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General Discussion => Essentially Flyertalk => Topic started by: catastrophe on July 19, 2018, 10:26:48 PM

Title: Real Estate Ty-cats
Post by: catastrophe on July 19, 2018, 10:26:48 PM
Anyone in the home rental game? People talk about it like it's simple but seems like you need to know 100 different things about at least a dozen other things.  Let's crowdsource this so we can all get rich.
Title: Re: Real Estate Ty-cats
Post by: steve dave on July 20, 2018, 09:38:08 AM
believe we have a thread on this and rick daris is the moderator. good tips in it iirc.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 24, 2018, 10:21:27 PM
Couldn't find it, so I'm gonna have to start from scratch.

We'll start with the steps to a successful real estate empire:

1. Limited liability.   Definitely need to set up some kind of an entity to hold the property.  I've heard that a Series LLC is the way to go.  Could be some alternatives.

2. Finance.  Typically makes zero financial sense to pay for a property out of pocket.  Apparently loans for investment properties work different than typical home loans?  Need to figure this one out.

3. Selecting a property.  Tons of "turn key" real estate websites out there that show you all kinds of stats on properties.  Need to figure out how to decipher this code.

4. Selecting a property manager.  Obviously you could try to do this yourself in order to get more bang for you buck, but it seems like a lot of pain unless you're already good at it.  No thanks.

5. Rental relationship.  Haven't read anything about this yet, but it sure seems like the actual lease is an important aspect of all this.

6. Tax breaks.  Even loser properties can make you money in the long run if you take advantage of all the tax breaks available.  Definitely the secret sauce to using rental income as an alternative to other investing.

7. Profit. Right?
Title: Re: Real Estate Ty-cats
Post by: steve dave on July 25, 2018, 09:01:42 AM
it may have been on ksufans in hindsight. either way @ him.
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 25, 2018, 09:55:00 AM
I don't do it personally, but my dad did. Here's what I learned:

1. Buy properties within a block of your house. Because tenants won't have big, wild parties and trash the place when they know you've got your eye on them.
2. Drop by unexpectedly fairly often. Because tenants won't let the place get to the point where it looks too terribly trashy if they know you might see it looking trashy.
3. Have a contract that says you can kick them out at any time for any reason. Because you don't want tenants who trash the place to continue trashing it until the end of a lease.
4. Have your kid do the mowing.
Title: Re: Real Estate Ty-cats
Post by: 8manpick on July 25, 2018, 09:57:07 AM
Isn't dropping by w/o 24 hours notice illegal? Going inside anyway...
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 25, 2018, 10:00:01 AM
Isn't dropping by w/o 24 hours notice illegal? Going inside anyway...

I'll probably see my dad this fall. I'll follow up then if I remember.
Title: Re: Real Estate Ty-cats
Post by: 420seriouscat69 on July 25, 2018, 10:01:51 AM
I was going to say, dropping by unannounced frequently sounds pretty shitty.
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 25, 2018, 10:06:58 AM
Isn't dropping by w/o 24 hours notice illegal? Going inside anyway...

I'll probably see my dad this fall. I'll follow up then if I remember.

I sort of think my dad once said something on this issue. It was of the form: "Well, you can't do such and such, but here's what you CAN do..."
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 10:55:32 AM
Did your dad rent to college students? Cause I’d think most small families are not going to be a major “wild party” threat just because they don’t own the place.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 11:04:53 AM
it may have been on ksufans in hindsight. either way @ him.

Paging @Dr Rick Daris
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 25, 2018, 12:24:51 PM
What kind of ROI do you expect to see on this borrowed money catastrophe?
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 25, 2018, 12:47:37 PM
Did your dad rent to college students? Cause I’d think most small families are not going to be a major “wild party” threat just because they don’t own the place.

He once had a 30-something non-college student tenant who you'd never expect to trash a place. But while she was there, a bathroom sink broke off the wall because her friend was sitting on it like it was a chair. There are all kinds of ways to trash a place.
Title: Re: Real Estate Ty-cats
Post by: star seed 7 on July 25, 2018, 12:51:31 PM
Maybe she just didn't approve of the oscar weber hire
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 01:11:22 PM
What kind of ROI do you expect to see on this borrowed money catastrophe?

Haven't gotten that far.  The number I've often heard is to strive for 10%, but if you do it the lazy way (paying property managers and others) I would expect lower.  I am a big believer in diversifying investments, though.  Real estate rentals scare me less than they used to cause even if you end up with a small or negative cash flow, you can still "profit" by offsetting tax money you would otherwise be paying from your day job.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 25, 2018, 01:27:53 PM
That seems like a really poor return
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 01:32:16 PM
You're going to feel really silly when I get to step 6 of this plan.
Title: Re: Real Estate Ty-cats
Post by: Dr Rick Daris on July 25, 2018, 01:45:16 PM
I had a couple of rentals for awhile. my advice for someone in catastrophe's boat is don't. just don't. they are a pain in the ass and not worth it. small exceptions I guess could be if you live close to the rental and like dealing with people, things that go wrong with said people and doing handyman type stuff on whatever craphole it is that you end up with. if that's you and you're just incredibly bored with lots of spare time then knock yourself out. it doesn't sound like it though so i'd pick a different hobby. two cents.

also, it's neat to see that the whole "@" thing actually works. I was like wow I have a notice about something!  :excited:
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 01:49:04 PM
Ok, thought experiment with some made up numbers that I think are legit.

