Anyone own a rental?

[Anonymous]

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

Can you share income, expenses, cost of purchase?

[Anonymous]

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.

[Anonymous]

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?

[Anonymous]

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

[Anonymous]

Ours are profitable. We bought in undervalued areas in a few cases and benefit from the steep rise in DC prices and rental rates. In another case we bought the house in 2002 and rental rates rose in the area where we bought even though we didn't really benefit from much price appreciation in the area due to the price correction post 2008.

[Anonymous]

We have three-- all bought in "transitional" years, we lived in each until we hopped to the next transitional neighborhood and turned into a group house.

Our rental income right now (pre-tax and post-PITI, etc) is about 52,000 annually for our three properties. We have in those three houses about 900,000 of equity using the scientific method of Redfin estimates.

[Anonymous]

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.

[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.

You haven't made 10%+ in the market consistently? Annualized return from 2010-now has been 17.5% (or 350% total for all of those years). From 2002-2008 it was 15.5% (or 103% total). From 1988-2000 it was 19% (816% total for all 12 yrs). Sure there were bear markets in between but in the 2001 bear market - down 44% total and in the 2008 downturn down 51% total. But the bear markets have come no where close to wiping out the massive returns from the bull markets. What on earth do you invest in??

[Anonymous]

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.

[Anonymous]

I ended up being a landlord not by choice. I think the money gets better over time. I bought a condo in 2000. My mortage was $1500/month, then taxes, condo fees, insurance brought it up to about $1900/month. I think I rented it for about that amoutn, so any unexpected cost and I lost money.

Now years later, my mortage is still the same (actually a little bit lower -- I refinancned a few years ago to get a better rate, but still fixed like before), and taxes and condo fees haven't gone up that much, but I get $2,500/month in rent. So I do make money every month.

If I were to buy my place today, I wouldn't make money. It works because I bought at a lower price back then, and my mortage is fixed, so my costs don't go up as much compared to the market rental rate.

[Anonymous]

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.

[Anonymous]

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

[Anonymous]

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.

[Anonymous]

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.

[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

This post with actual numbers was extremely helpful.