Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 12-21-2017, 08:04 PM   #121
Recycles dryer sheets
 
Join Date: Aug 2017
Posts: 199
Because the suggestion was it could sub for a bond. Bonds add portfolio diversity and tend to reduce volatility clearly sdy and spy are virtually identical except for a little more dividend in sdy
Doc0 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-21-2017, 10:21 PM   #122
Thinks s/he gets paid by the post
 
Join Date: Dec 2010
Location: Midwest
Posts: 1,789
Quote:
Originally Posted by Texas Proud View Post

As to the people who talk about buying cheap... well, there were a good number of people who were renting those houses and lost them.... I could say 'if I bought at the bottom of the market in 2009 I would make out like a bandit'.... but that is pure 20-20 hindsight... people were buying RE to rent in 2007 prior to it crashing... and lost everything they invested... maybe YOU didn't, but that does not mean there were not a lot of people who did... people who had a balanced portfolio lost value, but the bonds provided a cushion for them... the lost value, but not everything...


edit to delete link that did not work... see pb4uki's post who fixed it for me... thanks...
I have been buying and (as a broker) selling property for 30 plus years. I know plenty of people who lost money during the crash of 07/08 in RE, but they were either owner/occs of houses (not landlords), or "flippers". Rents held steady where I live in the Midwest. Mortgages were fixed. Property taxes actually deceased. I do not know a single landlord/investor who "lost everything"-because the rents continued to pour in. Lots of new renters in the market (who had owned homes and lost them). The landlords I know looked at the crash to buy homes cheap. They did not worry about paper values.

It seems to me that retirees who use a 4% or 3% withdrawal rate worry far more about market dips than landlords do about valuation. My valuations of RE don't matter to me. Only cash flow/rents matter. And in my 30 plus years of landlording, they have never decreased.
brucethebroker is offline   Reply With Quote
Old 12-21-2017, 10:53 PM   #123
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 17,203
Quote:
Originally Posted by brucethebroker View Post
I have been buying and (as a broker) selling property for 30 plus years. I know plenty of people who lost money during the crash of 07/08 in RE, but they were either owner/occs of houses (not landlords), or "flippers". Rents held steady where I live in the Midwest. Mortgages were fixed. Property taxes actually deceased. I do not know a single landlord/investor who "lost everything"-because the rents continued to pour in. Lots of new renters in the market (who had owned homes and lost them). The landlords I know looked at the crash to buy homes cheap. They did not worry about paper values.

It seems to me that retirees who use a 4% or 3% withdrawal rate worry far more about market dips than landlords do about valuation. My valuations of RE don't matter to me. Only cash flow/rents matter. And in my 30 plus years of landlording, they have never decreased.

I actually bought and sold a house during that time... and if you did not have a tenant it was almost impossible to get one... I looked at a number of houses that actually had 'tenants' that paid nothing but utilities to live in a house.... kinda shocked me... one couple said they had moved 3 times already... had to be able to move in a moments notice... I wanted to buy the house they were living in but could not come to terms as owner went BK... bank would not foreclose so the Gypsies (as we called them) lived there for 2 years... when it finally came to market their dog had ruined all the kitchen cabinets and floors and they had allowed a leak to keep going and it had mold in one wall... so I passed...

Also, rent levels were not enough to pay the mtg and taxes, so it was negative cash at that time for people who bought the previous year or two...


I also looked at rents when this was happening as I was thinking about renting my old house, but as I said they had dropped in my neighborhood... it was not worth it for me to rent...


Anybody know a site where you can look at historical rents for different cities or locations?
Texas Proud is offline   Reply With Quote
Old 12-22-2017, 06:14 AM   #124
gone traveling
 
Join Date: Dec 2016
Posts: 733
I use craig's lists to gauge market rents, and advertise my apartments. Not sure how to get historical rents. Maybe Zillow.

https://www.craigslist.org/about/sites
Luck_Club is offline   Reply With Quote
Old 12-22-2017, 06:54 AM   #125
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
Quote:
Originally Posted by Texas Proud View Post
I actually bought and sold a house during that time... and if you did not have a tenant it was almost impossible to get one... I looked at a number of houses that actually had 'tenants' that paid nothing but utilities to live in a house.... kinda shocked me... one couple said they had moved 3 times already... had to be able to move in a moments notice... I wanted to buy the house they were living in but could not come to terms as owner went BK... bank would not foreclose so the Gypsies (as we called them) lived there for 2 years... when it finally came to market their dog had ruined all the kitchen cabinets and floors and they had allowed a leak to keep going and it had mold in one wall... so I passed...