Say you buy a $200,000 house, paying 20% down ($40,000).

Mortgage is $160,000. Let's say 5% interest and to be conservative just keep it that way throughout the year ($8,000/year, $667/month).

Most halfway decent rental properties will get at least 0.7% rent compared to the price of the house.  So rent is $1,400/month.

I've heard property managers typically work at 1% of rent collected.  Let's be conservative again and say 2% = $28/month.

So you're bringing in $1,400 (rent) - mortgage interest ($667) - property management ($28) = $705/month.  Over the course of a year that's $8,460.

What is a normal repair budget for a year?  $3,000 to fix just the necessary stuff?  So $5,460 you take home per year.  That's on $40,000 you put down.

ROI for the year: 13.65%

Now you might say, the mortgage is going to be bigger cause you're making principal payments on top of the interest.  That's true, but that's not money that goes away.  It is just getting reinvested into the property itself in the form of equity.  Sure, the property might not appreciate but stocks might not either so that's a wash in my book.  Both tend to go up over the long term if you pick wisely.
Title: Re: Real Estate Ty-cats
Post by: pissclams on July 25, 2018, 01:51:49 PM
What kind of ROI do you expect to see on this borrowed money catastrophe?

your lack of a comma wasn't lost on me
Title: Re: Real Estate Ty-cats
Post by: pissclams on July 25, 2018, 01:53:23 PM
I've heard property managers typically work at 1% of rent collected. 

:lol: 

no consequences
Title: Re: Real Estate Ty-cats
Post by: Dr Rick Daris on July 25, 2018, 01:57:33 PM
Ok, thought experiment with some made up numbers that I think are legit.

Say you buy a $200,000 house, paying 20% down ($40,000).

Mortgage is $160,000. Let's say 5% interest and to be conservative just keep it that way throughout the year ($8,000/year, $667/month).

Most halfway decent rental properties will get at least 0.7% rent compared to the price of the house.  So rent is $1,400/month.

I've heard property managers typically work at 1% of rent collected.  Let's be conservative again and say 2% = $28/month.

So you're bringing in $1,400 (rent) - mortgage interest ($667) - property management ($28) = $705/month.  Over the course of a year that's $8,460.

What is a normal repair budget for a year?  $3,000 to fix just the necessary stuff?  So $5,460 you take home per year.  That's on $40,000 you put down.

ROI for the year: 13.65%

Now you might say, the mortgage is going to be bigger cause you're making principal payments on top of the interest.  That's true, but that's not money that goes away.  It is just getting reinvested into the property itself in the form of equity.  Sure, the property might not appreciate but stocks might not either so that's a wash in my book.

a 160,000 home loan at 5% (which i'm not sure you could get because it will be a rental) monthly payment would be $859 not $667. then you also have insurance and taxes which will be another $200-$300 a month. also, a property manager takes more than 1%. these aren't your biggest issues though. your biggest issue right now is that you are treating this like a math problem on a sheet of paper. it won't be. pick a different hobby.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 02:13:03 PM
Good points on the insurance, taxes, and property manager.  I must have misremembered and thought 1% where the going rate is closer to 10%.

And I don't understand you point about the maintenance being an issue.  Why should it take that much of your time if you're already paying a property manager?
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 25, 2018, 02:26:32 PM
You're going to feel really silly when I get to step 6 of this plan.

Considering you think someone will manage your property for $28 month and you didn’t consider taxes or insurance I’m not holding my breath.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 02:37:16 PM
You know what guys, this thread is about trying to figure out some questions.  Not to pile on poor catastrophe for not already knowing the answers.  :shakesfist:
Title: Re: Real Estate Ty-cats
Post by: Kat Kid on July 25, 2018, 03:20:06 PM
listen to rick daris.
Title: Re: Real Estate Ty-cats
Post by: sys on July 25, 2018, 03:29:01 PM
analyze on cap rate, not roi.
Title: Re: Real Estate Ty-cats
Post by: 8manpick on July 25, 2018, 03:29:34 PM
Even in the optimal $5000/year scenario, wouldn't it be a better use of time to pick up some weekend shifts at Home Depot?
Title: Re: Real Estate Ty-cats
Post by: DaBigTrain on July 25, 2018, 03:35:05 PM
Why not just buy some land instead, less maintenance.  If it gets all covered in weeds and stuff you just burn it down and let it grow back nice again.
Title: Re: Real Estate Ty-cats
Post by: Dr Rick Daris on July 25, 2018, 03:38:43 PM
Even in the optimal $5000/year scenario, wouldn't it be a better use of time to pick up some weekend shifts at Home Depot?

best advice yet. i'll offer a second option though. invest that 40k in a low cost index fund of some sort and then start a garden.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 25, 2018, 03:43:14 PM
Hi Rick,

Real Estate novice here.  It’s pretty common to have 0% vacancy rates in your cash flow assumptions right?


ww
Title: Re: Real Estate Ty-cats
Post by: Dr Rick Daris on July 25, 2018, 03:52:19 PM
Hi Rick,

Real Estate novice here.  It’s pretty common to have 0% vacancy rates in your cash flow assumptions right?


ww

oh definitely. especially in situations where you also aren't including taxes, insurance, are miscalculating the monthly mortgage payment while simultaneously assuming that someone is going to advertise the place, collect rent and fix all the crap that goes wrong with it for twenty eight dollars a month then i'd argue it's almost standard. basically 0% vacancy rates as far as the eye can see.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 04:14:30 PM
And I don't understand you point about the maintenance being an issue.  Why should it take that much of your time if you're already paying a property manager?

