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Re: pitfalls of rental real estate
Old 03-17-2006, 03:07 PM   #21
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Re: pitfalls of rental real estate

Quote:
Originally Posted by brewer12345
Just curious, where do you find NNN opportunities?
Don't understand your question.
NNN is symbol for Commercial Net Lease
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Re: pitfalls of rental real estate
Old 03-17-2006, 04:03 PM   #22
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Re: pitfalls of rental real estate

definite hassle, nothing is easy, especially when u got to chase down the "dead beat" tenants whose are ready to sue u anytime for anything.

but i do have to say that i am lucky enuff to have some equity growth on my properites and done much better than 401k and stocks.

no esay free ride. reit u do have to tons of fee don't you??

enuff
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Re: pitfalls of rental real estate
Old 03-17-2006, 08:00 PM   #23
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Re: pitfalls of rental real estate

I can speak from a little personal experience. I bought several condos in an upscale area of Boston in 1999. They were all in nice buildings (e.g. professional management company, doorman, security, etc). Cap rate when I bought them was around 5.5% after expenses. This was at the beginning of the housing bubble, which I won't take any credit for anticipating. Prices have risen and rents have risen, but prices more than rents, so the cap rate at current market value is now 3.8% after expenses (and 6-7% after expenses based on my purchase price).

The best part about owning these condos has been how little work has been required. Each unit has a bathroom and kitchen, no laundry. Once in 5 years I have had to call a plumber to replace a part for one of the sinks ($175). Twice I spent a weekend repainting a unit ($100 bucks plus 10-12 hours each time). Once after renting to a guy with a dog I had to call a company to replace the carpet ($250 out of pocket + $250 out of security deposit). Building management (for a condo fee which works to ~ 3% of the monthly rent) is great and takes care of a lot of other problems. I can count on one hand the number of times I've been called (or emailed, which is an easier way to handle problems) randomly to deal with a problem. The units are so simple that not much can break in them (unlike a SFH).

Since I live in the area I can rent the units myself using a personal network, craigslist, and rental brokers. Once I had to pay full fee/one month's rent to a broker. Another time I had to pay half fee. But in return I got great tenants, vetted by the brokers. And the rest of the time I found people myself, vetted them, printed 2 copies of a lease off from the internet, and it's a done deal. One time I have had a tenant leave town in violation of the lease. I put the unit back on the market and it rented within 2 weeks, so I shrugged it off. For the most part, the area/building attracts professional tenants (even the guy who ditched his lease was professional, though a lawyer...) and this may be the key to low hassles.

I know other landlords in the area who have retired down to Florida and hired management companies ~ 5-10% or a lower % and an exclusive rental listing. They are all happy and have no complaints. The key to their happiness seems to be buying in nice areas where you can rent to professionals (of course, you make less money doing this).

I would be interested to hear others with good/bad experiences. Oh and one last thought. Whenever I read this board or the other boards over at Motley Fool, I always see people complaining about inflation and predicting hyperinflation under Bernanke. So I am relieved when I read things like that to know that I am heavily in property which is a nice inflation hedge.
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Re: pitfalls of rental real estate
Old 03-18-2006, 01:48 AM   #24
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Re: pitfalls of rental real estate

A NNN lease means no costs of any kind to the landlord. I had one with the Standard Oil Company. They sent me rent and paid all my expenses. That means ALL. Property tax, upkeep, everthing.

I have never found any investment to equal a good one in real estate. With depreciation, tax free exchanges, expenses, and personal home sales with 100% tax free money available on sales every two years, I do not see anything to compare.

I have no idea what you guys are talking about. No, money doesn't fall out of the sky but it is really difficult to not make a nice return.

Currently, you are right, prices are way up, but hell, where have you been for the last ten years or so? Profits have been huge.

I dumped out of the stock market in 2000 when the dow was 10,300. Well, we ain't back there yet and real estate has been through the roof.

Hello?

b.
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Re: pitfalls of rental real estate
Old 03-18-2006, 01:59 AM   #25
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Re: pitfalls of rental real estate

NNN properties are offered by various brokers and a search query in your favorite engine will bring back many to you. It's the best means to own commercial estate, being diversified, not exposed to hazards (e.g. seismic), and not being a landlord, and having a good occupancy rate.

My two cents to add that commercial RE does not work the way residential does. You deal with companies, not individuals, when they get in they often spend a lot of money to re-design according to their marketing / operational needs to run their operations (I've seen up to half of the price of the shop/warehouse !), rents are supposed to be 10% of the capital invested min and then follow construction indexes, when companies go bankrupt they cease to exist and it's quicker to get rid of them (though sometimes a hassle ! given what's left behind, e.g. I had once tons of mechanical equipment left over thousand square meters which you cannot remove easily), and rents are significant. Good selection can yield 14-15% (before taxes), but sometimes things go wrong. All taxes on properties are paid by the tenants, etc.

I prefer commercial estate to generate revenue. Though sometimes (quite often) in terms of capital appreciation, residential delivers better. You can see it through the funds (or REITs) price evolution. But Jeremy Siegel says it, do not buy RE for capital appreciation (especially now) but for its cash flow.

Three cents.
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Re: pitfalls of rental real estate
Old 03-18-2006, 02:02 AM   #26
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Re: pitfalls of rental real estate

Quote:
Originally Posted by boont
I have never found any investment to equal a good one in real estate.
Agree !
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Re: pitfalls of rental real estate
Old 03-18-2006, 04:26 AM   #27
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Re: pitfalls of rental real estate

all real estate investments are good ones....that is until they arent
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Re: pitfalls of rental real estate
Old 03-18-2006, 07:34 AM   #28
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Re: pitfalls of rental real estate

Stocks

Thirty years of RE never did it for me - so so overall.

But I've run across enough retiree's over the years who got there via real estate of various kinds to recognize that it works for many.

No idea of what portion/% of retirees.

Hmmm - perhaps a little of both. Selling and consuming the procedes of our duplex early in ER allowed us to leave our IRA portfolio's in the market in 90's wherein the bulk of the gains occurred after retirement.

Different strokes for different folks - more than one way to skin a cat.

heh heh heh heh
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