't like that statement so well, but it is something that I'm not 100% sure about. This would mean taking some of our cash and putting it into rental real estate rather than the market for retirement. Granted, the rentals will make us income now and well into retirement.
Like H said though, if we end up putting $20k into the 2 bedroom house and we receive a total of $5,400/year in income off of it, that's a 24% return on investment. We can't get that in the market.

1st bolded: Wow, great! I'm also assuming that by putting some work into it, your "all in" cost (house plus repairs) will add some equity. And, although you can't cash in that equity without selling the house or doing a cash-out re-fi, it does increase your net worth and gives great options for the future.

Just for others reading, cash-out refis can be an integral tool to expand one's real estate portfolio more quickly, but I know @brij2006's debt-adverse money style and would never suggest she take out a loan. Plus there is always something to be said for "slower, but safer" investing.

2nd bolded: That's an amazing return on investment, even for real estate. I'm jazzed when I can find 18-20% ROI opportunities, which aren't impossible where I live, but fairly few and far between. Plus real estate diversifies your portfolio outside of the stock market. I've been nagging at myself to diversify my portfolio in the other direction...getting some money into mutual funds, instead of focusing all my investing in real estate.

@csuave, thanks! I'm surprised how often I'll read investors talk about "...and I'll buy the house with cash, so there is no mortgage to subtract from expenses...", but its rarely talked about that even one's own money isn't "free". It just goes to show even a small-timer, like myself with 3 properties, can still teach a thing or two to the big guys!

vlagrl35 · July 2016

I'm no rental expert. DH rents out his current space to 3 other photographers but that's the extent of my knowledge. Just to me with the rent only being $450 it seems like more work than its worth. If I rented out a house I would want a profit of $800 or more.

jtmh2012 · July 2016

brij2006 said:

The property we looked at last week immediately needs some work done to it, so we wouldn't have a tenant right away. The purchase price is $18k. The realtor thinks we could easily offer a $12k cash offer with closing in a week and the sellers

I'm somewhat jealous. The only thing you're buying in this area for $12-18k is dirt or a drug dealer's hangout....

jtmh2012 · July 2016

vlagrl35 said:

If I rented out a house I would want a profit of $800 or more.

I'm with ya. The headaches just aren't worth $200/month to me.

short+sassy · July 2016

@vlagrl35 and @jtmh2012, a general rule of thumb is that the expenses for a home will be roughly 50% of the monthly rent, NOT including the mortgage (or income tax or opportunity cost).

Most real estate investors (REI) strive for about $150 monthly cash flow per door (ie a duplex would be $300 monthly cash flow), with those numbers already including maintenance/property management/mortgage/vacancy/insurance/property taxes. Though cash flow can often be much more than that.

An $800/month cash flow, including mortgage, for a single family home would be pretty tough in any area of the country. But a duplex? Possibly. I did it.

With the exception of high insurance costs, I'm fortunate to be investing in NOLA. There are decent, blue collar neighborhoods with cheap houses and decent rent. I strive for $400-$500 cash flow per door. But most potential rental properties are more in the $250-$350/door range.

I get the impression, in general not just you all, that people think it is a lot more work than it is. Once a place is fixed up properly, it's hardly any work or time, especially with good and long standing tenants. It's really passive income. I'll go months without hearing even a peep from my tenants. Finding tenants and conducting showings can be a lot of work, but that is about it. It's not for everyone, that's for sure, but I really like it.

Or people joke they don't want to get a 3 AM phone call. I've never had a tenant try to call me at any weird time. And, if they did, I don't have my phone turned on while I am sleeping anyway. I mean, seriously, what kind of emergency could happen at 3 AM that I could do anything about anyway?

Which leads me to one of my favorite stories from the REI forum I follow. A newbie considering REI had posted a concern like that. One of the other investors told the story about the Friday night one of his rental properties had burned to the ground. His phone kept ringing that night and he ignored it. Then the police knocked on his door and he answered it. They verified his name and that he was the owner of XYZ property. They told him it had caught on fire, the fire department was there and had it under control, but it was mostly burned down. They asked if he wanted to go take a look.

