Anyone own a rental?

[Anonymous]

In real estate, it is always about location, location, location and timing.
We bought a 3 bedrooms TH in Frederick County for 250k in 2010. We put 5% down.
Our PITI is $1550. It will drop to $1400 once we drop the PMI next year. We rent it for $1800.
We are cash flow positive.

[Anonymous]

Rental income is $4100/month. PITA is $3000/month. Historically over 7 years, expenses (repairs, cleanings, appliances) have averaged $500/month. So we clear $600/month. Plus we are paying down capital at around $8000/year. Bought as our primary home in 2006 for $620,000. Moved out and started renting it in 2011. Refinanced it 5 years ago at 3.625% as an investment property. Home is in a hot area and has never been vacant. So far we’ve had excellent luck with tenants.

[Anonymous]

Bought on the Hill in 1998. Two units, both rented continuously since 2005. Paid the house off long ago, and pay a property manager 8% to run things. We clear about $3,500 a month before major repairs/upgrades (we upgrade something every year or two).

As PP said, location and timing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We inadvertantly ended up with a rental property when we moved put of state for a job. It is not profitable at all at this point but if we sit on it for a few more years it might sell well.

Why not sell?

The prices in the area seem to be going down or flat, so we can't sell it without losing money. And by losing money I mean like 15k. We didn't own it very long before moving and the job offer wasn't planned. That said, we see it as an savings account but we put 500US into it every month. And that doesn't include HOA or other fees. It is also a mile from family, so we would seriously consider moving back at some point.

Prices going down? In in the DC metro area?

[Anonymous]

Mine are all in Raleigh, NC

2003 - paid 131k, rents for $1250/month, now worth $170k
2004 - paid 169k, rents for $1495/month, now worth 250k
2004 - paid 160k, rents for $1500/month, now worth 240k
2006 - paid 203k, rents for $1635/month, now worth 280k
2012 - paid 210k, rents for $1775/month, now worth 280k

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’m am not seeing how they are financially profitable.

Can you share income, expenses, cost of purchase?

Rental income is $2800/mo. I bought for $300k, now FMV is probably around $600k based on neighbor's comps. Probably spend around $4000 in maintenance, taxes, insurance annually. I guess after that and my mortgage payment, I clear around 10k a year before income taxes. I keep it around as an inflation hedge

Do you claim depreciation on taxes each year?

[Anonymous]

Anonymous wrote:I’m am not seeing how they are financially profitable.

Can you share income, expenses, cost of purchase?

Not in DC area, we have rentals that are returning healthy rentals: a $100k home that rents for $1000 a month. In the DC area, it makes little sense. Even if the property was purchased many years ago so the cost basis is low, once you factor in what the property is worth now, it becomes obvious that it's more advantageous to sell the property and invest that money into something with higher yield. I don't doubt that there are certain segments of the rental market where this can make sense - probably lower income areas, where the property values are severely depressed, but these are high maintenance properties and tenants.

[Anonymous]

Anonymous wrote:We kept our townhouse as a rental when we moved to a SFH, so we didn’t have any new aqcuisiton costs, we already owned it. Rent is about $500/month over our PITI+ HOA fees, which we automatically save for maintenance and repairs. DH does minor repairs himself. We do not use a management company.

The real profit is our renters are paying down about $10k/year in principal for us, and this number will only go up. Plus the house has appreciated about $50k in the last 5 years since we moved out.

Similar experience--we moved out of our condo but didn't sell it. It's near a Metro station, so it's easy to rent out. We have a much smaller profit margin after PITI and condo fees, but the way we look at it, we are building equity for almost nothing. We will pay off the mortgage about the same time our oldest starts college (we refinanced to a 15-year mortgage), so it can become an income stream at that point, or we can sell. And once we're empty nesters, we could conceivably even move back in!

[Anonymous]

I did. It wasn't until we sold it when we could take a huge tax loss.

Paid around $400k and put 20% down. Rent was about $2k a month and HOA was $600/month.

Renters are hard on places and things break. A/c, appliances, carpets get stained, toilets get clogged, etc. Has to be painted frequently.

[Anonymous]

Anonymous wrote:Mine are all in Raleigh, NC

2003 - paid 131k, rents for $1250/month, now worth $170k
2004 - paid 169k, rents for $1495/month, now worth 250k
2004 - paid 160k, rents for $1500/month, now worth 240k
2006 - paid 203k, rents for $1635/month, now worth 280k
2012 - paid 210k, rents for $1775/month, now worth 280k

Interesting. Are these college rentals?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We inadvertantly ended up with a rental property when we moved put of state for a job. It is not profitable at all at this point but if we sit on it for a few more years it might sell well.

Why not sell?

The prices in the area seem to be going down or flat, so we can't sell it without losing money. And by losing money I mean like 15k. We didn't own it very long before moving and the job offer wasn't planned. That said, we see it as an savings account but we put 500US into it every month. And that doesn't include HOA or other fees. It is also a mile from family, so we would seriously consider moving back at some point.

Prices going down? In in the DC metro area?

Are you forgetting 2006? IT wasn't that long ago.

[Anonymous]

bought $145k in 1992, rent $1925
bought $242k in 2011, rent $1850
Bought $250k in 2012, rent $1850
bought $250k in 2012, rent $1850
bought $300k in 2013, rent $1925

All houses are now worth about $350-380k

[Anonymous]

Anonymous wrote:Our rentals make between 7-10% ROI. We can't make that in the market so we keep it in real estate.

?

Just in the last 2 years, market prices have increased 40-50%.

Like 6 times your rental profits.

[Anonymous]

Anonymous wrote:Rental income is $4100/month. PITA is $3000/month. Historically over 7 years, expenses (repairs, cleanings, appliances) have averaged $500/month. So we clear $600/month. Plus we are paying down capital at around $8000/year. Bought as our primary home in 2006 for $620,000. Moved out and started renting it in 2011. Refinanced it 5 years ago at 3.625% as an investment property. Home is in a hot area and has never been vacant. So far we’ve had excellent luck with tenants.

Freudian slip?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We inadvertantly ended up with a rental property when we moved put of state for a job. It is not profitable at all at this point but if we sit on it for a few more years it might sell well.

Why not sell?

The prices in the area seem to be going down or flat, so we can't sell it without losing money. And by losing money I mean like 15k. We didn't own it very long before moving and the job offer wasn't planned. That said, we see it as an savings account but we put 500US into it every month. And that doesn't include HOA or other fees. It is also a mile from family, so we would seriously consider moving back at some point.

Prices going down? In in the DC metro area?

Are you forgetting 2006? IT wasn't that long ago.

The market is softening. It is probably better to now buy and wait for a correction.