 :impatient:
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 25, 2018, 04:31:09 PM
analyze on cap rate, not roi.

I've actually heard IRR is probably your best bet, especially if you want to compare it to returns on stocks and such.
Title: Re: Real Estate Ty-cats
Post by: Rage Against the McKee on July 25, 2018, 04:57:29 PM
I would take that money and buy a hobby farm instead. Cows are much easier to deal with than shithead renters, and you get the joy of slaughtering and eating them at the end of their lease.
Title: Re: Real Estate Ty-cats
Post by: WonderMeal on July 25, 2018, 05:43:54 PM
I have one rental property and have had good luck with it. I also feel bad that everyone is piling on poor catastrophe for not already being a property baron, so AMA!

My tips:
-Buy a house (preferably with multiple units) right before property values and rents skyrocket. That's my #1 tip.
-Living close to the house is a good idea. Can walk over to fix piddly stuff.
-Having a property manager usually doesn't make sense if you're just renting out one unit.
-Do everything online--Paypal/Venmo rent, Google Doc lease, Google Form application, post on Zillow/Craigslist/etc. Makes life way easier, especially when tenants turn over.
-Always always always contact the previous landlord before renting to someone. Ask a few simple questions (are they clean? do they pay rent on time? would you rent to them again?) and you should learn everything you need to know.
-If you don't have a kid to mow the lawn, write into the lease that they need to mow the lawn.
-Be a good landlord. Always give 24 hours notice before you go over. Fix stuff (or better yet--pay to get stuff fixed) quickly. Then give your tenants a referral bonus if they find your next tenant.
-Hire someone to do your taxes.
Title: Re: Real Estate Ty-cats
Post by: sys on July 25, 2018, 06:07:51 PM
analyze on cap rate, not roi.

I've actually heard IRR is probably your best bet, especially if you want to compare it to returns on stocks and such.

i would not compare to stocks writ large.  compare to reits, look at cap rates, leverage and cost of capital.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 25, 2018, 06:12:27 PM
I have one rental property and have had good luck with it. I also feel bad that everyone is piling on poor catastrophe for not already being a property baron, so AMA!

My tips:
-Buy a house (preferably with multiple units) right before property values and rents skyrocket. That's my #1 tip.
-Living close to the house is a good idea. Can walk over to fix piddly stuff.
-Having a property manager usually doesn't make sense if you're just renting out one unit.
-Do everything online--Paypal/Venmo rent, Google Doc lease, Google Form application, post on Zillow/Craigslist/etc. Makes life way easier, especially when tenants turn over.
-Always always always contact the previous landlord before renting to someone. Ask a few simple questions (are they clean? do they pay rent on time? would you rent to them again?) and you should learn everything you need to know.
-If you don't have a kid to mow the lawn, write into the lease that they need to mow the lawn.
-Be a good landlord. Always give 24 hours notice before you go over. Fix stuff (or better yet--pay to get stuff fixed) quickly. Then give your tenants a referral bonus if they find your next tenant.
-Hire someone to do your taxes.

Does your property positive cash flow each month?
Did you use financing to purchase the property?
How often (months rented/ months available to rent) would you say your property has a tenant?
Title: Re: Real Estate Ty-cats
Post by: puniraptor on July 25, 2018, 06:14:24 PM
my tenants are catpissing dirtmonster hoardebeasts and i want them to live in my house as long as possible so i dont have to repair it to get a new renter.
Title: Re: Real Estate Ty-cats
Post by: mocat on July 25, 2018, 06:53:56 PM
is wondermeal the guy from the credit card thread who like runs a gift card mileage churn scam or something
Title: Re: Real Estate Ty-cats
Post by: WonderMeal on July 25, 2018, 10:05:54 PM
Does your property positive cash flow each month?
Did you use financing to purchase the property?
How often (months rented/ months available to rent) would you say your property has a tenant?

1) Yes. It's a multi-family home. We generate cash flow of >$1000 each month.
2) We bought the house to live in originally, now rent out both sides. It definitely helped us buy our current house--not sure we would have qualified without the extra income.
3) Since we purchased the property, it has had a tenant/tenants 92% of the time. Pretty standard for the area we're in.

I would take that money and buy a hobby farm instead. Cows are much easier to deal with than shithead renters, and you get the joy of slaughtering and eating them at the end of their lease.

Hobby farm sounds way more fun.

is wondermeal the guy from the credit card thread who like runs a gift card mileage churn scam or something
I am very saddened to hear that mocat A) thinks I manufacture spend like some sort of monster, and II) doesn't remember me at all, even though we both love Martavious with all of our hearts.
Title: Re: Real Estate Ty-cats
Post by: mocat on July 25, 2018, 10:36:28 PM
Sorry wm, it must have been that weirdo rams
Title: Re: Real Estate Ty-cats
Post by: Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!) on July 25, 2018, 10:46:53 PM
You're going to feel really silly when I get to step 6 of this plan.

