How many have rental real estate?

[calmloki]

We have 33 units that we have had for about 25 years. They are in two complexes that happen to be right next to each other. One on-site manager handles both. We plan on keeping about 5 more years then sell with owner finance.

Sounds like we were buying in around the same time. We had planned on a gradual sell off starting back around the RE crash time - managed to sell a 5-plex end of 2013 and am giving a 7 unit next month to someone who would be inheriting anyway, then we will just content ourselves with taking rent payments for awhile unless someone else just has to own one of the places.

Must say that your two side by side complexes sound much smarter than our small complexes scattered over several towns in a 12 mile radius.. How did you happen into them - did you go from RE virgins to multi-landlords in one swell foop?

 

[JoeWras]

. Any time I hear someone mention the prospect of owning rental property for the "easy income" I steer them toward an old movie "Pacific Heights".

Didn't see the movie, but read the comments on imdb. Wow, just wow. Lot's of real life stories that resonated with people. Also some creepy replies to those folks from some people that apparently identify with being the "creepy renter/squatter."

Just wow.

 

[Senator]

Any time I hear someone mention the prospect of owning rental property for the "easy income" I steer them toward an old movie "Pacific Heights".

I saw the movie. Actually downloaded it from the pirate bay...

While the Pacific Heights might be a bit extreme, other similar stories are more common. BUT, they are mostly easy to avoid by doing a proper background check. And knowing how to interpret the check and making a proper decision based on it.

I think you will find far more horror stories in the stock market, from 2007, 2000, 1987, etc.

But that's why I have both. Plus a small pension and SS.

 

[simple girl]

We have one rental property - single family home (townhouse) that we lived in for a short time before being sent on assignment for DH's job for about 4 years. That is when we converted it to a rental. We have used a property management company since we were out of town. Now that we live back in town we continue with the property management company because it is the "easy button" for now. We have contemplated doing it ourselves but I always discourage DH from this b/c I know we are both "softies" and would not handle people being late with rent, etc. very well.

I recently ran a cash-on-cash calculator on it, and it looks like it is a 4% annual return. Not as good as I had hoped, but it still feels nice to have that monthly payment come in. We've had a few annoyances with the management company, but overall we are happy and don't have to deal with many issues related to the rental.

 

[rodi]

We built a detached granny flat on the backend of our property. It was built for my in-laws as FIL was wheelchair bound and MIL was his caretaker. It allowed them to have independence, and still get caretaking support. That need is no longer there - so now we rent it out. We're in our first "non-family" tenure of tenants. (A niece rented it after my in-laws.)

We don't get the full gamut of tax breaks because it's part of our primary home parcel - the only thing that is separate from our primary, as far as bills is: power/cable/phone - tenant pays. insurance - which we can deduct. Property tax etc is all a single bill included with our primary home. We have no mortgage.

We get a pretty nice rental income - $1400/month. It's a nice place so we had a very nice selection of professionals to choose from to rent to. I agree with the comment that doing a proper background check is important. We ran full credit, employment verification, references on our tenants. They both work for megacorps that do background checks - so that's an additional level of background check.

Our longterm plan, once the kids are grown and launched, is to move into the unit ourselves and rent out the front house for larger rent. We'll use it as a base while we travel and explore the world. That's about 15 years from now. The casita has the advantage for our senior years in that it is designed to be wheelchair friendly.... one level, roll in shower, already outfitted with grab bars in appropriate places.

I'm in the process of looking for new insurance (changing companies). During the application for umbrella coverage, I was asked probing questions about "other properties, including rentals" that I might have. (I don't have any.)

I don't know what this would do to my umbrella, but I'm just curious about the questioning.

So I ask you landlords: do you have an umbrella? If so, did it go up as a landlord? Or do you somehow make this a business or LLC side project?

Aside from inherited PSTD (after seeing what my grandmother went through), these legal entanglements are one reason I've stayed away.

We just added an umbrella when we switched to non-family tenants. We had to change insurance companies because AAA found reasons to dump us when I tried to add the umbrella. First they didn't want to issue a landlord policy (the casita had been covered under our homeowners when my in-laws were living there.) Their reasons were invalid so they backed off that reason. And came up with a fire risk reason. (Same risk as was present since we bought the house and insured with them more than a decade ago.)

The reason for the umbrella is to add an additional level of insurance above the landlord policy (which covers the structure - but not the contents of a rental.) It covers if a tenant sues you, etc. For us, it's worth the peace of mind. We have good tenants and a well maintained place, but I'd hate to be forced out of retirement because a lawsuit wiped out my retirement savings.

 

[LitGal]

Only My Mom's House, Under Special Circumstances

How about "Never owned a rental and never will, if I have anything to say about it!" ?

Taking care of my own house is more than enough work of that type, for me.

Long story short, DB and I hired a property management co. to rent out Mom's house last spring after we moved her (MOST UNWILLINGLY, on her part) into assisted living. (The doctor said she had no choice but to go.) She doesn't have the savings to stay there indefinitely. But her paid-off 3BR/2BA in a suburb of Sacramento has become our little cash machine. It provides $1,000/mo. toward her assisted living bill and about $400/mo. toward a maintenance acct. we established to cover taxes, ins., repairs, etc.

