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Old 02-09-2017, 11:27 AM   #41
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A 22 year tenant. had to do a lot to fix that one up when he moved out but it was paid for.
Yes I just had a 10 year tenant move out and took the opportunity do the kitchen, bathroom, refinish the floors, update some electrical, new appliances and paint throughout and re-wallpaper the hallway. I also replaced an old oil furnace with a new high efficiency gas furnace....so $35k latter the place now looks really good. There are definitely expenses to renting, but the capital appreciation and positive cash flow have been good for me. Here is my wallpapering handy work.
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Old 02-09-2017, 12:37 PM   #42
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Originally Posted by Sunset View Post
It's more like 5% on $6,000 for insurance and property taxes = $300 per year. For that one house in 10 years that is $3,000 extra expenses for not raising the rent.
Then next year that same cost going up 5% is = $300 per year for 9 years it is $2,700.
You add all that up and it's a lot of $$$$$ you are paying out because you don't try to keep up with your costs.
So it's $25 bucks a month. I'm not saying to adjust to market rents. I'm just saying do it between turnovers. If your cash flow on the property is so tight you can't absorb a $25 a month hit for 2 years, you probably over paid. My typical buy point was about 30%+ free cash flow above mortgage and insurance. Anything less and I would say see ya

Another observation is market rent's don't go up just because your taxes and insurance did. Rents in my area for a 3 bedroom have only gone up about $100 a month in the past 10 years. Just because costs of taxes and insurance may have increased, doesn't mean the market will pay for it.

Of course I'm sure you passed on any tax reductions when proerty values fell, and insurance savings when you found better rates.
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Old 02-10-2017, 05:28 AM   #43
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So it's $25 bucks a month. I'm not saying to adjust to market rents. I'm just saying do it between turnovers. If your cash flow on the property is so tight you can't absorb a $25 a month hit for 2 years, you probably over paid. My typical buy point was about 30%+ free cash flow above mortgage and insurance. Anything less and I would say see ya

Another observation is market rent's don't go up just because your taxes and insurance did. Rents in my area for a 3 bedroom have only gone up about $100 a month in the past 10 years. Just because costs of taxes and insurance may have increased, doesn't mean the market will pay for it.

Of course I'm sure you passed on any tax reductions when proerty values fell, and insurance savings when you found better rates.
Absolutely I passed along a rent reduction when property values fell and my taxes went down.
I've been renting houses for 31 years.
The dumbest thing you can ever do is not raise rents on a regular basis.
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Old 02-10-2017, 07:00 AM   #44
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This isn't rocket science. Depends on your local market and how one values their own time. Some locations have high rents compared to prices and make landlording an attractive option. Other markets don't have high rents compared to prices.
If you are located in an area where it is the former and you are willing to put some time into it (ie you don't consider a few hours avg per month for a house and perhaps a weeks work when there is turnover to be too much) then landlording can be a great way to get much much more than 4% on your capital and hence be able to FIRE earlier. ...and if you consider landlording to be w*ork then maybe it is not for you.
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Old 02-10-2017, 11:57 AM   #45
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Oh Shanice112 - please don't give away all the secrets to the glorious glamorous of real estate finance - I've been keeping that a closely guarded secret!
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Old 02-10-2017, 12:00 PM   #46
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Oh Shanice112 - please don't give away all the secrets to the glorious glamorous of real estate finance - I've been keeping that a closely guarded secret!
I don't think she's here to give anything away. Sell something, but not give.
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Old 02-10-2017, 01:09 PM   #47
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Here is what is happening in Portland: the city pushed condo development and did not encourage the construction of apartments. Now comes significant immigration (typically from the Silicon Valley) and we don't have enough housing. Rents are skyrocketing but as all of you know it takes time to build apartments (property acquisition, design, permitting, construction - typically 2 years minimum). At the present time there is no protection for renters who can be evicted without fault. Even the middle income can't afford to rent let alone low income.

DH & I do not do rentals but it is not difficult to screen for good tenants. Verify income, check references not just from where they currently live (the landlord may want to be rid of them) but before that.

The City is ham-handed about formulating laws around no-fault evictions but they don't apply to landlords with just a couple rental units.

If the OP purchased during the housing slump s/he has a huge gain if they sell.

I agree, landlords buy themselves a job.

Not hosting a pity party, just work smart.
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Old 02-10-2017, 01:27 PM   #48
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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?
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Old 02-10-2017, 02:31 PM   #49
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Originally Posted by Lucky-Sperm-Club View Post
So it's $25 bucks a month. I'm not saying to adjust to market rents. I'm just saying do it between turnovers. If your cash flow on the property is so tight you can't absorb a $25 a month hit for 2 years, you probably over paid. My typical buy point was about 30%+ free cash flow above mortgage and insurance. Anything less and I would say see ya

Another observation is market rent's don't go up just because your taxes and insurance did. Rents in my area for a 3 bedroom have only gone up about $100 a month in the past 10 years. Just because costs of taxes and insurance may have increased, doesn't mean the market will pay for it.

Of course I'm sure you passed on any tax reductions when proerty values fell, and insurance savings when you found better rates.
I've raised my rent every year except for one long ago, which was a mistake, same tenants still there, so that is about 15 years.
By increasing it, they pay over $4,000 more per year compared to the 1st year -> that is NOT a hit I would want to take.
That is the one nice thing about a rent controlled area, tenants expect the rent to go up.
The other nice thing, is nobody builds a lot of new rental housing as profit is limited.

I'd much rather increase the rent a bit each year and keep the tenants, vs freeze the rent and kick them out 2 years later so I could catch up to the market rent again suffering the 1.5 month turn around time

As for my property values falling, taxes never went down, even if the property values sagged some time during that period. The City still needed the same revenue, so they just changed the mill rate (multiplier).
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Old 02-10-2017, 02:46 PM   #50
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I inherited property when my parents passed, and quickly discovered I don't have the temperament for it. It is not for the faint of heart, nor those who don't like surprises. It was a lot of work and frustration.
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Old 02-10-2017, 06:02 PM   #51
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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.
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Old 02-10-2017, 08:39 PM   #52
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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.
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Old 02-10-2017, 09:00 PM   #53
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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.
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Old 02-10-2017, 09:47 PM   #54
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Originally Posted by Curmudgeon View Post
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.
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Update
Old 07-07-2017, 06:51 PM   #55
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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.
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Old 07-07-2017, 07:58 PM   #56
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[QUOTE=Luck_Club;1836136]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.
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Old 07-09-2017, 08:26 PM   #57
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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.
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Old 07-10-2017, 01:32 AM   #58
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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.
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