30 With a New Hobby in Real Estate

[EvrClrx311]

Quote:

Originally Posted by srlimoges Out of the rental expense model TIMMUR fortunately I only pay for taxes and insurance as the tenant buyer does the rest (finding wood again). - Taxes - Insurance - Management - Maintanence - Utilities - Repairs

Are you sure you trust your tenants with those things? I'm not the kind of person who is going to drive a rental car into the ground, but I'm also not going to go out of my way to maintain something I'm just using temporarily. Though I admit I'm not up to speed on the whole rent-to-own thing... how likely are the 11 tenants to purchase the properties they are renting from you right now?

[brewer12345]

Quote:

Originally Posted by EvrClrx311 Are you sure you trust your tenants with those things? I'm not the kind of person who is going to drive a rental car into the ground, but I'm also not going to go out of my way to maintain something I'm just using temporarily.

You are wasting your time. OP is a true believer.

[srlimoges]

Quote:

Originally Posted by HpRyder All of ours, except 1, are MTM or 1 yr leases which shifts to MTM. That one is a bi-weekly. He's the one I've had to call & email. Evidently he's living paycheck to paycheck and somewhere along the line he'll leave. I do all the management, pay taxes and pay all expenses except utilities and tenant caused maintenance & repairs. I use to do RTO, but after talking with two real estate attorneys found evicting a RTO in Ca is very time consuming and expensive. That, fortunately, was after an RTO left. So I don't do RTO now, not worth the 1yr + attorney + court fees to get an RTO off title claim and out.

Sorry to hear that. Sounds like you have a tried and true system that works for you!

[srlimoges]

Quote:

Originally Posted by EvrClrx311 Are all of the properties in the same location? I think most would laugh at the suggestion that Denver might go the way of Detroit... but then again, people in Detroit would have laughed at the same thing a quarter century ago. Your Michigan counter part might have found themselves with well over $1,000,000 in debt and properties worth a few thousand a piece. just something to think about. In theory, what you are doing is a great way to make a lot of money... but the risks are there. I'm sure you're well aware of them.

They are all in Denver metro.

That word of caution seems to be written by someone with market and geographic cycle experience. priceless advice.

[plex]

Quote:

Originally Posted by EvrClrx311 Are all of the properties in the same location? I think most would laugh at the suggestion that Denver might go the way of Detroit... but then again, people in Detroit would have laughed at the same thing a quarter century ago. Your Michigan counter part might have found themselves with well over $1,000,000 in debt and properties worth a few thousand a piece. just something to think about. In theory, what you are doing is a great way to make a lot of money... but the risks are there. I'm sure you're well aware of them.

From Detroit area, and no, I certainly would laugh at the idea of Denver ever quickly becoming like Detroit, or any city really. Detroit's downward spiral has occurred over not just one or two decades, but for over FIVE decades. Look-up the 1967 Detroit riots, this was actually near the end of the white flight movement which began in the 1950's, which was the real beginning of the end. Watching Detroit's problems grow was like watching someone stand there waiting to get run over by a 10,000 ton train that started off a mile away and came towards them at an inch/hour.

[srlimoges]

Quote:

Originally Posted by EvrClrx311 Are you sure you trust your tenants with those things? I'm not the kind of person who is going to drive a rental car into the ground, but I'm also not going to go out of my way to maintain something I'm just using temporarily. Though I admit I'm not up to speed on the whole rent-to-own thing... how likely are the 11 tenants to purchase the properties they are renting from you right now?

I've only been doing this for 4 years so my experience isn't comprehensive but so far the only property to end the three year rent to own term has sold. There's lots of data out there about rent to own, especially on real estate sites like biggerpockets, but the typical conversion rate is 33%.

The tenants pay an upfront option fee that seems to, so far, encourage them to take care of the property along with the hope that they will someday own their own home. Will there ever be a time where I will need to step in? ...that day is coming I'm sure

[srlimoges]

[srlimoges]

Quote:

Originally Posted by plex From Detroit area, and no, I certainly would laugh at the idea of Denver ever quickly becoming like Detroit, or any city really. Detroit's downward spiral has occurred over not just one or two decades, but for over FIVE decades. Look-up the 1967 Detroit riots, this was actually near the end of the white flight movement which began in the 1950's, which was the real beginning of the end. Watching Detroit's problems grow was like watching someone stand there waiting to get run over by a 10,000 ton train that started off a mile away and came towards them at an inch/hour.

LOL.

Well, several decades ago a nuclear energy plant in golden, called rocky mountain flats, was shut down due to radioactive exposure being measured in Denver. Did the exposure come from rocky mountain flats? Probably. Could it have been worst, yeah, probably... Not sure how the local real estate market would have reacted though

[Keim]

Thanks for the update!

Quote:

Originally Posted by srlimoges Hey! Thanks for following up! So an update to my financial situation... in September 2012 I was laid off as a software engineer at the medical devise company I worked for 5 years unfortunately. That income was about 72,000 per year and with my wife's income and investment properties we did okay for the Colorado area. Now fortunately I have the rental properties (all leased as rent to own) and they are currently cash flowing $5,300 per month. They were a third income stream while we were both employed, and we reinvested the cashflow to buy more properties, but now we will use some of that income to live from. Being forced to leave my job may have been one of the best mixed blessing in my life to date. I'm currently starting a wholesale real estate business that will feed deals to the rent to own side, and I'm working hard at this new business but really enjoy the freedom to self direct my efforts! I can really choose where I want to focus my time and greatly appreciate that gift! Of our 11 rent to own properties our current net worth is about 800,000. I don't plan on ever working at a j.o.b. again but I know life is subject to change And one thing I've learned to say more is 'I love my life!'

[srlimoges]

Your welcome! Thanks for asking.

You guys have been positive and that's been inspiring to me. I appreciate you guys!

[arebelspy]

Quote:

Originally Posted by srlimoges Hey! ... in September 2012 I was laid off ... Now fortunately I have the rental properties (all leased as rent to own) and they are currently cash flowing $5,300 per month. They were a third income stream while we were both employed, and we reinvested the cashflow to buy more properties, but now we will use some of that income to live from.

Congratulations on becoming partly (mostly? fully?) FI to be able to weather that circumstance. How many people in the last few years were laid off and were one paycheck away from not being able to pay their bills when it happened?

Despite how some may not have liked the way you presented yourself, I say congratulations for being so well prepared financially for that layoff.

Best of luck with your new job (wholesaling).

[srlimoges]

Thanks Arebelspy. I appreciate it.

Arebelspy brings up a great point and I want to apologize if offended or discouraged anyone with anything I said. The fact is is that anyone can do anything they strive to do if they make the choice to commit to it.

On positive note I'm greatful for everyone's support on this forum. It will help fuel the energy needed to make this wholesaling business successful and later down the road passive.