Rental Real Estate

[Aiming_4_55]

Clifp - one thing to consider are multi-units... check out duplex, triplex, and quads. Give one unit a partial rent credit and they can keep the place clean, report anything funky, etc. Exit strategy is a little different maybe but they can cashflow a little better at times.

 

[clifp]

You two are angels?

More like sharks without teeth.

 

[Nords]

You two are angels?

More like sharks without teeth.

I'm not sure. Do you have to make a profit to be considered an angel?
Hawaii Angels

After the last few years it's more of a social club with a stock-picking problem...

 

[kcowan]

After the last few years it's more of a social club with a stock-picking problem...

In that case you are getting some real value out of it!

 

[tryan]

Yeah real estate is getting fun again ... just don't think you're getting OUT any time soon. Said on another thread, bought a HUD home last year. Had to pay cash ... no investor funds out there.

Rehab'd it ... realtor says "this is beautiful! I'll start it at 150k!". "Great" I said (I am into it for 100k). 3 weeks later: 140k ... 3 weeks later 130k ... 3 weeks later 120k. Now it's DECEMBER ... time to turn the heat on. So I said to my realtor "you've got 2 weeks to sell this thing ... or I am putting a body it; heat will run me 500/mo". She says "Gee ... 109K?".

2 weeks later I had a renter at 1300/mo. Clearing ~8% on my cash.

 

[kcowan]

...2 weeks later I had a renter at 1300/mo. Clearing ~8% on my cash.

Yes there is money to be made but not by flipping. Too bad for the realtors. What is it in your area? 5% of $109K? I don't think so!

 

[arebelspy]

Yeah real estate is getting fun again ... just don't think you're getting OUT any time soon.

Now is a terrible time to exit. Great time to enter.

Like so many things, lucky timing plays a big role whether you are:

and

or

and

 

[tryan]

Yes there is money to be made but not by flipping. Too bad for the realtors. What is it in your area? 5% of $109K? I don't think so!

Yeah, problem was after her commision, my return was ZERO. Better to rent it and forget about selling for a few years.

 

[kcowan]

Lots of people count the selling price rather than the net price. Same as forgetting about all the Saturday trips to Lowes for supplies. Luckily they count the latter activity as a hobby.

 

[haha]

High quality article about landlording to actually make money in the June 2011 Kiplinger's magazine.

IMO, in no way is this a diversification from passive or relatively passive investments. It rapidly becomes a demanding business.

Ha

 

[Nords]

Lots of people count the selling price rather than the net price. Same as forgetting about all the Saturday trips to Lowes for supplies. Luckily they count the latter activity as a hobby.

Every trip I make to Lowes is a tax-deductible hobby...

 

[arebelspy]

High quality article about landlording to actually make money in the June 2011 Kiplinger's magazine.

Will the article be online somewhere?

 

[Aiming_4_55]

See if this link works...

What It Takes to Be a Landlord

 

[arebelspy]

See if this link works...

What It Takes to Be a Landlord

Worked perfect. Thanks.

 

[kcowan]

Every trip I make to Lowes is a tax-deductible hobby...

Have you ever tried to deduct your time? Hiow about gas?

 

[calmloki]

IRS Announces 2010 Standard Mileage Rates


Not time (cause rental income is unearned income - landlord labor is just for fun), but $.50/mile for us for a rental expense last year - I'm sure Nords is all over that one if it's of any value!

Haven't had the way distant rental property or stones to try it, but if CliffP were to buy a Vegas rental and use it less than 2 weeks/year I think his trips from the island - for business only of course - would be deductible.

 

[nun]

High quality article about landlording to actually make money in the June 2011 Kiplinger's magazine.

IMO, in no way is this a diversification from passive or relatively passive investments. It rapidly becomes a demanding business.

Ha

The article covers one approach to rental income. My approach is very different. I bought a nice two family in Boston. The area is really nice, close to Harvard and within walking distance of shops, good schools and public transportation. I've rented to grad students and young couples and as I live in the upstairs apartment I can keep an eye on things. The rent Is $1200 a month as I like my tenants, but it will be going up to $1400 when they leave. Positive cash flow after taxes and expenses is $900 a month. I have to fix the odd leak and replaced a water heater and a waste disposal last year, but it's no more than any home owner needs to do. The rental income is about 50% of my ER income requirements and as I bought a good house in a great neighbourhood I have a $200k capital gain even with the money I spent on upgrades, new siding and the housing crash. Like anything it's best to buy quality rather than trying to make a quick buck and having the worry of managing multiple cheap rentals.

 

[calmloki]

We bought what we could afford as soon as we could, fixed 'em up, and have made solid returns for 25 years or so by managing multiple cheap rentals. I loath Section 8 housing though - had dealt with the housing office and don't care for them a bit. That said, we do have a couple Section 8 tenants still; an old lady and a gal we've rented to for 20 years or so. Don't care to jump through unnecessary government hoops to make money. Can evict people in the winter but it pisses me off.

 

[Nords]

Have you ever tried to deduct your time? Hiow about gas?

Not time (cause rental income is unearned income - landlord labor is just for fun), but $.50/mile for us for a rental expense last year - I'm sure Nords is all over that one if it's of any value!

I keep a spreadsheet of the dates that we've been at the rental house or shopping for it at one of Oahu's many fine home-improvement retail outlets, and then I multiply by the mileage from our house to the rental or from the rental to the stores.

Never bothered to keep a specific mileage log or track gas purchases.

I also track spouse's mileage & uncompensated expenses to her two non-profits. I'm also building a spreadsheet to track my angel investing expenses, but that's a pretty discouraging exercise.

Haven't had the way distant rental property or stones to try it, but if CliffP were to buy a Vegas rental and use it less than 2 weeks/year I think his trips from the island - for business only of course - would be deductible.

It's been over a decade since I had to do this on a tax return, but IIRC the plane ticket & lodging were fully deductible, as was the rental car & gas. (GPS and a DVD player might be dubious.) Phone expenses were fully deductible. I think meals were 50% deductible if someone mentioned the words "rental" and "taxes" in a sentence.

We went through this exercise with our Hawaii rental when we were stationed in San Diego. One of us would fly out every six months or so for a week or two of temporary duty at a training command, and spend evenings/weekends working on the house. We also squeezed in a couple family vacations with power tools.