30 With a New Hobby in Real Estate

[arebelspy]

Just wanted to post an update on the real estate progress. I have the sixth home under contract now, am living in one house, and am renting/lease purchasing the other four with a cash flow of $1600 a month. If the sixth property works out I expect to lease purchase the house with a cash flow of $600 a month.

I also consider this a hobby now and am having fun collecting properties.

Mods, can this thread title be changed to a more accurate description of my purpose, 30 With a New Hobby in Real Estate ?

I enjoyed this thread, thanks for the update, and thanks for sticking with it despite all the thoughts that you were spamming.

Why change the title? Are you no longer looking to retire early?

 

[srlimoges]

Thanks Arebelspy.

The title change is complicated. I still would like to retire early, and I feel if real estate is treated like a hobby now (have fun making money for myself), when I leave the day job I'll just have a real estate hobby.

Other commitments have also entered into my life as I'm now engaged and plan on children later. These commitments mean more financial responsibility and stability. It may take a few extra properties or mean working a couple more years.

 

[ER Fireball]

My folks had assorted rental properties, and several of my friends have properties.

I think that the concept of building a portfolio of properties and operating them does not fall into the same category of income as living off your investments. Running 30 properties as your sole source of income is not 'retired', it is a job! And not all of the work can be done on your schedule!

Some folks have done well over the years, but I also know several that have had serious problems with it. Land-lording tends to work well when the economy is working well, when people can get jobs, and when the real estate market is appreciating.

 

[arebelspy]

I think that the concept of building a portfolio of properties and operating them does not fall into the same category of income as living off your investments. Running 30 properties as your sole source of income is not 'retired', it is a job! And not all of the work can be done on your schedule!

I agree with that, but can't you get a few more properties and use the proceeds to pay a property manager to handle them all? That'd still be some work, dealing with the PM occasionally, but probably no more than most put into their equities investments.

 

[Keim]

srlimoges claimed real estate could get him to ER in 5 years. That was about 2.5 years ago. I am curious how he/she has done.

Would you care to update us on how your strategy is doing?

 

[REWahoo]

He hasn't logged on since June of last year. Guess his tenants are keeping him busy...

 

[brewer12345]

A blast of batsh!t nonsense from the past. Gotta love it.

 

[Keim]

A blast of batsh!t nonsense from the past. Gotta love it.

It is always a good idea to look at strategies that challenge pre-conceived notions. If he really followed through, it would be interesting to see how my notions are bearing out.

AND: I am ALWAYS happy to learn from OTHERS mistakes. It costs less.

 

[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]

Looks like our posts crossed paths

 

[HpRyder]

Since srlimoges hasn't updated you, I'll update on my real estate in retirement.
I net 6300+/mo. So far this yr I've 1) had to make a couple of phone call & emails about late rents, 2) go to the bank to deposit the checks and 3) mail out some billed expense checks. Tracking stocks is more work.

 

[HpRyder]

Looks like srlimoges posted in while I was composing my response.
Great that your doing so well srlimoges. My wife doesn't want any more RE so we're not buying any more, just coasting on what we have.

 

[srlimoges]

HpRyder, I agree. Do you have straight rentals or rent to own terms?

I rarely ever get tenant calls or late payments knock on wood. By far and away I spend most my time acquiring new properties (finding deals, lining up financing, finding rent to own candidates).

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

 

[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.

 

[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.

 

[EvrClrx311]

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]

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]

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]

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]

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]

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]

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!

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!