After verifying no one was hurt (plus the Red Cross had already arranged for a hotel room), he asked, "Is there any reason I would need to go there tonight instead of tomorrow during daylight?" The police officers looked surprised but said, "No, not really. I guess not." So he thanked them, said he would contact his insurance company, and go check out the damage the next day. He took a few minutes to call his insurance company and let them know what happened. Then went back to playing video games with his son.

At this point in my career, I probably wouldn't be as blasé as that if one of my properties burned down, lol. But if I owned a few dozen properties, I could see it.

The other concern I hear is they don't want a tenant messing up their property. That's the most valid concern. It happens. Even with good tenants. But most tenants want their security deposit back and/or are just good people and don't cause damage. Even the only bad tenants I've had didn't do any deliberate damage. Their damage was about $600, half of which was my husband's labor. Everybody else left the place clean and did zero damage.

smerka · July 2016

I would also check into the eviction process in IL. In Chicagoland, they won't put anyone on the street if the temperature is below a certain temperature. Maybe 50 degrees. I know this is the case for foreclosures, but I'm not sure about rentals. It would suck to get a judgement in say November and not actually be able to kick them out until March or even April.

jtmh2012 · July 2016

short+sassy said:

I get the impression, in general not just you all, that people think it is a lot more work than it is. Once a place is fixed up properly, it's hardly any work or time, especially with good and long standing tenants. It's really passive income. I'll go months without hearing even a peep from my tenants. Finding tenants and conducting showings can be a lot of work, but that is about it. It's not for everyone, that's for sure, but I really like it.

... snip ...

The other concern I hear is they don't want a tenant messing up their property. That's the most valid concern. It happens. Even with good tenants. But most tenants want their security deposit back and/or are just good people and don't cause damage. Even the only bad tenants I've had didn't do any deliberate damage. Their damage was about $600, half of which was my husband's labor. Everybody else left the place clean and did zero damage.

Well, I wasn't seriously thinking $800 per se, but you get the point.

The last paragraph is honestly more my concern. At my last house a rather nice Navy guy bought the house at the end of our court. Spent what must have been a lot of money cleaning it up with the intent to live in it and was unexpectedly transferred. I do know he contracted with a local property management company and rented it out with the idea of eventually returning.

The renters trashed the house. Never did any of the yard work. One of the guys living there came home drunk one night and ran into the garage door so bad it had to be replaced. As we were cleaning up our place for sale we noticed a man storm out on the porch screaming at what was either a woman or young child. We called the cops. Didn't take anybody away, but they were there for awhile. The guy ended up having to evict three families one by one.

Shortly after that, I talked to my neighbor who was a general contractor. He'd been in touch with the owner and was asked to give an estimate of the damages. From what he told me there were numerous doors off the hinges and/or otherwise damaged. The counter tops were ruined from having hot pans set on them. The bathrooms had mold/mildew/etc in them. Green crap growing in the tubs. I forget what else, but he said it was about $20k in damages.

Now I do understand this is probably an extreme situation, but I got to watch it play out versus reading it off an internet forum. Currently, my real estate investing is in mutual funds which are returning well enough to give me tax issues. However, every time my day job irritates me and I just want to quit, I keep thinking about how I'd love to own enough units to not have to go back to work.

csuave · July 2016

@Brij2006 with the numbers you have presented I'm thinking the risk may be even lower because of resale value. If you don't like being a landlord maybe it wouldn't be hard to sell for a profit....I'm not sure what the housing market is like where you live.

LillibetteV · July 2016

jtmh2012 said:

brij2006 said:

The property we looked at last week immediately needs some work done to it, so we wouldn't have a tenant right away. The purchase price is $18k. The realtor thinks we could easily offer a $12k cash offer with closing in a week and the sellers
I'm somewhat jealous. The only thing you're buying in this area for $12-18k is dirt or a drug dealer's hangout....

