The landlording proposition

[NilesMike]

(05-03-2021, 05:43 PM)fenders53 Wrote:

(05-03-2021, 04:36 PM)NilesMike Wrote: My Dad bought income properties and I started while in High School. Buying crappy multi families for 16-17K. Later on I was a residential appraiser in a former life and owned just about every kind of property.

The path to success in my case was the order of investment properties. Early on only cash flow properties, literally no appreciation, 4 doors or more under 1 roof. As your experience and portfolio expands you can move on to what I call vanity properties. Properties that do not cash flow but appreciate like gangbusters.

Best tenants are single Moms with decent income. They do not want to move their kids frequently. Single women are good as well, until the boyfriend becomes an issue.

The holding period is like a high quality stock, never sell. The buy in is the most difficult phase. Need cash?-refinance the vanity property (ies)

Unlike stocks, there is much more work involved, like a job and I considered my tenants as my customers. That makes it much easier to deal with their issues.

Definitely work at times.  If you hire all the work out you'll be waiting a much longer time for true appreciation unless the chips fall your way.  That property you pay $408K for may be worth $500K or $350K in a few years.  I wanted equity as quick as possible.  No cash flow for 13yrs, then it was paid off and it was pure cash flow for 6 yrs.  At time of sale 100% of my cash outlay was long ago recovered plus much more.

I look at property value somewhat differently. The bank is holding the bag for 80% of the price, so your 80K becomes 350K in Fenders' scenario-so what. If the property more than pays for itself that's a pretty good return on your cash.

I started a long time ago and properties were cheap in the 1970s, cheap enough that I paid cash for the 1st one, did some sprucing-refied and rolled into the next one and so on. 

It was classic Dr. Lowry with guidance from others.