Considering you think someone will manage your property for $28 month and you didn’t consider taxes or insurance I’m not holding my breath.

Bingo.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 08:45:59 AM
I’m sure you already feel silly that FSD is on your side.
Title: Re: Real Estate Ty-cats
Post by: ChiComCat on July 26, 2018, 09:06:34 AM
Are you looking at doing this in MHK?
Title: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 09:15:46 AM
Texas. Likely DFW area but I’m flexible. If I have success I’d like to get a place in MHK so I can write off travel whilst catching a football game, but I don’t think that market is  as good for investing overall.
Title: Re: Real Estate Ty-cats
Post by: DQ12 on July 26, 2018, 09:28:57 AM
My dad used to rent some properties.  He would echo Rick's sentiments.  Not worth it.

But hey look at this blog with the summer's hottest (non-pit) thread being about investment strategies.  8 years ago this thread would've been about icing eachother.  we've grown up so much.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 09:46:17 AM
For real, though.  Has anyone actually used a property management company to focus on the leasing, rent collection, coordinating repairs, etc.?  This is a must for me.  This whole money-making scheme is DOA if that doesn't work.  I've heard folks with good property management companies only need to spend 1-2 hours a month on a property, but this has admittedly come mostly from people trying to sell turnkey properties.
Title: Re: Real Estate Ty-cats
Post by: mocat on July 26, 2018, 09:50:24 AM
i think OP just wants someone to tell him to do it
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 09:51:53 AM
Or numbers to convince me otherwise.  Sass is fantastic message board currency, but will not move the needle on where this guy's money goes.
Title: Re: Real Estate Ty-cats
Post by: 420seriouscat69 on July 26, 2018, 09:55:50 AM
Sounds like if you want to sit on the fence of potentially making a profit, dealing with ppl you can't control living in your spaces, putting a lot of time and effort into keeping crap nice, etc. It's a great idea!
Title: Re: Real Estate Ty-cats
Post by: BIG APPLE CAT on July 26, 2018, 09:57:58 AM
'strophe I didn't see the part where you factored in closing costs either, or is this a property you already own and are considering converting to a rental?
Title: Re: Real Estate Ty-cats
Post by: XocolateThundarr on July 26, 2018, 10:13:41 AM
I'm interested in buying a lake house to use a few times throughout the year and VRBO'ing that bitch the rest of the year.  Anyone had experience with that?
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 10:14:57 AM
'strophe I didn't see the part where you factored in closing costs either, or is this a property you already own and are considering converting to a rental?

Not as concerned about those since it is a one-time expense, but yes it gets factored into overall profitability.
Title: Re: Real Estate Ty-cats
Post by: Rage Against the McKee on July 26, 2018, 10:27:49 AM
If you need a management company to manage your 1 building rental empire, you probably are in the wrong business.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 26, 2018, 10:37:27 AM
I'm interested in buying a lake house to use a few times throughout the year and VRBO'ing that bitch the rest of the year.  Anyone had experience with that?

Why don’t you just rent a lake house a few times a year?
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 26, 2018, 10:46:58 AM
Everyone here is factoring in equity, right?
Title: Re: Real Estate Ty-cats
Post by: 420seriouscat69 on July 26, 2018, 10:48:59 AM
Everyone here is factoring in equity, right?
Pretty sure everyone but catastrophe
Title: Re: Real Estate Ty-cats
Post by: star seed 7 on July 26, 2018, 11:10:12 AM
PILE ON!!!!!!!

(https://i.makeagif.com/media/4-10-2014/kBQp5q.gif)
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 11:10:48 AM
Damnit Wacky. That is expressly why I only included interest in my “cost” calculations, which Dr Daris subsequently roasted me over not calculating the “full mortgage payment.”
Title: Re: Real Estate Ty-cats
Post by: Rage Against the McKee on July 26, 2018, 11:12:11 AM
Forgetting the property tax and insurance was a pretty big blunder, catastrophe.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 26, 2018, 11:15:48 AM
Also paying 200,000 for a house that rents for 1400 is not good business.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 11:33:17 AM
I’m starting to consider not even posting my research results ITT for you ingrates.
Title: Re: Real Estate Ty-cats
Post by: Kat Kid on July 26, 2018, 11:36:08 AM
I can't believe how many bloodsucking landlords we have around here.
Title: Re: Real Estate Ty-cats
Post by: DQ12 on July 26, 2018, 11:38:23 AM
good to own land
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 26, 2018, 11:40:34 AM
good to own land

What kind
Title: Re: Real Estate Ty-cats
Post by: XocolateThundarr on July 26, 2018, 12:43:24 PM
I'm interested in buying a lake house to use a few times throughout the year and VRBO'ing that bitch the rest of the year.  Anyone had experience with that?

Why don’t you just rent a lake house a few times a year?

The thought was to use the VRBO deal to help pay for it.  Most of the places I have been looking at rent for about $500 per night.  Seems like if you have a desirable property, it wouldn't take long to pay for itself.  Once it's paid for, quit renting it and enjoy your private getaway.
Title: Re: Real Estate Ty-cats
Post by: Brock Landers on July 26, 2018, 12:52:27 PM
I'm looking forward to catastrophe rebounding from this rough start and eventually becoming a modern day Mr. Potter.
Title: Re: Real Estate Ty-cats
Post by: 420seriouscat69 on July 26, 2018, 01:14:10 PM
Just messing with ya, bud.  :D
Title: Re: Real Estate Ty-cats
Post by: ChiComCat on July 26, 2018, 02:04:46 PM
For real, though.  Has anyone actually used a property management company to focus on the leasing, rent collection, coordinating repairs, etc.?  This is a must for me.  This whole money-making scheme is DOA if that doesn't work.  I've heard folks with good property management companies only need to spend 1-2 hours a month on a property, but this has admittedly come mostly from people trying to sell turnkey properties.