You can at least get that..... why is Boston so expensive?! lol

brij2006 · July 2016

csuave said:

@Brij2006 with the numbers you have presented I'm thinking the risk may be even lower because of resale value. If you don't like being a landlord maybe it wouldn't be hard to sell for a profit....I'm not sure what the housing market is like where you live.

That is a good point. Our area is LCOL and the town we're looking at purchasing in is considered a commuter town. So the real estate market in it isn't necessarily the best, but also isn't horrible. The realtor said if we did the repairs we were wanting to, he would re-list it at $35,000. So my H said that if anything, we could flip the house if we hate being landlords.

brij2006 · July 2016

jtmh2012 said:

brij2006 said:

The property we looked at last week immediately needs some work done to it, so we wouldn't have a tenant right away. The purchase price is $18k. The realtor thinks we could easily offer a $12k cash offer with closing in a week and the sellers
I'm somewhat jealous. The only thing you're buying in this area for $12-18k is dirt or a drug dealer's hangout....

Yeah, keep in mind the average household income in our area is $40k/year. So the pay matches the LCOL. It's also why a 1 bedroom house (not apartment) only costs $450/month.

The biggest negative for us is going to be finding good tenants. They are out there, but there are definitely more bad tenants than good. However, once tenants are in a home, they stay for a very long time around here. My parents have owned a couple rental properties for 20+ years. Their current tenants have been living there for 5 years now. The prior ones were there for 11.

We also have a lot of slumlords in the area as well since the property values are so low. So once tenants find a good landlord that actually takes care of the property, they stay.

For us, we're just trying to figure out a way to diversify our investing a bit more besides just solely going into the market. We both love real estate and this feels like a good opportunity for us to bring in some side income while allowing me to eventually stay home.

So far our overall intentions are that we have $60k that we're willing to put into rental properties. There's this house that we'll be into at about $20k, then another house that's 3 bedrooms that we'll be into for around $40k. We know that we can make it solely on H's income if/when I stay home, so our hope is to just put the rental income aside and let it build until we have enough cash sitting there to purchase another rental.

We laid out a timeline and in about 3 years we'll have enough to buy another 1-2 bedroom home to rent out. Or if we wait 4 years, we could buy another 3 bedroom. It really all depends on how much of a deal we can find (like these 2 properties).

We figure that will at least give us a couple of years to figure out whether or not this is worth it for us. We would be buying both of these properties at the low end of the market and doing some work to them, so we would be able to re-sell them and get all of our money back out if we hate being landlords.

short+sassy · July 2016

jtmh2012 said:

short+sassy said:

I get the impression, in general not just you all, that people think it is a lot more work than it is. Once a place is fixed up properly, it's hardly any work or time, especially with good and long standing tenants. It's really passive income. I'll go months without hearing even a peep from my tenants. Finding tenants and conducting showings can be a lot of work, but that is about it. It's not for everyone, that's for sure, but I really like it.

... snip ...

The other concern I hear is they don't want a tenant messing up their property. That's the most valid concern. It happens. Even with good tenants. But most tenants want their security deposit back and/or are just good people and don't cause damage. Even the only bad tenants I've had didn't do any deliberate damage. Their damage was about $600, half of which was my husband's labor. Everybody else left the place clean and did zero damage.

Well, I wasn't seriously thinking $800 per se, but you get the point.

The last paragraph is honestly more my concern. At my last house a rather nice Navy guy bought the house at the end of our court. Spent what must have been a lot of money cleaning it up with the intent to live in it and was unexpectedly transferred. I do know he contracted with a local property management company and rented it out with the idea of eventually returning.

