Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How is your rental business? and for the coming future?
Old 03-18-2021, 12:59 PM   #1
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
How is your rental business? and for the coming future?

Hi All,

It's been a while to write a post. Meanwhile, I FIRE'd in Feb 4th this year Yay!!

My probate was ended in January, so I had spent a lot of time to questioning how long I would keep the job. And, the coworker who kept bullying at me was driving me crazy so I reported to upper management, and they don't do anything and told me to keep tolerating, so I didn't wanna tolerating even a minute more. I gave them resign letter and walked out on the day. Nothing surprise. I knew he wouldn't change any, management is useless. That's why I planned FIRE. And now I am happy with that.

Anyway, back for my post title.

How are your rental business doing? I know so many people can't make their rent but eviction can't happen etc. I have not increase rent since covid19, I am not sure if I can and how other people are doing since house price went up a lot.

My tenants are fine, the section 8 tenant has some trouble, but still up to dated due.

My original property tenant is moving out in the next month since he bought a house. The house was the one I used to live before moving into my Airbnb house. so if I get rid of all houses, still need a place to live, that was the most possibility. This house was only $43k and now $96kish, $900/month. I can increase to 1050/m if I keep renting.

But I see house price went up a lot kinda of bubble way. and I am really afraid, the high number of death will make a lot of inventory. And covid end possibility can be shorten much faster than I anticipated. on contrast, MO is really shorten in inventory even in news article.

So, I am not 100% sure for selling, I would like to know other opinions how you guys see the real estate market.

I have 11 houses now. 4 were mine, and 7 inherited. so the 7 got step up basis. the step up basis numbers were pretty high, so it is long way to go even if the last year big increase. So like credit card debt, should I sell things first which would meet the step up basis number??

I was not planning to keep the rental business long run, so I prefer with stocks. I have AA 100% stock for total stock or S&P a little over 1mil. and I don't wanna be stuck unable to sell rentals when crash possibly happen. But since the step up basis, would it better to keep for any tax benefit

Based on those plan, I have to plan how I am investing from now. What should I consider the most?? Should I hire property management company to keep them long run

Please advise me.

Thank you in advance.
retire to nature is online now   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 03-18-2021, 01:49 PM   #2
Thinks s/he gets paid by the post
Finance Dave's Avatar
 
Join Date: Mar 2007
Posts: 1,550
Wow...too much for me to unpack...but...

It is NOT true that you cannot evict during the pandemic. The mandate only says you cannot evict for NON-PAYMENT, and even then it only applies to "covered persons". If you need to evict, you need to study up on this. We have 5 rentals and have not needed to evict yet...but I know many landlords who have done so legally and successfully.

It sounds like you are concerned about your high stock allocation. Maybe sell some off each month for a year to get to a safer AA level.

Real estate market is a very "local" thing. Check your market...and if it's "HOT", you may want to sell...but realize you may have hits to your AGI by doing this.

Step up basis is ok so long as your heirs want to manage property. My DW wants NOTHING to do with rentals, so we plan to sell ours off before I reach 70...hopefully I won't croak before then.
__________________
"Live every day as if it were your last, and one day you'll be right" - unknown
Finance Dave is offline   Reply With Quote
Old 03-18-2021, 02:24 PM   #3
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
Quote:
Originally Posted by Finance Dave View Post
Wow...too much for me to unpack...but...

Sorry, I knew I have a lot of things to ask haha. It's been a while so kept thinking all kinds of scenario. haha.

It is NOT true that you cannot evict during the pandemic. The mandate only says you cannot evict for NON-PAYMENT, and even then it only applies to "covered persons". If you need to evict, you need to study up on this. We have 5 rentals and have not needed to evict yet...but I know many landlords who have done so legally and successfully.

I don't need to evict for anyone. Pretty much every property is for month to month basis. some of tenants not maintaining well, possibly no renew.

It sounds like you are concerned about your high stock allocation. Maybe sell some off each month for a year to get to a safer AA level.

Not really, I am happy about it. I won't sell for current one. Since I have income from rental I would buy differently. That's why I was asking.

Real estate market is a very "local" thing. Check your market...and if it's "HOT", you may want to sell...but realize you may have hits to your AGI by doing this.

That's why I was asking. I see possibly hot for next year or two at least due to local issue and MO is not like CA high price, but crash can be turn down faster than I expect and nobody knows.

Step up basis is ok so long as your heirs want to manage property. My DW wants NOTHING to do with rentals, so we plan to sell ours off before I reach 70...hopefully I won't croak before then.
I am the only heir, like I said, originally, I was thinking about 5-6year max to manage before pandemic and this high increase. I would say originally the price should be about 80k, but zillow says 96k now. and the area is very hot to sell. But, thank you for reminding me to talk to CPA for AGI issue.


Thank you for the reply.
retire to nature is online now   Reply With Quote
Old 03-18-2021, 02:33 PM   #4
Full time employment: Posting here.
 