I worked in property management briefly and while they can definitely cut down on your level of work, they also can be quite expensive.  They will likely take a cut and then if the tenant needs something fixed, you'll either pay the PMC a high hourly to fix or pay them a high hourly (less hours tho) to outsource, which will also be billed to you. 

I would find a potential company to go and talk to.  If there is something similar to what you are looking for that's on the market, go to the company and talk to them about their comps in the area and fees (might have to pretend you're going to buy that property).  That should give you a much better estimate of their costs because they aren't going to be $28. 
Title: Re: Real Estate Ty-cats
Post by: pissclams on July 26, 2018, 02:10:56 PM
For real, though.  Has anyone actually used a property management company to focus on the leasing, rent collection, coordinating repairs, etc.?  This is a must for me.  This whole money-making scheme is DOA if that doesn't work.  I've heard folks with good property management companies only need to spend 1-2 hours a month on a property, but this has admittedly come mostly from people trying to sell turnkey properties.

I worked in property management briefly and while they can definitely cut down on your level of work, they also can be quite expensive.  They will likely take a cut and then if the tenant needs something fixed, you'll either pay the PMC a high hourly to fix or pay them a high hourly (less hours tho) to outsource, which will also be billed to you. 

I would find a potential company to go and talk to.  If there is something similar to what you are looking for that's on the market, go to the company and talk to them about their comps in the area and fees (might have to pretend you're going to buy that property).  That should give you a much better estimate of their costs because they aren't going to be $28. 

You mean to tell me that i have to pay the plumber to fix the toilet on top of the $28 a month I pay to the property management company ?
wtf kind of crap is this
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 02:19:10 PM

What is a normal repair budget for a year?  $3,000 to fix just the necessary stuff? 

 :don'tcare:
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 02:20:17 PM
I'm looking forward to catastrophe rebounding from this rough start and eventually becoming a modern day Mr. Potter.

I'll PM you my tricks if I hit it rich.
Title: Re: Real Estate Ty-cats
Post by: Kat Kid on July 26, 2018, 06:48:37 PM

What is a normal repair budget for a year?  $3,000 to fix just the necessary stuff? 

 :don'tcare:

Like literally every other question you asked, it is highly dependent upon what property you are the landlord of and is so broad that no one could possibly answer it, further indicating that this is something you probably aren't close to prepared to take on.

Buy mutual funds or ETFs.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 26, 2018, 06:57:11 PM
I'm interested in buying a lake house to use a few times throughout the year and VRBO'ing that bitch the rest of the year.  Anyone had experience with that?

Why don’t you just rent a lake house a few times a year?

The thought was to use the VRBO deal to help pay for it.  Most of the places I have been looking at rent for about $500 per night.  Seems like if you have a desirable property, it wouldn't take long to pay for itself.  Once it's paid for, quit renting it and enjoy your private getaway.

Sounds more promising than the OP’s scenario, let’s map this thing out ITT.
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 26, 2018, 07:02:51 PM
Quote
• A mutual fund investment averaging 10% returns after fees ends up at a 7% net annualized return = Almost $138,000 after 15 years.

• A turnkey rental property investment leveraging your $50,000 to buy $200,000 in real estate, averaging 6% in net annualized return after expenses and 3% annual appreciation of the asset = Over $431,000 after 15 years.

https://www.forbes.com/sites/forbesrealestatecouncil/2018/04/11/stock-market-vs-real-estate-the-right-approach-for-passive-income-investors/#4d898497d857
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 07:20:40 PM

What is a normal repair budget for a year?  $3,000 to fix just the necessary stuff? 

 :don'tcare:

Like literally every other question you asked, it is highly dependent upon what property you are the landlord of and is so broad that no one could possibly answer it, further indicating that this is something you probably aren't close to prepared to take on.

Buy mutual funds or ETFs.

That was in response to clams acting like I assumed nothing would need fixing.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 26, 2018, 07:22:44 PM
chum just made it on the "PM secrets after rolling in money" list.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 26, 2018, 07:45:28 PM
Quote
• A mutual fund investment averaging 10% returns after fees ends up at a 7% net annualized return = Almost $138,000 after 15 years.

• A turnkey rental property investment leveraging your $50,000 to buy $200,000 in real estate, averaging 6% in net annualized return after expenses and 3% annual appreciation of the asset = Over $431,000 after 15 years.

https://www.forbes.com/sites/forbesrealestatecouncil/2018/04/11/stock-market-vs-real-estate-the-right-approach-for-passive-income-investors/#4d898497d857

Quote
Full disclosure: I am co-partner of a turnkey investment company.)
Title: Re: Real Estate Ty-cats
Post by: puniraptor on July 26, 2018, 09:03:00 PM
property management company pro tip:

they are all horrible and idiots, but worth it to deal with the month to month admin and finding renters.

i got on with a brand new company and negotiated a good rate, then they were horrible and got bought out by another company, which is somewhat less horrible but has honored my original rate, which is really nice.
Title: Re: Real Estate Ty-cats
Post by: puniraptor on July 26, 2018, 09:08:00 PM

What is a normal repair budget for a year?  $3,000 to fix just the necessary stuff? 