The renters trashed the house. Never did any of the yard work. One of the guys living there came home drunk one night and ran into the garage door so bad it had to be replaced. As we were cleaning up our place for sale we noticed a man storm out on the porch screaming at what was either a woman or young child. We called the cops. Didn't take anybody away, but they were there for awhile. The guy ended up having to evict three families one by one.

Shortly after that, I talked to my neighbor who was a general contractor. He'd been in touch with the owner and was asked to give an estimate of the damages. From what he told me there were numerous doors off the hinges and/or otherwise damaged. The counter tops were ruined from having hot pans set on them. The bathrooms had mold/mildew/etc in them. Green crap growing in the tubs. I forget what else, but he said it was about $20k in damages.

Now I do understand this is probably an extreme situation, but I got to watch it play out versus reading it off an internet forum. Currently, my real estate investing is in mutual funds which are returning well enough to give me tax issues. However, every time my day job irritates me and I just want to quit, I keep thinking about how I'd love to own enough units to not have to go back to work.

The nightmares do happen! But can largely be mitigated with more due diligence. He should have fired his property management company after Guy 1. They obviously weren't periodically checking the house for things to have gotten that bad. I have it written in my leases that I can check the property, with 24 hour notice, for leaks and/or repairs needed. Though typically, I'll contact the tenant and we set it up for a mutually agreeable day/time. I usually visit 3 months after move-in and then about every 6 months after that (assuming there were no issues on the first visit). Though don't get me wrong, a lot of bad stuff can happen in 3 months.

And it sounds like everyone/most of the tenants the PM company placed in the house were evicted. That's completely nuts. They could not have been doing even a minimal background check for that to have happened. Evictions will occasionally happen (though I haven't had one yet) the longer one is a landlord and the more property one has, no matter how good tenants are vetted. But it should be a very small percentage of placements. Not almost every single one. Yikes!!!

To the last bolded, oh yeah! Exactly my long term goal, lol.

short+sassy · July 2016

smerka said:

I would also check into the eviction process in IL. In Chicagoland, they won't put anyone on the street if the temperature is below a certain temperature. Maybe 50 degrees. I know this is the case for foreclosures, but I'm not sure about rentals. It would suck to get a judgement in say November and not actually be able to kick them out until March or even April.

I actually came back in to make this suggestion and @smerka beat me to it !

Before I began investing in real estate, I looked into what was involved in the eviction process for my area. Fortunately, Louisiana/NOLA is pretty landlord friendly. @brij2006, you'll want to look at what the general process is for your county. Just to be forewarned and prepared. I know my parish (county) even gave approximate timelines for how long each part of the process takes.

Here's an evictions story I remember from a REI in Illinois, specifically Chicago. So with evictions, the sheriff's office will come into a rental and the landlord hires someone (or does it themselves) to clear the belongings out and put them on the street. This is pretty much how it works everywhere. She found it frustrating that, as the landlord, she was not allowed to touch the belongings on the street until after 24 hours (though anyone else could). BUT then she would start getting fines for the "trash" before she was allowed to clear it away. Her solution was to make contact with a few salvage/picker kind of people. Now, she calls them as soon as the belongings are out on the street and they swoop in and grab the stuff up.

jtmh2012 · July 2016

short+sassy said:

The nightmares do happen! But can largely be mitigated with more due diligence. He should have fired his property management company after Guy 1. They

I should clarify. There were apparently three separate families living there at once. It wasn't one after the other. I don't know anything about Virginia law, but apparently, they were required to evict each family individually. And yes, the property management company was fired. I never thought to ask who they were.

jtmh2012 · July 2016

short+sassy said:

To the last bolded, oh yeah! Exactly my long term goal, lol.

Maybe I'll just send you some money and you can send me my share of the dividends...;)

jtmh2012 · July 2016

short+sassy said:

Her solution was to make contact with a few salvage/picker kind of people. Now, she calls them as soon as the belongings are out on the street and they swoop in and grab the stuff up.