Join Date: Feb 2016
Location: SoCal
Posts: 852
I only have 3 tenants. 2 fully paid, 1 a few bucks behind. The behind one has been there 15 years. I raised the rent 5% on two of them on Jan 1.

I would ask myself if I wanted to continue being a landlord. If the answer is no, start selling gradually.

Perhaps since you retired, you won't mind monitoring your investments. I spend 30 minutes a week on yard work and pocket 5k a month rent. I'm good with that.
Mr. Tightwad is online now   Reply With Quote
Old 03-18-2021, 02:38 PM   #5
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 2,922
I think the bigger question is do you want to stay in the rental business? If you want to get out and just have more traditional stocks and fixed income type investments, then you should sell the inherited stepped-up basis properties so that you minimize cap gain taxes. The ones you own, can sell as they become vacant, just beware of the tax hit. Although the good thing is you have the profits from selling to pay the tax hit. In general now seems a good time to sell with still historically low mortgage rates. Don't be greedy, if you have desire to get out of rental business, do it when it is seller's market.

As for the investment of all those house sale proceeds, just invest per your desired AA. That may be a 60/40 mix or whatever works for you. 60/40 just being a very common AA for retirees as example. Your risk tolerance and timeframe will determine what is best for your situation.
__________________
The advice we're giving you is invaluable, that's why it's free
Experience is a good teacher, but the tuition can get expensive real fast

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 03-18-2021, 02:52 PM   #6
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
Quote:
Originally Posted by Mr. Tightwad View Post
I only have 3 tenants. 2 fully paid, 1 a few bucks behind. The behind one has been there 15 years. I raised the rent 5% on two of them on Jan 1.
Thank you for the reply. Yes, I was thinking to increase rent about 5% too, but I haven't because of shyness due to pandemic. most of mine are $100-150 lower than market now since the market is hot or no inventory even for rent.
retire to nature is online now   Reply With Quote
Old 03-18-2021, 02:59 PM   #7
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
Quote:
Originally Posted by 38Chevy454 View Post
I think the bigger question is do you want to stay in the rental business?
No for long run, but step up basis got in my way. I learned about myself, stock is best fit for me. I can be a concerning person, time goes by, rental business is getting not to bad, but still much headache than stock since my balance is pretty big no worry to be poor (or it can be opposite more balance more worry, but personally, I feel stock market gonna be very good for a few years, in my humble opinion)
yes, I need to see CPA asap, too.
retire to nature is online now   Reply With Quote
Old 03-18-2021, 03:00 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 6,617
We didn't raise rents last year but I will this year - City water/sewer bills went up a bunch and I have one tenant milking Oregon's no eviction policy real hard and not bothering to pay rent.

Paying a management company is a great way to reduce your rental profits big time.
__________________
"Be kind whenever possible. It is always possible." Dalai Lama
calmloki is offline   Reply With Quote
Old 03-18-2021, 03:38 PM   #9
Thinks s/he gets paid by the post
RetireBy90's Avatar
 
Join Date: Feb 2009
Location: Cville
Posts: 1,235
I only have one rental, but it has been reliable first to pay off the mortgage and now for monthly check. I hired a management company from the start as it is out of state.
For your situation I would probably sell the inherited properties and hire a management company for the remaining ones. Just my preference.
IMHO
__________________
FIRE 31 Aug, 2018 - Always leave every place better than you found it, always give more than expected
RetireBy90 is offline   Reply With Quote
Old 03-18-2021, 03:39 PM   #10
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
Quote:
Originally Posted by calmloki View Post
We didn't raise rents last year but I will this year - City water/sewer bills went up a bunch and I have one tenant milking Oregon's no eviction policy real hard and not bothering to pay rent.

Paying a management company is a great way to reduce your rental profits big time.
Thank you for the reply. I may increase this year. the gap of rent amount has been bothering. Yes, I know that fact, so I was managing myself. I am used to doing it though. actually, I had to call a company for HVAC for one of my property.

all mines are ok profit rate, and so I can keep forever to generate income too. maybe it is psychologic stuff, since I just RE'd, need to more piece and relax. Also, these days AirBnB is pretty much homeless people come and go. I have regular good tenants in Airbnb house, but I can see the trend of ppl losing job no where to go. I hope university open up asap, then I can promote better people soon.

p.s. hope you have resolve the problematic tenant well.
retire to nature is online now   Reply With Quote
Old 03-18-2021, 03:43 PM   #11
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
Quote:
Originally Posted by RetireBy90 View Post
I only have one rental, but it has been reliable first to pay off the mortgage and now for monthly check. I hired a management company from the start as it is out of state.
For your situation I would probably sell the inherited properties and hire a management company for the remaining ones. Just my preference.
IMHO
Thank you for the reply. yes, I don't have any debt for all. so it can be just collecting check.

