Anyone own a rental?

[Anonymous]

Anonymous wrote:

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?

I think it's playing the long game with a systematic plan and a careful assessment of each investment on whether it's really going to pay off. So many people are accidental or casual landlords and if the diff between mortgage payment and rent is a couple hundred they think it's going to pay off. If you did a 'long game' of this kind of investment where each one doesn't assess opportunity costs, maintenance costs, taxes, labor, vacancies, additional insurance etc. it's a recipe for ruining your wealth.

[Anonymous]

Anonymous wrote:

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.

Is the first one an apartment? 1BR or 2?

[Anonymous]

Anonymous wrote:

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?

Thanks!! The 4 unit is on a 15 year mortgage. So that will be paid off in 12 years. Ive also got two others that are on 15 year paydown, which will also be done in 12 years. Ive got 1 on 20 years, will be done in 16 years. And the rest 30 year- wont be done for 25 years. If I was a disciplined with $, I would like to do 30 year on all of them. But when I do that, the money ends up being frittered away. 15 year is terrific forced savings and I need that to a certain extent. I know u can do 30 year and just pay down extra as if it was 15 year. But Im not disciplined enough to do that.

[Anonymous]

In the 8 years our place has been rented the value has gone up over $100k and the tenants have paid off $100k of the mortgage. Also in 8 years it was vacant for only about 1.5 months total. We’re happy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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?

I think it's playing the long game with a systematic plan and a careful assessment of each investment on whether it's really going to pay off. So many people are accidental or casual landlords and if the diff between mortgage payment and rent is a couple hundred they think it's going to pay off. If you did a 'long game' of this kind of investment where each one doesn't assess opportunity costs, maintenance costs, taxes, labor, vacancies, additional insurance etc. it's a recipe for ruining your wealth.

I completely agree. I was very lucky and things could have easily gone poorly for me. I started buying in early 2000’s bc prices where going up 10% or more year after year and money was so easy to get. I thought prices would always go up, bc that was my only experience. I didnt even think about the cash flow. Then the financial crisis hit which ended up being good for me bc interest rates plummeted and I was able to refinance the properties to super low rates. And people kept moving into DC at a rapid pace. So I had this situation which was fortuitous where my costs dramatically decreased and the rents dramatically increased. And I was lucky bc home prices in NW DC didnt decline nearly to the extent that they did in other places. And finally I was lucky in the sense that this is my part time job. I make a lot of money in my real job, which allowed me to have staying power with the real estate to get through hard times, and there were certainly those times. Ive been spending my extra money in improvements to the properties I have in order to improve the cash flow. Ill probably buy a few more in DC eventually- mine are all in the same zipcode and I wont go outside of that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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?

I think it's playing the long game with a systematic plan and a careful assessment of each investment on whether it's really going to pay off. So many people are accidental or casual landlords and if the diff between mortgage payment and rent is a couple hundred they think it's going to pay off. If you did a 'long game' of this kind of investment where each one doesn't assess opportunity costs, maintenance costs, taxes, labor, vacancies, additional insurance etc. it's a recipe for ruining your wealth.

I completely agree. I was very lucky and things could have easily gone poorly for me. I started buying in early 2000’s bc prices where going up 10% or more year after year and money was so easy to get. I thought prices would always go up, bc that was my only experience. I didnt even think about the cash flow. Then the financial crisis hit which ended up being good for me bc interest rates plummeted and I was able to refinance the properties to super low rates. And people kept moving into DC at a rapid pace. So I had this situation which was fortuitous where my costs dramatically decreased and the rents dramatically increased. And I was lucky bc home prices in NW DC didnt decline nearly to the extent that they did in other places. And finally I was lucky in the sense that this is my part time job. I make a lot of money in my real job, which allowed me to have staying power with the real estate to get through hard times, and there were certainly those times. Ive been spending my extra money in improvements to the properties I have in order to improve the cash flow. Ill probably buy a few more in DC eventually- mine are all in the same zipcode and I wont go outside of that.

Can I ask the average price these days in that zipcode and how you finance your purchases?

[Anonymous]

Anonymous wrote:

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.

Don't forget it might not be 2x PITI right at the start. We were breaking even when we started renting our apartment out, but rent has gone up $300/month in 6 years, and it's still going up. We could have been even more aggressive with the rate, but we like our current tenant and have been keeping the rent steady for her.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Don't forget it might not be 2x PITI right at the start. We were breaking even when we started renting our apartment out, but rent has gone up $300/month in 6 years, and it's still going up. We could have been even more aggressive with the rate, but we like our current tenant and have been keeping the rent steady for her.

Yeah, but in that case it's not necessarily considered as good an investment as what else you could have done with your money (e.g., a passive stock/bond index fund split -- or dividend funds if you need the income).

[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.

Of the people I know who consider themselves real estate gurus in this area -- I think they DO lose money more than they admit esp when you factor in a month here or there vacant, having to swap out an appliance or deal with some roofing issue or whatever. And even if they don't lose money -- I am 100% convinced they do NOT beat the market or come anywhere close, not even just during this bull run but in the ups and downs of the last 30 yrs. I think they honestly just like monthly checks coming in and consider themselves savvy for having that 2nd income -- not realizing you CAN set up a stock portfolio to throw off income too.

Now I'm NOT saying there aren't people making money -- there are like the people discussing their experiences above. Yet I feel like all of those people bought when certain areas were transitional etc. The people I'm talking about are like my coworkers who think Clarendon is underpriced and think they are savvy investors and are quick to let you know -- oh we looked at one condo in Clarendon this weekend and put in an offer.

TBH I am a big market investor but I am somewhat considering whether it's worth it to buy something in a secondary market that is growing. There are places where you still buy and end up with a $900 mortgage in a place where SFH rents aren't THAT cheap. Of course a long distance buy would 100% depend on property mgmt. and while I have ZERO problem with taking a hit on a return to pay a bit to a mgmt. co. so no one is calling me for a dripping tap -- I also question the wisdom of buying in South Carolina or Tennessee or someplace when you aren't from there and don't live there.

I could have written this. How are these people not meeting or beating the market long term. I would never buy anywhere more than 30-40 miles max. I have enough stories of bad property management and horrible tenants and these were $400k plus homes.