Now that's funny.....:)

Btw, I really didn't mean to turn this into a horror of landlording thread, my response to you was more that it was the property damage / eviction stuff that scared me more than the "work"....

brij2006 · July 2016

So I'm a little excited. I went for a run last night and saw that another smaller house was just listed. I looked up the listing and it's a 2 bed, 1 bath for $25,900. Sold as-is. I e-mailed the realtor and it is a foreclosure but he said it's in pretty good shape. So I think we're going to add another property to our list of ones to look at. The roof is also only 5 years old, so that's a definite plus, but the siding definitely needs painted.

brij2006 · July 2016

jtmh2012 said:

short+sassy said:

Her solution was to make contact with a few salvage/picker kind of people. Now, she calls them as soon as the belongings are out on the street and they swoop in and grab the stuff up.

Now that's funny.....:)

Btw, I really didn't mean to turn this into a horror of landlording thread, my response to you was more that it was the property damage / eviction stuff that scared me more than the "work"....

Neh, you're good. I fully know there are a ton of horror stories out there about rental properties. My parents had 1 bad tenant in the past 20 years and I'll never forget the mess we walked into when it came to cleaning the house and getting it ready for the next tenants to move in.

short+sassy · July 2016

brij2006 said:

So I'm a little excited. I went for a run last night and saw that another smaller house was just listed. I looked up the listing and it's a 2 bed, 1 bath for $25,900. Sold as-is. I e-mailed the realtor and it is a foreclosure but he said it's in pretty good shape. So I think we're going to add another property to our list of ones to look at. The roof is also only 5 years old, so that's a definite plus, but the siding definitely needs painted.

I think it's too late for you, Brij...you already have the real estate bug .

I do that ALL the time! So many good opportunities...not enough money to buy them all, lol.

brij2006 · July 2016

short+sassy said:

brij2006 said:

So I'm a little excited. I went for a run last night and saw that another smaller house was just listed. I looked up the listing and it's a 2 bed, 1 bath for $25,900. Sold as-is. I e-mailed the realtor and it is a foreclosure but he said it's in pretty good shape. So I think we're going to add another property to our list of ones to look at. The roof is also only 5 years old, so that's a definite plus, but the siding definitely needs painted.

I think it's too late for you, Brij...you already have the real estate bug .
I do that ALL the time! So many good opportunities...not enough money to buy them all, lol.

Yeah, it's something we've talked about for a long time. Even before getting out of debt. We also know that if I stay home then I will have the time to manage a few extra properties and grow this into a good sized business. That would be our intentions with this. Not just a couple rentals here and there.

I looked up the info one the one my H told me about that's 3 bedrooms. It's actually 4. That scares the crap out of me. A lot more maintenance, much higher chance of a family coming in and trashing it (that probably sounds bad). It also has a detached older garage/shop. It's in the town we live in and my H would love to utilize that portion for himself. But all I see is $$$ and constant maintenance. It's an older home and an even older shop/garage that needs a ton of money put into it. Um, no thank you. I'd rather have a couple smaller rentals where a single person, couple, retirees, or small family moves into, than even 1 larger older home for a good sized family.

short+sassy · July 2016

jtmh2012 said:

short+sassy said:

To the last bolded, oh yeah! Exactly my long term goal, lol.

Maybe I'll just send you some money and you can send me my share of the dividends...;)

I know you're kidding . But if you ever want to come out to NOLA for a part-play, part checking out the real estate scene vacay, you just let me know!

There are also investment groups that do exactly what you are talking about, but on a bigger scale. They'll pool RE investors and usually buy apartment complexes and/or office buildings. They handle/hire out all the gritty details. Investors can sit back and receive a monthly (or quarterly) report and a check for their share of the proceeds.

I haven't looked much into it, but there are minimum investment requirements. My guess is, depending on the project and/or group, that minimum investments start at $5k but will usually be more in the $25K range.

