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RE: right time to invest or not?
#21
That's sound advice rayray. I've heard the same from a number of landlords. I broke a few of the rules along the way. I had a very good job and didn't want to deal with four or five different tenants. The house has never been empty a week so it worked out well enough. I don't think my rent was quite double the mortgage. That would definitely be difficult with anything less than a duplex. They paid it completely off soon enough though. I also didn't want to be an appliance repairman, but the house was already furnished with older stuff. I specifically put in the lease the rent does not include appliances. You may use the ones present if you wish. If anything breaks it becomes your appliance if you decide to repair it at your own expense. If you invest any repair money you may take it with you when you leave. That worked out surprising well for 18 years. Several of my tenants ended up leaving a complete set of working appliances for the next tenant. It helped keep the rent competitive as well. Some of the reason it was never vacant. The last time I listed it available, I had 12 people requesting to be screened by that evening. Competitive rent in the right neighborhood is too easy to keep occupied. You just have to get the details right so you don't learn any hard lessons. You won't get it perfect. Things happen, people get life problems and change etc. Talk to other local landlords and learn the local things you should know.

I had a friend who rented a home in a rough neighborhood. The crackhead tenants were pulling the aluminum siding off the house and recycling it for drug money. Scrap prices were very high at the time. He didn't watch the house for a month and they burned him. There are a million landlord horror stories like that. VBIN won't be dealing with that crowd. I'm not trying to discourage you. As I said the ROI makes my stock returns look weak by a wide margin. I should calculate my annual return. Once it was paid off I began to get my entire initial investment back every single year. And that's a single family dwelling that everyone says you shouldn't bother with.
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#22
Sometimes it is very easy to forget, especially for my wife when the service request come, these tenants are OUR CUSTOMERS.
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#23
Thank you all of u for sharing the thoughts, very insightful. More information is always helpful.
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#24
(07-02-2019, 08:14 PM)rayray Wrote:
(07-02-2019, 01:23 PM)ChadR Wrote: You turn your current house into a rental, you start depreciating it at the price you paid for it. eg You bought it for $150k, that is what your depreciable basis is.  If it is worth $250k, you don't get to depreciate that extra $100k.  When you sell it years down the road, you pay taxes on the $100k of gain.  Where if you sell it now, you get the $100k gain tax free and the new rental you buy for $250k you get to depreciate the rental at the $250k basis.  And then when you sell it, you pay capital gains on the gain from $250k and not $150K (this is ignoring depreciation recapture).  There by saving the taxes on the $100k capital gain.

The downside to the 1031 exchange is that you have to keep in the rental game.  If you ever get sick of being a landlord or want to use the money for something else, you then have to pay the taxes.  But yes, it is best to never sell real estate.

Another thing he did was non of his rentals came with appliances, nothing, he would tell me he's in the rental property business not the appliance and repair business. He didn't want to be getting 2am calls that some dishwasher, dryer, washing machine or fridge wasn't working.

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Regarding some of the horror stories.

YOU GOTTA HAVE A PLAN

I have had more than my share of totally ruined rental units. I have all of them insured by the same company and same agent. The insurance pays for the renovations and covers the missing rent until the unit unit is ready to re-rent. You must present the case as vandalism. Get a police report when you gain access to the unit and file your insurance claim.

Regarding appliances and late night calls. I don't answer my phone outside of regular business hours. The tenants are instructed that if they have a fire or other life threatening issue to call 9-1-1. Other "catastrophes like a burst pipe or no heat situation" they call one of my guys. If it turns out to not be an emergency situation when he gets there. THEY PAY THE BILL. All spelled out in their rental agreement. (No more leases-they are way too tenant favorable)

Just met a younger guy 40ish who has 115 SF rentals. Oh if I was 20 years younger
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