Anyone own a rental?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think it's hard to make a good profit on rentals in DC. Real estate is expensive and I do think people lose money more often than they're willing to admit, or at least they don't make the return you'd expect given the aggravation.

I inherited some rental real estate in an expensive real estate market with high taxes. After doing the math on maintenance, depreciation, etc, I decided I was much better off investing the money elsewhere. And that's not even considering the hassles of dealing with it and what my time is worth. As others have noted, it can be a good deal if you buy in a market that is appreciating rapidly and leverage your equity and have someone else pay off your mortgage. This is what my relative did, and it was an awesome strategy for them. But I think as a place to park your equity, it's often not a great deal.

This is what we did. We bought a two-family house in a gentrifying neighborhood at the bottom of the last housing bust. We rent out the top floor for $1485 and live in the other two floors. Our P&I is $1500; with taxes and insurance it totals @ $1900. So our tenant is paying our mortgage. But this only worked because we bought when prices were way down and nobody wanted to buy.

[Anonymous]

Anonymous wrote:

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?

Accountant handles that, so if it's legal, we probably claim depreciation taxes

[Anonymous]

Anonymous wrote:

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?

Not specifically college rentals although they are not too far from the university. I usually get young professionals and sometimes roommates who are juniors or seniors in college.

[Anonymous]

Bought a little place in NWDC in 2008 for myself. Never had a problem renting it out and maintenance guys in the building will keep it running. Small things are covered by HOA fees, bigger things I pay for. Even though the place was in need of updating when I bought it, I haven't done it yet. Only bought new appliances.
I paid $162k in 2007. It's worth ca $185 now. My PITI is high because I took out a 15 year loan. I've had to pay extra $500 every month, but the equity grows almost $1000 a month at the moment. As I see it, the $500 becomes $1000.
Taxes on rent? I don't really feel it or see it. I still have the new home-buyer program money coming out of it.
5 years to go on mortgage, maintenance for last 4 years was $350- shower needed to be fixed.
The way we are going to make this rental work is that we are moving into it and leave in there cheaply while saving up money for college for a child. Once it's paid off, it's like living in great neighborhood for $500 a month.
Once it's paid off ROI is ca 4% when paid off. I'd have more money it I sold it and invested the money, but we might need a cheap place to live in as I stated.

[Anonymous]

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

Can you share income, expenses, cost of purchase?

Purchase price 200k, mortgage 800/mo, rent $1800/mo.

Not DC, Richmond.

[Anonymous]

1985 -paid 70k, rents for $2250/month now worth $450k
1988 - paid 60k rents for $1710/month now worth $315k
1988 - paid 59k rents for $1500/month now worth $300k
2009 - paid 265k rents for $1710/month now worth $380k

All in DC area, Fairfax and prince William counties.

[Anonymous]

Anonymous wrote:1985 -paid 70k, rents for $2250/month now worth $450k
1988 - paid 60k rents for $1710/month now worth $315k
1988 - paid 59k rents for $1500/month now worth $300k
2009 - paid 265k rents for $1710/month now worth $380k

All in DC area, Fairfax and prince William counties.

I'm guessing the first three are located in PW and the last in Fairfax

[Anonymous]

Anonymous wrote:

Anonymous wrote:1985 -paid 70k, rents for $2250/month now worth $450k
1988 - paid 60k rents for $1710/month now worth $315k
1988 - paid 59k rents for $1500/month now worth $300k
2009 - paid 265k rents for $1710/month now worth $380k

All in DC area, Fairfax and prince William counties.

I'm guessing the first three are located in PW and the last in Fairfax

Actually the first one is in fairfax city right across the street from GMU. The other three are in Prince William.

[Anonymous]

The only way to make $ in DC from renting is to play the long game. You have to be committed to 20-25years. If you are and you have staying power so if there is an extended vacancy or massive repair its not a big deal, then you can make millions and have great cash flow. I’ve got 7 rowhouses in NW, $4 million in equity and monthly positive cash flow of $21,000k (after paying everything including exenses) and monthly mortgage paydown is $13k a month. But this has taken 15 years to achieve.