 :don'tcare:

Like literally every other question you asked, it is highly dependent upon what property you are the landlord of and is so broad that no one could possibly answer it, further indicating that this is something you probably aren't close to prepared to take on.

Buy mutual funds or ETFs.

That was in response to clams acting like I assumed nothing would need fixing.

financially plan on having to totally repaint and re-carpet between each renter (if they have kids or pets). the cost will obviously depend on your sq ft.

the other costs depends on how crappy your place is and how much of your crappy stuff breaks down.

Title: Re: Real Estate Ty-cats
Post by: sys on July 27, 2018, 01:58:28 AM
you can also magnify your gains and losses in stocks with leverage.
Title: Re: Real Estate Ty-cats
Post by: puniraptor on July 27, 2018, 02:00:42 AM
and you can convert your house to blockchain
Title: Re: Real Estate Ty-cats
Post by: ChiComCat on July 27, 2018, 06:30:04 AM
If you are using a company to manage your VRBO, I would guess you are looking at 40% off the top of any rent you would receive.  Any maintenance would be on top of that.  Any decent PM company will have comps and give you a good idea of what to expect.  The best way to make money is to not be the one using it on prime dates. 
Title: Re: Real Estate Ty-cats
Post by: Kat Kid on July 27, 2018, 07:04:44 AM
If you are looking for real VRBO advice, I can call up my buddy who is the King of Council Grove to break down lake properties.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 27, 2018, 08:13:19 AM
Let’s hear it. Interested in this as well.
Title: Re: Real Estate Ty-cats
Post by: EMAWican on July 27, 2018, 08:56:33 AM
Build a small hidden room in the house and stash BTC miners. Make sure renter pays electric bill tho
Title: Re: Real Estate Ty-cats
Post by: ChiComCat on July 27, 2018, 09:16:05 AM
If you're doing VRBO, I would also recommend some smart devices particularly thermostat.  Fuckers are going to come in the middle of summer and crank it down to 60 degrees.  You need to at least be able to adjust that when they check out.
Title: Re: Real Estate Ty-cats
Post by: puniraptor on July 27, 2018, 09:30:25 AM
I am also entangled in vacation rental.  Airbnb/VRBO

Tiny cabin in North Georgia mountains.
Title: Re: Real Estate Ty-cats
Post by: puniraptor on July 27, 2018, 09:32:16 AM
Airbnb/VRBO advice: make it a nice place where you would want to stay. Put Andes mints on the pillows.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 27, 2018, 09:45:05 AM
What kind of biz does your cabin generate? You got a property manager for it? If so, do they take care of the listing and everything or do you just AirB&B?
Title: Re: Real Estate Ty-cats
Post by: DaBigTrain on July 27, 2018, 09:52:13 AM
Build a small hidden sound proof room in the house and stash BTC miners. Make sure renter pays electric bill tho
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 27, 2018, 01:41:25 PM
you can also magnify your gains and losses in stocks with leverage.

With a fraudulent loan? I like the idea, I just don't know how it would work.
Title: Re: Real Estate Ty-cats
Post by: sys on July 27, 2018, 01:59:24 PM
i don't advocate bank fraud.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on July 27, 2018, 02:10:14 PM
SMDH @ chum1
Title: Re: Real Estate Ty-cats
Post by: chum1 on July 27, 2018, 02:35:51 PM
Well, that sounds boring.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 27, 2018, 02:36:21 PM
I think most real estate moguls would tell you not to purchase a property solely in the hopes that it appreciates, which is essentially what you would be doing if you leveraged stocks (minus some dividends that are typically at the complete discretion of individual companies).
Title: Re: Real Estate Ty-cats
Post by: sys on July 27, 2018, 03:05:42 PM
I don't think the difference in asset type is that significant.  but there are very significant differences in loan conditions and tax treatment that favor real estate.
Title: Re: Real Estate Ty-cats
Post by: EuroCat on July 28, 2018, 11:17:10 AM
I have a few units. Couple of thoughts about 'nalysis

Assume the worst in your analysis. You don't want to get foreclosed on.

I assume 8% gross rents are vacancy costs (lost revenue, turnover costs)
15% gross rents go to repairs
Always assume 8-10% for property management. Even if you self manage, you don't want to take that option off the table.
Property tax, insurance, debt service also needs to accounted for

I look for deals that offer at the very least 7% cash on cash return. Appreciation is just icing on the cake. I don't plan on it
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 28, 2018, 12:57:58 PM
Do you own properties through an LLC? How do you finance?
Title: Re: Real Estate Ty-cats
Post by: Kat Kid on July 28, 2018, 03:35:01 PM
I have a few units. Couple of thoughts about 'nalysis

Assume the worst in your analysis. You don't want to get foreclosed on.

I assume 8% gross rents are vacancy costs (lost revenue, turnover costs)
15% gross rents go to repairs
Always assume 8-10% for property management. Even if you self manage, you don't want to take that option off the table.
Property tax, insurance, debt service also needs to accounted for

I look for deals that offer at the very least 7% cash on cash return. Appreciation is just icing on the cake. I don't plan on it

This is great advice. Think about what a rental home in MHK looks like and whether that matches up with your ideas about "appreciation."

