I am considering buying a rental property. Talk me out of it.

[Anonymous]

It's all about the tenants. Good ones will make your property cash-flow positive, and then it's up to you to manage that via repairs, improvements, etc etc. Your ROI will be in your hands, to make the right decisions, DIY things at times, get a good handyman/electrician/plumber in place etc

Bad ones will bankrupt you if you don't have the cash on hand to outlast them. Tenants have time on their side, all they have to do is wait you out until you finally get the sheriff to come after them. Depending on how savvy they are, that process can take a few weeks or a few months. You need to be able to weather that cash burn, be able to make repairs on the back end, and hold the property vacant until you are able to rent it again.

People say have cash on hand for repairs, unexpected expenses, a month or two of vacancy - that's all assuming everything is normal, and it happens anywhere from 70-95% of the time depending on your unit and area etc.

But the 3-7% of the time it goes south, it really goes south - and that's what you need the cash for, to be able to weather that storm

[Anonymous]

Anonymous wrote:It's all about the tenants. Good ones will make your property cash-flow positive, and then it's up to you to manage that via repairs, improvements, etc etc. Your ROI will be in your hands, to make the right decisions, DIY things at times, get a good handyman/electrician/plumber in place etc

Bad ones will bankrupt you if you don't have the cash on hand to outlast them. Tenants have time on their side, all they have to do is wait you out until you finally get the sheriff to come after them. Depending on how savvy they are, that process can take a few weeks or a few months. You need to be able to weather that cash burn, be able to make repairs on the back end, and hold the property vacant until you are able to rent it again.

People say have cash on hand for repairs, unexpected expenses, a month or two of vacancy - that's all assuming everything is normal, and it happens anywhere from 70-95% of the time depending on your unit and area etc.

But the 3-7% of the time it goes south, it really goes south - and that's what you need the cash for, to be able to weather that storm

I'm one of the LL's who posted previously. I think this advice is very wise.

Another tip I've heard from several wise investors is that while an LLC is a good way to limit your liability, appropriate insurance coverage is an even more important way to protect yourself when things go wrong.

[Anonymous]

Anonymous wrote:

Anonymous wrote:to people who have rentals:

How much of your own time per week do you spend on your rental(s)? Not op, but this thread is helpful

I have two rentals. The average week I don't even think of them until the check comes in. But then once in a while something will come up and you will have to spend time on them depending on what the problem is. Also, when you are in between tenants is when the biggest time commitment is, because you have to fix everything, clean it up, show it off, and vet tenants. As someone else mentioned, choosing your tenant is key and another factor I have is how long I think they will live there. Longer the better, and I incentive them to stay by keeping rent increases minimal.

same here.

[Anonymous]

We've had up to 6 rentals at once, and all had positive cash flows - 4 bought at auction, and 2 were bought but boarded up - and sold 4 during the height of the market. Buy low and sell high. You'll be very glad you invested in real estate. But you can also make some poor choices, so you have to know what you're doing.

The 2 we boarded up were purchased for a $1 in Baltimore city. We sold them to an investor for 30K a piece a few years back.

[Anonymous]

Anonymous wrote:We've had up to 6 rentals at once, and all had positive cash flows - 4 bought at auction, and 2 were bought but boarded up - and sold 4 during the height of the market. Buy low and sell high. You'll be very glad you invested in real estate. But you can also make some poor choices, so you have to know what you're doing.

The 2 we boarded up were purchased for a $1 in Baltimore city. We sold them to an investor for 30K a piece a few years back.

$1. At auction? Any way to do research on them before the auction? Or is it basically, here is what we have, bid away?

[Anonymous]

Can you idiots not read and/comprehend? oP wants to be talked out of becoming a landlord....not interested in all of you gloating out there!

[Anonymous]

Anonymous wrote:Can you idiots not read and/comprehend? oP wants to be talked out of becoming a landlord....not interested in all of you gloating out there!

And your response is helpful?

[Anonymous]

Anonymous wrote:We've had up to 6 rentals at once, and all had positive cash flows - 4 bought at auction, and 2 were bought but boarded up - and sold 4 during the height of the market. Buy low and sell high. You'll be very glad you invested in real estate. But you can also make some poor choices, so you have to know what you're doing.

The 2 we boarded up were purchased for a $1 in Baltimore city. We sold them to an investor for 30K a piece a few years back.

Very interesting! I have seen some properties being auctioned off in PG... can you tell me about the process a little bit? Did you buy any for over $1? Did you have to get financing? How hard was it to get financing?

[Anonymous]

how the hell do you buy a property for $1

[Anonymous]

We own two rental houses and they pay for themselves. We have someone trustworthy and reliable who is on call for any repairs that are needed. We've never regretted the decision.

[Anonymous]

For those of you with sfh that you rent out, what are they worth? Just wondering if it only makes sense to do this for homes in a certain price range.

[Anonymous]

A broad spectrum of experts believe in the likelihood that automation / AI / robotics will displace a large number of jobs within 30 years. It will happen gradually rather than all at once. As this phenomenon weakens the economy, there will be weaker demand for rentals and housing at today's prices. Subsequently, in 30 years, you will be unable to make positive cash flow from rent during the later years on the mortgage, and will be unable to sell the property at the full purchase value.

[Anonymous]

Anonymous wrote:
A broad spectrum of experts believe in the likelihood that automation / AI / robotics will displace a large number of jobs within 30 years. It will happen gradually rather than all at once. As this phenomenon weakens the economy, there will be weaker demand for rentals and housing at today's prices. Subsequently, in 30 years, you will be unable to make positive cash flow from rent during the later years on the mortgage, and will be unable to sell the property at the full purchase value.

Why would this type of disruption have a greater impact on housing than the rest of the economy? If people do not have enough money for housing they will not have enough money for anything else, either. So if my rental would suffer so would my index funds. Just trying to clarify.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
A broad spectrum of experts believe in the likelihood that automation / AI / robotics will displace a large number of jobs within 30 years. It will happen gradually rather than all at once. As this phenomenon weakens the economy, there will be weaker demand for rentals and housing at today's prices. Subsequently, in 30 years, you will be unable to make positive cash flow from rent during the later years on the mortgage, and will be unable to sell the property at the full purchase value.

Why would this type of disruption have a greater impact on housing than the rest of the economy? If people do not have enough money for housing they will not have enough money for anything else, either. So if my rental would suffer so would my index funds. Just trying to clarify.

The comment does not suggest alternative investments. Just doom. Invest in asteroid miners.

[Anonymous]

Do you ever know for certain if a tenant relationship will not go south? An article I read in the WP online today struck a chord and not just on illegal immigration. Imagine being a potential landlord and legally NOT being able to get a social security number from a prospective tenant.

https://www.washingtonpost.com/business/economy/in-these-six-american-towns-laws-targeting-the-illegals-didnt-go-as-planned/2017/01/26/b3410c4a-d9d4-11e6-9f9f-5cdb4b7f8dd7_story.html?utm_term=.6759ddf9fdee

This is in a town in Nebraska "Fremont’s rental applications, with their wording approved by the courts, did not require the information, such as a Social Security number, that could help determine whether a person was in the United States legally."