Also, rent levels were not enough to pay the mtg and taxes, so it was negative cash at that time for people who bought the previous year or two...

I also looked at rents when this was happening as I was thinking about renting my old house, but as I said they had dropped in my neighborhood... it was not worth it for me to rent...

Anybody know a site where you can look at historical rents for different cities or locations?
I bought a 4-plex every year from 2008 to 2012. Five total. All were rehabbed and rented before I bought the next one. Any landlord that cannot find a tenant needs to get out of the business, or learn quick. You can always increase demand by lowering price.

Quote:
Originally Posted by Luck_Club View Post
I use Craig's lists to gauge market rents, and advertise my apartments. Not sure how to get historical rents.
Craigs is a good indicator, but I do it a bit different. I generally rent 6-10 units per year, in various places. I start showing a place as soon as I get notice the existing tenant is vacating (45+ days before an actual vacancy), and plan to have it rented in 2-3 weeks, maximum.

I start a bit higher than I think the rent should be, and look for the number of inquires. If the volume is not what I expect after a week or so, I lower price. I have a tendency to get 50+ inquires on each opening, each week. I pre-screen, so I only show a place a few times before it gets rented.

If I am too high on the price, lower quality renters are the only ones I get to inquire or view the apartment. These are ones that are barely qualified, ore ones that think I will waive the rules. Good renters can go anywhere, they know value and will not pay more than a place is worth. Poor quality renters have to take a chance and see and apply for every thing.

If the tenant quality is not what I expect after a week again, I lower price again. $25 or so. It depends on how high I initially thought I was. Also what season we are headed into and how many other vacancies I have coming up. I have dropped by $100 a month already.

If I get 1-2 tenants, that I think were qualified (based on discussions of wages, occupation, credit score, etc.) and they do not rent, I lower price. Works every time.

My rents in 2014 to now are up considerably, 20%+. From ~2000 to 2013 or so, rents were pretty flat. My vacancy rate is sub 2%, most of which is planned.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Back to Bonds
Old 12-22-2017, 08:12 AM   #126
gone traveling
 
Join Date: Dec 2016
Posts: 733
Back to Bonds

Good primer on buying, monitoring and managing bonds. Do I dare say it sounds like a lot of work.
https://www.fidelity.com/learning-ce...e=email_weekly

Sector analysis of investment impacts of the tax reform more talk about impact to bonds.
https://www.fidelity.com/viewpoints/...and-tax-reform

"US corporate bond quality—and rates—may rise
To the extent that tax reform benefits the bottom line of US companies that issue debt, their credit quality may improve. The repatriation of cash from foreign earnings may shift the capital structure of multinational corporations, allowing them to issue less debt to raise US operating cash. The limit on deductibility of debt interest payments will generally hit only the most highly levered companies (those issuing high yield debt), but may increase credit risk at the very lowest end of the credit spectrum.

To the extent that the act stimulates the economy as anticipated, the Fed may be encouraged to raise rates faster, which will influence government, corporate, and municipal rates. However, the Fed’s economic projections have accounted for moderately higher economic growth due to tax cuts, with no change as of yet to their policy rate projections. Actively managed bond funds may be best positioned to take advantage of shifts in the fixed income market as issuance volumes, issuer credit quality, and rates change."
Luck_Club is offline   Reply With Quote
Old 12-22-2017, 08:21 AM   #127
Full time employment: Posting here.
hesperus's Avatar
 
Join Date: Aug 2013
Location: https://www.google.com
Posts: 750
Send a message via ICQ to hesperus Send a message via AIM to hesperus Send a message via Yahoo to hesperus
Quote:
Originally Posted by Senator View Post

If I am too high on the price, lower quality renters are the only ones I get to inquire or view the apartment. These are ones that are barely qualified, ore ones that think I will waive the rules. Good renters can go anywhere, they know value and will not pay more than a place is worth. Poor quality renters have to take a chance and see and apply for every thing.
That's very interesting, and runs counter to what people might typically believe. But it makes sense, and I wish I had tried this when I had a rental in Virginia from 2006-2011, the worst of the recession. We had a good tenant leave at the end of 2007, and had a terrible slew of tenants following that, the last of which left the home and surrounding yard infested with fleas. I was completely reliant on a property manager there, because we had moved back out west. I never knew how bad it was until it was too late. For a couple of years all I remember was getting my checkbook out whenever the property manager called me. It was a terrible experience. But I digress from the topic...
hesperus is offline   Reply With Quote
Old 12-22-2017, 10:18 AM   #128
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 17,203
Quote:
Originally Posted by Luck_Club View Post
Good primer on buying, monitoring and managing bonds. Do I dare say it sounds like a lot of work.
https://www.fidelity.com/learning-ce...e=email_weekly

