Rental income to FI RE earlier

[nun]

Most of the replies seem to focus on multiple properties and all the headaches they can be. I plan to use rental income as part of my ER, but I've done it in a small and manageable way. I own a 2 family and rent out the downstairs apartment for $1500 a month. I live upstairs so I can keep an eye on things, but I've always had super tenants. Also I'm only ever dealing with one person or a couple. Maintenance is minimal and after taxes and insurance I get $10k a year from the place. If I was to move downstairs and rent out where I live now I'd get $2500 a month.

[thefed]

I'm actually finding the rental market to be great right now...got a good tenant within 10 days of advertising our most recent rehab...im hearing the opposite in other parts of the country

[wolf]

OP.

I am retired, have 2 rentals. Great income. Units paid off now.

Tips:

1. Find a mentor. Not the local Realtor. ( ie. retired person, who is a landlord, and listen.)

2. Location of unit. Never forget this rule. " location, location, location"
ie. great schools, jobs. Makes it much easier to rent
and you will get better tenants.


3. Do your own repairs. If you cannot. Do not be a Landlord. In the begin
ing, your cash flow is to small.

4. As mentioned earlier. It will be very difficult to find a unit with cash
flow. But if you search you may find one.

In my case, many years ago, I knew the area I wanted buy in. Great location. I knew in advance, the selling prices of units. I also knew what the rents were, and I could estimate the insurance and property taxes.

I found a unit for sale, by owner, did an FHA assumtion, and purchased the unit about 10-15K below market. Reason, the owner had already moved out and bought a house. They wanted to sell, the realtor they used gave them a bad time......etc...

So, deals are out there, but you have to do your homework and know what you are doing.

If you are "lazy", don't want to get your hands dirty, want the R.E. person manage your unit....forget being a landlord.

Just my 2 cents.

[tryan]

Quote:

A typical deal is usually a $20K or $30K property that i put $5 K - $15K into and rent for around $800 per month.

Those are "no-brainers" ... not finding them in my hood. Did walk thru an REO I used to own. Funny tale: I bought it for $8.5k in the early 90's; flipped to a tenant within weeks for 40k (carrying the note for him); he holds the place for 12 years (renting it out for a couple years); sells at the peak for 243K !! New owner foreclosed on; now offered at a short sale for 68k. Bank has refused to budge (3 investor offers regected).

So I walk into the unit ... the carpet is same stuff I put into it 15+ years ago! Easily needs 15k worth of work. Then it rents for 1k/mo. Numbers are a little tight for me, so I let it go. A betting person will doll the place up then try flipping it for 110-120k.

[kat]

I'm a total rookie considering renting out my city house, while I stay in my country place.

Honestly, it started from realizing I only spent 20% of my time there, and it seemed like a waste. It didn't start from needing or caring about the money. I am considering selling it too, but that doesn't seem likely. It just feels wrong to leave it empty.

My thinking is I may pour any rental income back into the house, like replace the 100 year old cedar shake siding with new cedar shake siding, and replace the ugly white kitchen cabinets. Just give myself a lovely new house after/through it all.

Might even consider renting out one or the other place, for a couple years at a time, with time off in between.

I like the flexibility. No mortgage on either.

[nun]

Quote:

Originally Posted by wolf OP. If you are "lazy", don't want to get your hands dirty, want the R.E. person manage your unit....forget being a landlord. Just my 2 cents.

I think it's good to be handy around the house if you want to be a landlord, but if you do what I did and just buy a duplex or two family home and live in one half and rent the other it isn't hard work at all. There's very little worry and the rent goes a long way to paying the mortgage. Once that is paid off you start taking income free and clear. Also I like be diversified in my investments so I didn't want to sink a lot of money into real estate. Now I'm in a nice situation that I'll be getting $18k a year in rent with minimal worry.

[HpRyder]

OK I’ll kick in my experience. I’ve been a landlord for 10 or so years now with SFRs. They cash flow about 40K/yr. When they’re rented I’ve had very few unusual problems. Most problems are figuring out what rent will attract an acceptable tenant from the local rental pool, collecting the rents from the one or two late payers without alienating them and the sudden expensive repairs (a new AC & furnace just after a 95 F day in an SFR rented as having AC). I’ve got an inexpensive handyman to do all the small repairs, so all I do is tell him what to do, where and when. Right now, I’m using the cash flow as part of living expenses.

[queeneev]

Thanks for the update, OP's!

I think a good measure for whether you should landlord or not is how flexible you can be in an any given instant. Do you have the ability to cover those large repairs, do you have the time and job flexibility (if emplyed) to deal with vacancies that take days on end to get ready for the next tenant? Do you have a support system (someone to bounce your game plan off of when your tenants misbehave and you want to wring their necks haha)? Are you willing to landlord longer than you desire if the real estate markets are not playing nice?

Also, a sidebar topic for this real estate mess is Section 8. Anyone do this? These days Section 8 is HOT. They don't even take names for waiting lists. Recipients know they have a good thing, and a landlord can use that as leverage (ie; behave or I will report you, which would be devastating to your living arrangement). I have one Section 8 unit. I was fearful of giving it a shot, primarily because of the "inspection" part, but in hindsight, that is no big deal. An annual nuisance, but not a big deal. I have a somewhat unique situation in that my unit is the only one in the community that is Section 8 (not a typical Section 8 suburb, but the unit is very small so my rents fall within their payment ranges). When this unit goes vacant and I advertise as Section 8, I get 10's and 10's of calls. It will never stay vacant long. I get my checks on time every month, and my Section 8 tenant has minimal complaints. The only downside is that Section 8 tenants are hard on the property. Not a judgement, I'm just sayin that's my experience. I have lots of clauses in the lease, but sure enough, they will make that one bad move that I didn't think of (yet) to spell out in my lease. Example: I now have to add a clause that says "no standing on the bathtub soapdish" (that actually happened, it broke, giant hole in the wall into which water spewed until I learned of it much later...).

One added benefit to landlording....nothing shocks me anymore, no amount of "firedrills" can cause me to panic. That's actually a lesson that spills over into all aspects of life.

I am rambling...

[Martha]

We used to have a building with a couple of disabled section 8 tenants on SSI. They were both long term and neither was hard on the property. Rent came directly from the county. We bought the building with the tenants already there, and we sold the place a number of years ago. One of those tenants still lives there, probably has for 25 years. The inspections were never an issue. In our community all rental properties are supposed to be inspected every three years (they are now behind due to budget cuts). I liked the inspections. It helps you know that you are keeping things safe and up to date.

[tryan]

Our section 8 housing gets inspected annually. Seems that every time I got a rent increase the inspector wanted a "large" repair (new flooring, vanity, or counter top ...). But this year the increase was rejected due to budget constraints and the inspection was almost nothing. Fair enough.