If you have a rental property that you have put significant capital investment in to, that changes things, but that is a lot more risk.
Title: Re: Real Estate Ty-cats
Post by: HerrSonntag on July 29, 2018, 12:08:43 AM
You also need to subtract the interest payments from your take home figure, since thats not getting reinvested.  But I mean, 8-10% ROI  is nothing to sneeze at if you've exhausted some other financial options.

From what i've talked to with people, one off the worst parts is that you're renting to rental people. Now, say you live in a college down/military town/transient town (oil boom folks?) there are legitimate reasons why someone wants a short term rental.  But, most other places, your average renter is a renter because they can't get their crap together enough to own a home.  Those are the folks who can loose a job and go full hobo in a months time, those are the folks who have to get evicted and spend the last 3 months or whatever they get trashing the place.  Those are the folks who yell in your face when you make really reasonable requests that they not trash your property.  And it can be anybody. 
Had a coworker tell me about a rental he had, nice looking couple moved in, payed regularly for over a year, then one month missed a payment.  He shows up because they aren't returning calls and the place is trashed and looks like an 19th century opium den. 
Had another buddy rent his house out because he moved out of state and didn't have time to mess with selling it, so he had his brother manage renting it out.  Renters stopped paying after 3 months, 6 months later when they finally are evicted they check out the house and they had stopped paying for trash service and just used one of the bedrooms to store all the trash. Like, trash bags floor to ceiling.

Now, those are the horror stories, my neighbor sold his house about a year ago and a guy 2 blocks down the street bought it, owns several houses in the neighborhood and rents them out.  First tenants seem nice, he even popped in and had an awkward "Hey i'm a cool landlord" conversation on their front porch a few weeks ago that i over heard while painting my garage (an experience that made me not envy the thought of having multiple houses to keep on top of painting)  Seems like he's had pretty smooth sailing.

But yeah, sounds like a fun opportunity, huh?
Title: Re: Real Estate Ty-cats
Post by: WonderMeal on July 29, 2018, 04:03:20 PM
From what i've talked to with people, one off the worst parts is that you're renting to rental people. Now, say you live in a college down/military town/transient town (oil boom folks?) there are legitimate reasons why someone wants a short term rental.  But, most other places, your average renter is a renter because they can't get their crap together enough to own a home. 

"Rental people." What an incredibly myopic and classist view of humanity you have.

The fact that you only have anecdotes and expressed worry about painting multiple houses and not just writing that stuff off on your taxes tells me you have zero to add to this conversation.


I have a few units. Couple of thoughts about 'nalysis

Assume the worst in your analysis. You don't want to get foreclosed on.

I assume 8% gross rents are vacancy costs (lost revenue, turnover costs)
15% gross rents go to repairs
Always assume 8-10% for property management. Even if you self manage, you don't want to take that option off the table.
Property tax, insurance, debt service also needs to accounted for

I look for deals that offer at the very least 7% cash on cash return. Appreciation is just icing on the cake. I don't plan on it

EuroCat gets it.
Title: Re: Real Estate Ty-cats
Post by: catastrophe on July 29, 2018, 05:27:58 PM
Do you own properties through an LLC? How do you finance?

Wondermeal or Eurocat. Thoughts on this? Also, do you rely on an accountant come tax season or do you factor in the available tax breaks in how you purchase/rent?
Title: Re: Real Estate Ty-cats
Post by: Kat Kid on July 29, 2018, 05:33:39 PM
From what i've talked to with people, one off the worst parts is that you're renting to rental people. Now, say you live in a college down/military town/transient town (oil boom folks?) there are legitimate reasons why someone wants a short term rental.  But, most other places, your average renter is a renter because they can't get their crap together enough to own a home. 

"Rental people." What an incredibly myopic and classist view of humanity you have.


The fact that you only have anecdotes and expressed worry about painting multiple houses and not just writing that stuff off on your taxes tells me you have zero to add to this conversation.


I have a few units. Couple of thoughts about 'nalysis

Assume the worst in your analysis. You don't want to get foreclosed on.

I assume 8% gross rents are vacancy costs (lost revenue, turnover costs)
15% gross rents go to repairs
Always assume 8-10% for property management. Even if you self manage, you don't want to take that option off the table.
Property tax, insurance, debt service also needs to accounted for

I look for deals that offer at the very least 7% cash on cash return. Appreciation is just icing on the cake. I don't plan on it

EuroCat gets it.

All your vassals think you are cool.
Title: Re: Real Estate Ty-cats
Post by: EuroCat on July 29, 2018, 07:21:28 PM
Do you own properties through an LLC? How do you finance?

Wondermeal or Eurocat. Thoughts on this? Also, do you rely on an accountant come tax season or do you factor in the available tax breaks in how you purchase/rent?
I just use my local bank and it's a "typical" fannie mae underwritten mortgage. Since it's not owner occupied you will likely have to put at least 20-25% down and pay a slightly higher rate.

Some people transfer properties to an LLC after taking out the loan but there are risks to doing that. The way most mortgages are underwritten the bank can call the note through a due on sale clause. If this happens you will be required to pay off the note immediately or you can be foreclosed on.