Sector analysis of investment impacts of the tax reform more talk about impact to bonds.
https://www.fidelity.com/viewpoints/...and-tax-reform

"US corporate bond quality—and rates—may rise
To the extent that tax reform benefits the bottom line of US companies that issue debt, their credit quality may improve. The repatriation of cash from foreign earnings may shift the capital structure of multinational corporations, allowing them to issue less debt to raise US operating cash. The limit on deductibility of debt interest payments will generally hit only the most highly levered companies (those issuing high yield debt), but may increase credit risk at the very lowest end of the credit spectrum.

To the extent that the act stimulates the economy as anticipated, the Fed may be encouraged to raise rates faster, which will influence government, corporate, and municipal rates. However, the Fed’s economic projections have accounted for moderately higher economic growth due to tax cuts, with no change as of yet to their policy rate projections. Actively managed bond funds may be best positioned to take advantage of shifts in the fixed income market as issuance volumes, issuer credit quality, and rates change."

The first sentence from the first article kinda blows your point....
Investing in individual bonds can often require a more strategic, sophisticated approach than, say, choosing 1 or 2 bond funds, but there are unique benefits for those willing to commit the time.

This is an alternative from choosing 1 or 2 bond funds.... so just chose 1 or 2 and be done... no need to read the rest of the article... that is the beauty of a MF or ETF....
Texas Proud is offline   Reply With Quote
Old 12-22-2017, 10:25 AM   #129
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 17,203
Quote:
Originally Posted by Senator View Post
I bought a 4-plex every year from 2008 to 2012. Five total. All were rehabbed and rented before I bought the next one. Any landlord that cannot find a tenant needs to get out of the business, or learn quick. You can always increase demand by lowering price.



Craigs is a good indicator, but I do it a bit different. I generally rent 6-10 units per year, in various places. I start showing a place as soon as I get notice the existing tenant is vacating (45+ days before an actual vacancy), and plan to have it rented in 2-3 weeks, maximum.

I start a bit higher than I think the rent should be, and look for the number of inquires. If the volume is not what I expect after a week or so, I lower price. I have a tendency to get 50+ inquires on each opening, each week. I pre-screen, so I only show a place a few times before it gets rented.

If I am too high on the price, lower quality renters are the only ones I get to inquire or view the apartment. These are ones that are barely qualified, ore ones that think I will waive the rules. Good renters can go anywhere, they know value and will not pay more than a place is worth. Poor quality renters have to take a chance and see and apply for every thing.

If the tenant quality is not what I expect after a week again, I lower price again. $25 or so. It depends on how high I initially thought I was. Also what season we are headed into and how many other vacancies I have coming up. I have dropped by $100 a month already.

If I get 1-2 tenants, that I think were qualified (based on discussions of wages, occupation, credit score, etc.) and they do not rent, I lower price. Works every time.

My rents in 2014 to now are up considerably, 20%+. From ~2000 to 2013 or so, rents were pretty flat. My vacancy rate is sub 2%, most of which is planned.

What did you own before 2008? That is the point I was making...

Did these 4 plexes get repoed? If so, then someone before you was renting them out and lost everything.... if not, they decided the work needed for the return was not worth it.... who knows for sure...


I agree that if you only bought after the crash then you are doing well... but I also say if you only bought stocks after the crash you are also doing well.... a quick look takes it from 7,000 to 24,000 and that does not include dividends.... say around 350%....

With leverage you might be up that much... but are you?


BTW, I would not want to be dealing with 20 renters... and you might have more than that...
Texas Proud is offline   Reply With Quote
Old 12-22-2017, 10:39 AM   #130
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
I owned two duplexes before that. Since Jan 2001.

All property I have ever purchased have been in some process of foreclosure. The banks lost more than the investors or owners that went broke.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 12-22-2017, 10:44 AM   #131
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 17,203
This was touched on earlier when I said I did not pay any federal income tax...

I have almost all of my bond allocation in IRAs or 401(k)s... I keep my taxable account income as low as possible with stocks which is exempt...