Can you tell me why the reason i have to sell inherited one first? even if the step up basis value is still high to reach? I was thinking i can wait more for those not to pay any capital gains on them. I can't understand.
retire to nature is online now   Reply With Quote
Old 03-18-2021, 03:47 PM   #12
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
Quote:
Originally Posted by Mr. Tightwad View Post

Perhaps since you retired, you won't mind monitoring your investments. I spend 30 minutes a week on yard work and pocket 5k a month rent. I'm good with that.
Actually, too much time caused worry because my case is having 10 single family houses separately and one Airbnb with 9 rooms. yours must me fourplex or something like a building or expensive area?

my income is pretty high, so I shouldn't complain.
retire to nature is online now   Reply With Quote
Old 03-18-2021, 04:36 PM   #13
Thinks s/he gets paid by the post
RetireBy90's Avatar
 
Join Date: Feb 2009
Location: Cville
Posts: 1,235
Quote:
Originally Posted by retire to nature View Post
Thank you for the reply. yes, I don't have any debt for all. so it can be just collecting check.

Can you tell me why the reason i have to sell inherited one first? even if the step up basis value is still high to reach? I was thinking i can wait more for those not to pay any capital gains on them. I can't understand.
I was thinking that with stepped up basis there would be less cap gains. That would be the only reason for me.
__________________
FIRE 31 Aug, 2018 - Always leave every place better than you found it, always give more than expected
RetireBy90 is offline   Reply With Quote
Old 03-18-2021, 06:58 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Sep 2014
Location: The Great Wide Open
Posts: 2,649
All rentals are paid n full, we've worked with one couple who had the virus and missed some work. We did have a vacancy that we put on the market in late October, just filled it 2 weeks ago. Very few calls, and the ones that did show up for appointments for showing, were absolute nutcases. Worst batch of applicants ever. But patience paid off, we have a great young couple with a young child. the key to rental property is it is an investment property, you pick who is going to pay you. (without discriminating) just like picking a stock or bond.
__________________
Give me Liberty or give me Death. Patrick Henry
Winemaker is offline   Reply With Quote
Old 03-18-2021, 11:16 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 11,197
Quote:
Originally Posted by calmloki View Post
We didn't raise rents last year but I will this year - City water/sewer bills went up a bunch and I have one tenant milking Oregon's no eviction policy real hard and not bothering to pay rent.

Paying a management company is a great way to reduce your rental profits big time.
One year I didn't raise rents, I was nervous folks would move out. But later I realized if I didn't raise rents each year, I'd fall farther behind and tenants would come to expect no increase.

Now I raise it every year, and they expect it. Small amounts like ~2% per year as it's a rent controlled area.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is offline   Reply With Quote
Old 03-19-2021, 09:41 AM   #16
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 675
I have three rentals and so far so good. All tenants are fully paid. I do worry about future anti-landlord legislation.
jkern is offline   Reply With Quote
Old 03-19-2021, 09:45 AM   #17
Recycles dryer sheets
 
Join Date: Dec 2005
Posts: 237
I have one Rental left, that I'm planning on selling this year. The prices are too good to pass up. Just not sure where the proceeds will go at this point.
Livefree is online now   Reply With Quote
Old 03-19-2021, 10:44 AM   #18
Dryer sheet wannabe
 
Join Date: Jan 2015
Posts: 19
Quote:
Originally Posted by calmloki View Post
Paying a management company is a great way to reduce your rental profits big time.
My rental is a vacation week to week rental and the management company (I'm 5 hours away) is invaluable. They charge 22%, which is standard in the area for this kind of place.

In my case COVID hit us pretty hard last year with beach shutdowns. Sally then did a ton of damage to the place. 2020 was a big loss. Finished fixing it right before the new year. With the loss of supply occupancy in these properties is 100% and prices have gone up. Everyone wants to go to the beach - everything is packed. Barring another hurricane it should be a bumper year.
Sand101 is offline   Reply With Quote
Old 03-19-2021, 11:13 AM   #19
Moderator
 
Join Date: May 2007
Posts: 12,790
So far so good with my rentals. I'm still getting 100% of my expected income.
__________________
46 years old, single, no kids. Exited the job market in 2010 (age 36). Have lived solely off my investments since 2015 (age 41). No pensions.
Current AA: real estate 64% / equities 10% / fixed income 16% / cash 10%
FIREd is offline   Reply With Quote
Old 03-30-2021, 03:33 PM   #20
Recycles dryer sheets
 
Join Date: Aug 2018
Location: STL
Posts: 103
I am checking zestimate and most of my rental is behind $150-200 range of $800-1500. for example, zestimate shows at $1045 but I am collecting $800. I was too crazily busy for my sister death and next year was pandemic so It hasn't been increased at all after move in. It is bothering me because it is too much gap. how much should I increase?
retire to nature is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
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
Change coming to Aetna's Part D business Telly Health and Early Retirement 17 03-27-2019 08:16 AM
Rental car with horrible cigarette smell - how to avoid it in the future? Disappointed Other topics 17 04-08-2014 07:36 PM
UPDATE: Mrs. Thefed's inflatable bounce house rental business... thefed Other topics 83 01-27-2013 01:18 PM
Coming up with a business name bank5 Other topics 16 10-12-2009 06:02 PM

» Quick Links

 
All times are GMT -6. The time now is 10:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.