Because we sank $ initially into paint, new flooring and a few updates, we have very happy renters who've said they never plan to move. If we ever put the house up for sale, they've asked to be contacted first.

Mom has settled in now to her new home, and has admitted that she likes the way the rent is extending her savings.

For me, though, I wouldn't do it. (MY DB is a corporate CFO, so enjoyed setting all this up.........and he does live near Mom and the house. So it hasn't mattered that I'm 2,600 mi. away.)

Thank goodness!

 

[jkern]

Own 3 rental Condo's. Purchased in 2010/2011. They were 4 to 7 years old when purchased. No turnover yet, so they have only required about 10 hours per year of my time. Net ROI is about 8% to 9%. Capitol appreciation has been about 75%. So far so good!!!

 

[InTheSticks]

Sounds like we were buying in around the same time. We had planned on a gradual sell off starting back around the RE crash time - managed to sell a 5-plex end of 2013 and am giving a 7 unit next month to someone who would be inheriting anyway, then we will just content ourselves with taking rent payments for awhile unless someone else just has to own one of the places.

Must say that your two side by side complexes sound much smarter than our small
T complexes scattered over several towns in a 12 mile radius.. How did you happen into them - did you go from RE virgins to multi-landlords in one swell foop?

I sold a start up at 27. I made a large down payment on the properties and paid off the properties while working.

The fact that they are side by side was dumb luck. I had a duplex and single family house but sold them years ago due to time constraints.

 

[SVHoper]

Hi,

We have 4 rentals added since 2009. Appreciation with those has been good ~70%. Currently struggling whether to add another as finding it very difficult to get even 5% net on rents.

Not planning to fully retire for 10 years, but then rental income will be critical.

 

[Ronstar]

I'm a member in an LLC that owns 2 Florida condos that are rented. We use a management agency for one, handle the other one ourselves. We sold another one in 2013, and would like to sell the current 2 within the next couple of years as my partners are getting old.

 

[kevdude]

Have 'em and semi retired because of 'em

We bought our first rental property in 2002 (a fourplex) and now have 29 units total, including 3 small apt buildings, some single family rental homes, and a couple of condo units. The two condo units are paid off. I quit my job about 18 months ago at age 49 and we now live off the rental income and income from flipping 1-2 houses per year. Hopefully neither of us will have to return to work any time soon.

Sure, we've had some tenants that have caused us grief, but we knew we would going in and we try to screen our tenants very carefully. We've also had some tenants that have been with us since we bought the first building.

We don't have any plans to sell in the near term, but maybe when we're 60'ish after our kids are off to college. The vast majority of our wealth is tied up in the rentals, but we also have approximately $300k in retirement accounts.

 

[Cat-tirement]

We have a single rental property, but unlike most responding here, its purpose is not income or profit. It will be our retirement home in a couple of years. We bought it while the real estate market was down and area rentals were (and still are) in high demand. Tenants are paying the mortgage and other expenses until we are ready to use it.

 

[Lucantes]

We also have a single rental property that will be our retirement home in a couple of years. The rental income is paying for repairs/upgrades to the property prior to our retirement to it so I am happy about that.
Would possibly consider buying another one if I could find something that was a great deal.

 

[wolf]

I know a certain number here have rentals, but wonder at the percentage. I feel kind of like an outlier, as we got started buying ratty old places that we thought were cool and then had to make them pay for themselves, which resulted in a collection of rentals that ended up being our livelihood sans other meaningful employ for me. We now have a manager for most of the time, but the rentals continue to be our main repository of wealth and a primary funder of our annual income.

Currently have rentals, self manage. Dumb question, how do I access the
poll?

 

[JTOrt]

We have one rental apartment located in a big city, half an hour from the small town we live in. I self manage, only one call in 3 years. 4% return + rising equity. Trying to decide weather to keep it when we ER just to stay in the ridiculously high market or sell it and never move back. It's a security blanket for the time being.

 

[calmloki]

Currently have rentals, self manage. Dumb question, how do I access the
poll?

If you haven't voted you just check the boxes up at the very beginning of the thread that apply, then click "view poll results". Once you have voted I think you are only presented with the poll results.

 

[JoeWras]

I guess the lesson here is that rentals can be a very good investment. Just go into it with eyes open. Do your homework. And, it may not be for everyone.

I also think it varies a bit state to state. The laws among the states vary quite a bit when it comes to owner-tenant issues.

 

[tryan]

Had 23 units (AND a day job) prior to FIRE in 2005 ... bailed on all the multis. Kept half a dozen SF ... built a vacation home/rental on a small lake in ski country.

Still living off the rents nearly 10 years n'counting.

Prices tanked nearly 50% in some areas I own in (inner city). But the rents were steady and values are slowing recovering. Did one flip in 2012 for "fun".

