Rental Real Estate Surprises

[Sunnymar]

I used to own rentals is LA County (South Bay) it is a desirable area with many young professionals renting just our of college. It seems to be the young first job thing to move to the beach in Southern California, live the exciting single beach life, some stay some move back home after settling down. The tenants are low risk, have money, never had an trash my property. I'm moving from the area so I didn't want to keep rentals there.
I've had rentals, both houses, duplexes, apartment buildings and like RE for a well rounded portfolio. I know California RE is different than some other areas.
I managed the small units, but had a list of vetted plumbers electricians, etc to fix and send me the bill. I never did repairs.

 

[Luck_Club]

well rounded portfolio. I know California RE is different than some other areas.
I managed the small units, but had a list of vetted plumbers electricians, etc to fix and send me the bill. I never did repairs.

I'm currently compiling a list as I get older, don't want to bother and want more time away. Previously they have been on as needed basis. Got lots of travel plans in or before 2021!

It has been very good to us over the past 15 years in a falling interest rate and appreciating home value market. As I enter the next phase of life, I'm looking to simplify, but the cash flow can't be ignored. It is my pension, and to annuitize the market value, would result in less than half the gross cash flow.

As mentioned in another post show me a relatively predictable and steady cash flow that can match the return without the active 10-20 hours a year (per property) of surprises, and I'm all over it.

 

[nun]

If you have multiple properties then bring a landlord could take a lot of time and effort. That's why bought a duplex and I just rent out the one bedroom apartment on the ground floor. I keep everything well maintained and so there are very few surprises. I deal with one person and they have a boiler plate lease that I got off the local town's website.

One bonus happened this morning. I shoveled lots of snow last night, but more fell during the night and when I went outside at 8:00 am the tenants were cleaning up the overnight snow fall. Three shovelers made light work of it.

 

[Brat]

Don't want to steal the thread, but I've been considering purchasing a home somewhere I'd enjoy visiting frequently, and hiring someone to manage it as a vacation rental. I could stay there 14 days a year, PLUS whatever time I needed to 'maintain' it, and all costs would be fully deductible. Have people generally had good/bad experiences with this type of rental?

We did that in Sunriver, Oregon very successfully. While our house could accommodate 6 I hear that the large homes have the best ROI. Before you buy meet with several rental agents, learn the market.

 

[sunsnow]

Update

So we just finished selling the last of the four properties we had planned to liquidate. I calculated the returns, and here they are:

The first percentage is the annualized return we received for the property, and the second is what our annualized return would have been had we invested in the S&P at the time instead (according to https://dqydj.com/sp-500-return-calculator/):

prop 1. 10.36% 8.43%

prop 2. 33.92% 12.94%

prop 3. 14.97% 11.23%

prop 4. 31.44% 13.24%

I must say, it has been really nice getting rid of all the headaches that came with owning those properties. However, we did decide to hang on to a couple so we are not entirely carefree.

Thanks to everyone for the sage advice, and I hope this information is of interest.

 

[Blue Collar Guy]

I can't condone what she did. But I'd be pretty mad if you jacked my rent by double, and would look to leverage every protection afforded me under the law.

With that being said. As a landlord myself, getting a 4% raise from 1 year to the next is like pulling teeth. I never raise rent during a tenancy, but will raise it when a unit turns over.


Wish you were my former landlord. Every August like clock work, we got a 25, then 50 then 100 a month rent increase. It was time to go. As a parting gift he tells me that the new tenant is paying an additional $100 over what were were paying. Turns out that was the last month she ever paid. She stayed till Hurricane Sandy(11 months) wiped out all the basement apts in the complex. The other 2 tenants in the building told me about the cops being a fixture at the apt every few days. And how they wrecked the apt. Bet he missed my cash rent that was on time every month for those years.

 

[Senator]

With that being said. As a landlord myself, getting a 4% raise from 1 year to the next is like pulling teeth. I never raise rent during a tenancy, but will raise it when a unit turns over.

I went many years (2000 - ~2012) without raising rents on tenants. I generally bump every year ~$25 a month now. And add another $25 for a dog or cat.

When a tenant moves out, I can typically get another $75+ per month. It's crazy really. My rents are up almost $7,800 a year since a year ago, on 25 units, which is on average about $25 a month.

A person has to do something with their 24 hours. Sleeping takes care of about 6 of them. A nap, maybe another hour. Then, having a few hours a week of maintenance is a good use of your time. I would guess I take an half-hour per unit per month, at most. Maybe a few extra hours on an apartment turn. I would do t again in an instant, but maybe leave the full-time job earlier.

Real Estate (and the markets) did bring my net worth up ~10X since 2008. It also provided me many business tax benefits and a nice living.

 

[brucethebroker]

Senator, 1+.
Yep about not raising rents on current tenants.
yep about raising rents when the property becomes vacant.
Yep about needing something to do.
and Yep about bringing up net worth.

And, yep about reducing the number of properties in retirement. Although I do occasionally get the itch to grab a good deal when I see on. I get over it, though.