[Anonymous]

Anonymous wrote:The only way to make $ in DC from renting is to play the long game. You have to be committed to 20-25years. If you are and you have staying power so if there is an extended vacancy or massive repair its not a big deal, then you can make millions and have great cash flow. I’ve got 7 rowhouses in NW, $4 million in equity and monthly positive cash flow of $21,000k (after paying everything including exenses) and monthly mortgage paydown is $13k a month. But this has taken 15 years to achieve.

Nice. Curious to know what year you last purchased and at what price?

[Anonymous]

Anonymous wrote:The only way to make $ in DC from renting is to play the long game. You have to be committed to 20-25years. If you are and you have staying power so if there is an extended vacancy or massive repair its not a big deal, then you can make millions and have great cash flow. I’ve got 7 rowhouses in NW, $4 million in equity and monthly positive cash flow of $21,000k (after paying everything including exenses) and monthly mortgage paydown is $13k a month. But this has taken 15 years to achieve. [/quote

As someone who has visited DC but not lived there, I would think DC has the best investment properties because of high demand and high rents. True, there's some maintenance but the high price of rents can make up for minor repairs, no?

[Anonymous]

Anonymous wrote:

Anonymous wrote:The only way to make $ in DC from renting is to play the long game. You have to be committed to 20-25years. If you are and you have staying power so if there is an extended vacancy or massive repair its not a big deal, then you can make millions and have great cash flow. I’ve got 7 rowhouses in NW, $4 million in equity and monthly positive cash flow of $21,000k (after paying everything including exenses) and monthly mortgage paydown is $13k a month. But this has taken 15 years to achieve.

Nice. Curious to know what year you last purchased and at what price?

Last one was a 4 unit row house that I bought in 2014. I paid $1.5, which was a great deal. The rent roll was $9200. I spent about a $100k to do improvements and it just appraised at $2.2. By the improvements, I increased the rent roll to a little over $14k a month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The only way to make $ in DC from renting is to play the long game. You have to be committed to 20-25years. If you are and you have staying power so if there is an extended vacancy or massive repair its not a big deal, then you can make millions and have great cash flow. I’ve got 7 rowhouses in NW, $4 million in equity and monthly positive cash flow of $21,000k (after paying everything including exenses) and monthly mortgage paydown is $13k a month. But this has taken 15 years to achieve. [/quote

As someone who has visited DC but not lived there, I would think DC has the best investment properties because of high demand and high rents. True, there's some maintenance but the high price of rents can make up for minor repairs, no?

Thanks to the economy here and zillow, I have less than a 2% vacancy rate. Yes, there are always repairs, but rents make ip for ot. A key is to have a great handyman who is reasonably priced.

[Anonymous]

Anonymous wrote: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.

Most real estate investors don't look for just cash flow positive, but also how it compares with what else they could do with that money as well as estimating sinking funds for maintenance/vacancy.
A common guideline is that the rent should be 2x your PITI for it to be considered a "good investment." So merely month-to-month cash flow positive isn't actually a good thing. You would have to look at the opportunity costs of your initial 12500 investment--and any transaction fees-- compared to a stock market index fund. Deduct for any maintenance costs/vacancy periods etc.

On the plus side, you get to figure in the appreciated value of the townhouse minus the cost to sell (usually estimated at 10%). But you should do this analysis regularly to see if it makes more sense to sell the investment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The only way to make $ in DC from renting is to play the long game. You have to be committed to 20-25years. If you are and you have staying power so if there is an extended vacancy or massive repair its not a big deal, then you can make millions and have great cash flow. I’ve got 7 rowhouses in NW, $4 million in equity and monthly positive cash flow of $21,000k (after paying everything including exenses) and monthly mortgage paydown is $13k a month. But this has taken 15 years to achieve.

Nice. Curious to know what year you last purchased and at what price?

Last one was a 4 unit row house that I bought in 2014. I paid $1.5, which was a great deal. The rent roll was $9200. I spent about a $100k to do improvements and it just appraised at $2.2. By the improvements, I increased the rent roll to a little over $14k a month.

That is awesome. Great job. How long are you hoping to take to pay them off since you are accelerating payments?