 

[mathjak107]

i invested very heavily in nyc real estate. mostly special situation stuff like owning co-ops with rent stabilized tenents in them over looking central park.

we would offer lots of dough to buy out the leases and sell the apartments. my partner was a famous real estate mogal.

we also owned some fabulous lease rights on some commercial property in the same area.

we didn't even own the property ,just the lease rights and in march an investor group bought the remaining 20 years of lease rights from us for a staggering amount which made real estate headlines.

but with retirement less than 1 year away we have been liquidating everything. the last thing i want to do in retirement is deal with tenants ,courts and the city.

we still have 2 apartments left with tenants not going anywhere and expenses and rents are about a wash. so it does not look like i will be totally out but 95% out works for me.

 

[pb4uski]

My Dad had residential rentals and ultimately sold them because of the hassle factor and he was too busy to deal with them and didn't want to hire a manager to deal with them. He also had a commercial rental that he kept and has worked out very well for them.

I have no rentals and have no interest in buying myself a job. I may end up inheriting the commercial rental and I would be fine with that, but I wouldn;t go anywhere near residential.

 

[mathjak107]

we have a commercial mgmt firm but even so i don't want the hassles or ill-liquidity of it through retirement if i can avoid it.

retirement is no time either to play around with tenants who turn bad and leave you with no income stream and expenses for what could be months unless you have deep pockets.

we started unloading our holdings over the last decade.

the irony is i loved the income from those commercial leases we held . that was going to be a part of my retirement income. but now that our partner bernard spitzer , who is one of americas real estate mogals decided to sell them the burdon is on me to get that kind of return on my own and there is no way i can do that consistently.

i got a chunk of taxable cash from the sale so it is something i can not duplicate.

 

[pb4uski]

I hear you but this is a bit of a special situation in that it is single tenant (large company) and they have been renting this building for over 30 years so other than negotiating the lease every 10 years it is very low maintenance. I can't for the life of me understand why they haven't bought the building.

 

[mathjak107]

if it is trouble free and if you can afford to deal with it when the day comes they say they are leaving then all is good in the hood.

these lease rights were ours since 1984... figures 11 months from me retiring the pensionized income ends ha ha ha.. it was that steady and good.

these are the stats on our lease rights that were sold. we owned 9 co-ops in the same building of which just 2 are left now.

we had a 10% stake in the lease rights and a 25% stake in the apartments with our kids having another 25% stake.

http://www.masseyknakal.com/listingimages/setup/pdf/200_Central_Park_South_-_Setup.pdf

http://therealdeal.com/blog/2014/01...0-cps-leasehold-from-bernard-spitzer-for-18m/

 

[kcowan]

We rent out our home for 6 winter months but it is all professionally managed. We don't rent out our winter home in the summer.

 

[kgtest]

have owned a 6-plex, sold and took appreciation. That one was tough as it took a lot to get into, we (my partner was my ole man who currently owns a handful of rentals) had a lot of appliances and maintenance work added with the fact it was 100mi away from us.

Sold that after owning it for 5 years and banked < 3% plus some tax breaks that allowed reinvestment into dads other investments.

Bought townhome foreclosed in 2010. Has been a positive cash flow since and is < 5 years from being paid off. Looking to buy another rental but the markets are a bit high in my area and the trick is ALWAYS buy low, and select tenants with good credit.

My ole man paid off his original home a looong time ago and used the positive cash flow to pay off his current home which now he uses his job income to pay off his latest investment property sooner as well. He told me between a few smaller Pensions and his rental income he shouldn't have to touch his SSN. The tough part is convincing him to maximize his SSN WR for his and moms tax situation.

My oldest sis (40yrs old) owns 7 rentals with her husband. Her DH is hands off basically just signing when he needs to to obtain low financing. She says she is planning to retire in 5 years at 45 after saving diligently and investing high in 401k at MegaCorp since she was 25 so past (15-20yrs). Her kids will be trust fund kids and I am beginning to think mine may as well.

My families fortune is multi-millions now which is astonishing considering Grandma relocated the fam from a rented farm to "the big city" in 1969. Grandma is living off SSN and is happy with that...ole man prob just bought her last used buick a cpl years ago she is 89 and lost everything she had to a gambling diabetic hsuband who passed years ago.

I don't think single handedly a rental would be worthwhile, but compounded...just like market investments... seems to take the sting and "sweat" out of owning the rentals.

ALL are self-managed. Would never pay someone to wash my vehicle let alone manage my investments. We hire out the work ourselves when needed but avoid this at all costs. Both me and the ole man have noticed since texting has become mainstreem it has made managing these things a little easier for some reason.

My dad plans on self-managing (currently 62yrs old) until he can no longer physically do it...then its my resp...or else I will hire a prop manager if my sis ever decides to go that route...we will prob need to to some sort of family trust to maximize all of the wealth coming from these properties once they are all sold throughout time. Thinking about a trust with a defined Inherited IRA or something.

I like to relate my family to the modern day mafia...we are definitely not a soup kitchen.

In the over 10+ units and over 30yr timespan between me, sis and ole man we have had to evict 2 people.

Another side benefit is we have built up a ton of local connections and friends in the process, and aquired a fleet of trucks and just about any tool you could think of. No backhoe yet but we haven't needed one.