At the moment, I'm more comfortable and know much more about buying rental properties that I own and manage myself. But, once I've hit my goal with that, I plan to start looking more into that type of investing.

jtmh2012 · July 2016

brij2006 said:

I looked up the info one the one my H told me about that's 3 bedrooms. It's actually 4. That scares the crap out of me. A lot more maintenance, much higher chance of a family coming in and trashing it (that probably sounds bad). It also has a detached older garage/shop. It's in the town we live in and my H would love to utilize that portion for himself. But all I see is $$$ and constant maintenance. It's an older home and an even older shop/garage that needs a ton of money put into it. Um, no thank you. I'd rather have a couple smaller rentals where a single person, couple, retirees, or small family moves into, than even 1 larger older home for a good sized family.

Or you get someone like me who turns one room into an office and another into storage....:)

short+sassy · July 2016

I have my 4-bedroom unit up for rent right now and we had an applicant with EIGHT children. All under the age of 10. Two of them are twins.

It was actually pretty funny. My H gave me the application and said something like, "Oh, you have to check THIS out!" So, I'm looking at the first page, I don't see anything weird or alarming. She lists herself and 4 children. That's a good amount of kids, but it is a 4-bedroom. Then he says, "Turn the page." And the other 4 were listed. Yikes!!!

Yeah, with a 4-bedroom, you can hope for an @jtmh2012 tenant, but that's dreaming, lol. It's going to be families, families, families. Nothing wrong with that, but children can be a lot of wear and tear. We've had a lot of showings and all of them had at least 2 children, with the exception of a work crew who were looking for lodgings for the next 6 months.

vlagrl35 · July 2016

It's always good to have extra sources of income, I've just never been the type to want to buy a house to rent out. Dh told me a couple years ago if he didn't get to build his studio like he wanted he would have bought a home for rent. He's always been the type to look for extra sources of income.

brij2006 · July 2016

Yeah in our area a 4 bedroom will either mean a large family or families wanting to live in it. As in families, meaning a family of 5 then their aunt and uncle and cousins, as well as the grandma. Um yeah, no.

I think H is just vying for that one because of the detached shop/garage. That's also zoned commercially, so he could easily do his car flipping out of it. I still just see $$$, maintenance, and a hard time finding good tenants.

Also, the people who have families and are good people, usually have bought a house at that point. Since real estate is so cheap around here, 80% of the homes are owned.

jtmh2012 · July 2016

short+sassy said:

I have my 4-bedroom unit up for rent right now and we had an applicant with EIGHT children. All under the age of 10. Two of them are twins.

Damn!

jtmh2012 · July 2016

short+sassy said:

Yeah, with a 4-bedroom, you can hope for an @jtmh2012 tenant, but that's dreaming, lol. It's going to be families, families, families. Nothing wrong with that, but children can be a lot of wear and tear. We've had a lot of showings and all of them had at least 2 children, with the exception of a work crew who were looking for lodgings for the next 6 months.

Just to give you a funny story. When we moved 3 yrs ago, we needed temporary accommodations while one house sold and until we could find another. So we did a 6-month lease in a nearby apartment complex. Rented a 2 bedroom/2bathroom apartment and one of their garage units. Put my nice shiny collector car in the garage and put some of our garage stuff in the 2nd bathroom. Now, I did tell the apartment complex we were going to do this (sorta) and I put down a drop cloth to protect the floors.

Now for the sorta. I have a rather good side gas grill that is setup for natural gas. Told the apartment complex this because for obvious reasons you can't have grills on the patios. Apparently, even ones that aren't connected. I asked if it would be ok to have it in the bathroom. They didn't object. I also had a bunch of garden tools and boxes of other garage type stuff in there.

I will say, the unit was probably in better shape when we left then when we moved in. But I'm sure we're the rare case. I also didn't want to give them any reason to trip up my credit approval for the mortgage.

My side note.....I did find it interesting that it almost seemed like my mortgage company cared more about the 6-months I spent in that apartment than the 10 prior years I spent paying them mortgage and interest (on time and in full) every month.

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