However, I think that is pretty rare these days as many banks only care that the monthly payment keeps coming in. It is certainly a risk, though.

I don't have an LLC at this point but i have considered it. I would definitely do your research if you are considering doing this.
Title: Re: Real Estate Ty-cats
Post by: WonderMeal on July 29, 2018, 10:18:38 PM
Do you own properties through an LLC? How do you finance?

Wondermeal or Eurocat. Thoughts on this? Also, do you rely on an accountant come tax season or do you factor in the available tax breaks in how you purchase/rent?

I don't have a ton of advice on financing. Me and @MrsWondermeal bought the house to live in, then moved out and rented out our side. So it's just whatever our first mortgage was. For that same reason, I don't have advice on whether to use an LLC. We have a small liability policy (a few hundred a year) which would help us in most cases. The biggest regret I have for not doing an LLC is credit card points-related.

Definitely use an accountant. It's significantly easier, you can write off the preparation expenses as a business expense, and it helps me believe I'm getting every tax break available to me (and not say...messing up the depreciation deduction).

 
All your vassals think you are cool.

I would definitely rent to MrsKK. Not sure that you could pass my three-question background check.
Title: Re: Real Estate Ty-cats
Post by: puniraptor on January 30, 2019, 06:58:58 PM
how do i stop my renters from being disgusting and living in dog and cat crap without kicking them out (thus having to fix everything before renting to more potential disgustos after lowering the rent by several hundos because the manhattan rental market is tanking)?
Title: Re: Real Estate Ty-cats
Post by: Spracne on January 30, 2019, 07:00:52 PM
A controlled infestation might work
Title: Re: Real Estate Ty-cats
Post by: puniraptor on January 30, 2019, 07:04:48 PM
A controlled infestation might work

like hire a team of insects to eat the pet waste out from under them?
Title: Re: Real Estate Ty-cats
Post by: Spracne on January 30, 2019, 07:21:09 PM
A controlled infestation might work

like hire a team of insects to eat the pet waste out from under them?

I was thinking more like scaring them straight.
Title: Re: Real Estate Ty-cats
Post by: wetwillie on January 30, 2019, 07:27:29 PM
Long distance landlording seems fun
Title: Re: Real Estate Ty-cats
Post by: gatoveintisiete on January 30, 2019, 07:32:36 PM
the perfect rental property would be made out of semi-indestructible material, with industrial drains so you can just firehose the place clean between tenants, basically like a la petit daycare.  If this could be done I would invest everything in rentals.
Title: Re: Real Estate Ty-cats
Post by: eastcat on January 30, 2019, 09:08:33 PM
the perfect rental property would be made out of semi-indestructible material, with industrial drains so you can just firehose the place clean between tenants, basically like a la petit daycare.  If this could be done I would invest everything in rentals.

Sounds like Marlatt hall.
Title: Re: Real Estate Ty-cats
Post by: KITNfury on January 31, 2019, 03:04:16 PM
I invest in RE, and to me, nothing makes more sense. I started w/ multifamily, sold those through a 1031 exchange to purchase some others. Going through a cash-out refinance now which I'll use to buy more.

I won't claim to be the authority on this stuff, but would be happy to help those interested or answer questions.
Title: Re: Real Estate Ty-cats
Post by: 420seriouscat69 on February 07, 2019, 10:20:31 AM
Mrs. wacky wants to move to the Home Alone house.

https://property.listreports.com/HJ5tBVHG4/12816-west-118th-street-overland-park-ks-66210
Title: Re: Real Estate Ty-cats
Post by: star seed 7 on February 07, 2019, 10:25:33 AM
Don't do it bud, that house is ugly as crap
Title: Re: Real Estate Ty-cats
Post by: 420seriouscat69 on February 07, 2019, 10:26:36 AM
lol. Yeah, I agree. Not happening.
Title: Re: Real Estate Ty-cats
Post by: Brock Landers on February 07, 2019, 11:36:26 AM
I'm glad this thread got bumped because there's two things I really liked about it:

1. A bunch of grizzled old veteran landlords banding together to keep a potential fresh new landlord out of their industry.
2.  The idea that you can pay a property manager $28 per month.
Title: Re: Real Estate Ty-cats
Post by: ben ji on February 07, 2019, 06:17:59 PM
Mrs. wacky wants to move to the Home Alone house.

https://property.listreports.com/HJ5tBVHG4/12816-west-118th-street-overland-park-ks-66210

Didnt you just buy a house like a year ago?
Title: Re: Real Estate Ty-cats
Post by: 420seriouscat69 on February 07, 2019, 08:18:58 PM
Lol. Yes. Trust me, I rolled my eyes.
Title: Re: Real Estate Ty-cats
Post by: meow meow on February 08, 2019, 12:59:47 PM
sounds like your wife doesn't appreciate what she has, and will always look to upgrade.  watch your back wackster.
Title: Re: Real Estate Ty-cats
Post by: chum1 on February 08, 2019, 03:17:30 PM
(https://compote.slate.com/images/dbf3e61e-a9cc-4e1c-9bdb-b87a6d0cd451.jpeg?width=780&height=520&rect=1199x799&offset=1x0)

https://twitter.com/publicroad/status/1093966803091574786
Title: Re: Real Estate Ty-cats
Post by: steve dave on February 10, 2019, 02:14:49 PM
lmao