Now, I did know someone who had their RE in an IRA, but that meant she did not get the tax savings on depreciation... but like the RE people here she was only interested in cash flow... bought really bad property (IMO) cheap and was able to raise the rent as the economy got better...
Texas Proud is offline   Reply With Quote
Old 12-22-2017, 03:19 PM   #132
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
Quote:
Originally Posted by hesperus View Post
That's very interesting, and runs counter to what people might typically believe. But it makes sense, and I wish I had tried this when I had a rental in Virginia from 2006-2011, the worst of the recession. We had a good tenant leave at the end of 2007, and had a terrible slew of tenants following that, the last of which left the home and surrounding yard infested with fleas. I was completely reliant on a property manager there, because we had moved back out west. I never knew how bad it was until it was too late. For a couple of years all I remember was getting my checkbook out whenever the property manager called me. It was a terrible experience. But I digress from the topic...
Property managers are the worst, if you do not know how to manage them. They make the most money when you make the least.

A vacancy is like a truck load of bananas. You need to get rid of it before it goes bad. Lower the price if you have to. That is what you would do with bananas. Another truck load get delivered in 30 days.

Vacancy is the number one avoidable expense as a landlord. Keep in mind that good renters look 45-60+ days out. Low quality renters look for next week. If you have a vacancy, and do not have a renter lined up, expect to be vacant for 6+ weeks.

Most landlords see a lot of low-quality renters inquiring. 95%+ of all inquires are low quality renters. Low quality renters move more often due to eviction, lease non-renewal, and just not behaving well in the rental. They also know that they cannot get accepted to too many places, so they apply to many more places.

Factor those statistics in, and you have a high number of low quality applicants. In reality, only about 30% are low quality.


Quote:
Originally Posted by Texas Proud View Post
With leverage you might be up that much... but are you?

BTW, I would not want to be dealing with 20 renters... and you might have more than that...
I have 25 renters when full. 8 buildings, only two small mortgages. Adding in my own hoe makes 9 buildings.
With good tenants, it's easy to manage. I did it for many years and still held a full time job.

Approximately $2.8M in real estate, and only $375K in mortgages. I am up almost double, 200%. And I did cash flow like a madman. If I would have kept all the money and not spent it, like a stock, it would be at least another $750K or so. I paid down about $375K in mortgages in the last thee years to increase my cash flow for retirement.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 12-22-2017, 03:34 PM   #133
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 17,203
I will say that a good renter makes it easy... one of my sisters rented out the first house she bought.... always wanted a cheap place to go if they lost jobs etc...

Had a renter in for 15 years and never had to worry... it was agreed that they take care of everything except if something major breaks and they could not fix.. she said there were be years without doing anything except deposit the check...


Still, enough horror stories out there when you have to evict someone that I would not want to do it... even though it is easy in Texas...
Texas Proud is offline   Reply With Quote
Old 12-22-2017, 03:50 PM   #134
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
Quote:
Originally Posted by Texas Proud View Post
I will say that a good renter makes it easy... one of my sisters rented out the first house she bought.... always wanted a cheap place to go if they lost jobs etc...

Had a renter in for 15 years and never had to worry... it was agreed that they take care of everything except if something major breaks and they could not fix.. she said there were be years without doing anything except deposit the check...


Still, enough horror stories out there when you have to evict someone that I would not want to do it... even though it is easy in Texas...
It's all about screening and waiting for a good tenant. Knowing what a good tenant looks like on paper is key. I screen often sight-unseen. I can approve them all based on the applicants paper trail.

I have not missed a day of rent in years.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 03-01-2018, 12:33 PM   #135
Recycles dryer sheets
 
Join Date: Jun 2015
Posts: 338
Quote:
Originally Posted by pb4uski View Post
Let us know once you have sold.... until then it is wishful thinking.
Sold on 2/20/18 for full asking price, $215,000.
Joylush is offline   Reply With Quote
Old 03-01-2018, 12:35 PM   #136
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,265
Congratulations.

So you paid $110k about a year ago, made $25k of improvements and sold for $215k? That's extraordinary.... what part of Florida are you in? Was it a special situation of some sort?

P.T. Barnum was a wise man.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Where Does Real Estate Fall into this Asset Allocation? nico08 FIRE and Money 1 11-04-2010 10:53 AM
Real Estate, Trusting Stocks & Asset Allocation msbearkeley FIRE and Money 7 03-28-2010 06:20 PM
Study: Alcohol can be a partial substitute for exercise REWahoo Health and Early Retirement 14 01-29-2008 04:10 PM
Real Estate Agent in Down Real Estate Market TromboneAl Other topics 4 06-09-2007 10:20 AM
No substitute for experience John Galt Life after FIRE 9 02-08-2005 01:31 PM

» Quick Links

 
All times are GMT -6. The time now is 06:22 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.