I’ve avoided Rentals and bought strictly raw land in the past.
For one, my job doesn’t really afford me the ability to manage rentals.
But our current market has changed enough that smaller rentals may be worth looking at.
A friend and former business parther has recently started doing some rental management and repairs. I’m confident in his abilities and honesty, and am sure he would handle things on a month by month basis for me.
Can anyonme recommend some good reading on the subject in order to help me decide where to look next?
Replies
i could take up all of bt bandwidth on the negs and postives of landlording,so i'll try and keep it short.
i've read alot of books and the best i could say is almost everyone of them are 90% bs. the problem is finding the 10% to pay attention to. so go pick you up 5 books at borders and start reading.
i was told years ago,when i said i was investing in real estate,the guy corrected me and said"your in the rental bussiness". he was right, a guy can own a couple and not be to involved,but as that number increases it becomes a bussiness.
your comment about not having time for them,if you don't have time i would have to ask ,what is your goal for owning? do you live in a area with high apperciation?are you looking for monthly income? if the answers monthly income and you have to hire management and repairs,sharpen the pencil. i have to tell you i don't have one that would work and still produce a income that would be worth messing with if i was hands off.
i don't want to be all negative,they have been very good to me most of the time.i have had only a handfull of bad renters in 30 years,i remember everyone of them.lol
do some searching here there has been lots of goo threads on landlording and to tell you the truth will probably be better than any book out there.larry
YOU ONLY NEED TWO TOOLS IN LIFE - WD-40 AND DUCT TAPE. IF IT DOESN'T
MOVE AND SHOULD, USE THE WD-40. IF IT SHOULDN'T MOVE AND DOES, USE THE
DUCT TAPE.
I don't require monthly income above paying for themselves.
The reasoning is that the market here is looking favorable in the lower price ranges.
Meaning, Buy-Hold/Rent for a few years-sell
Just some thoughts.
Remember that if Capital Gains taxes are increased you will be looking at taking a harder hit when you sell. Not necessarily a deal breaker just something to keep in mind.
Everything you do be sure it's accounted for to keep your cost basis documented.
It's not bad overall but to really make money you need to get 1.5% per month of the value. Very few actually do.
I think the rental business is going to get better because the govt is not competiting with us as much by offering down paymment money, low interest loans, etc. Well, they are trying, it's just not working right now.
I'm now shifting to buying land and commercial type property and away from residential rentals. Just a lot less hassle and more fun. Wish I'd put the money into land and commercial instead of residential at the beginning but I think most people start in rentals with residential.
Every car, truck and tractor in America should run on natural gas- it's the future.
do you live near the jersey shores ?
i like the properties that are going to accelerate past their peers when times get better
i misread the market in the '80's.... thought we were going to need good quality commercial properties.... but the market was really in 2d homes
and seasonal rentalsMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
do you live near the jersey shores ?
2 - 2 1/2 hours away.
Some of that property is way down
but
It was way up! Way too far up.
I'm looking at Rows and twins in my general area. The ability to buy right now seems to be bigger than the actual price and I think I may try to capitalize on that.
Fill out your profile.
I'm 2 1/2 hours from the jersey shore but there are a lot of places that could be described as such.
re. the rentals, find an area that can command rentals in any market.
I have one that is great, and one that sucks.
The one that sucks is in a rural market and that is not good. it has been a money and time pit for me.
Be prepared for all the typical nightmares.
HVAC failures.
leaks
tenant trashing the place
etc.
i used to be half residental half commercial.now i'm down to about 10 % commercial 90 res.
my experence is that the res is a steady income,some apperciation,but nothing exceptional.
all my home runs have come from commercial,either from me changing the use or the new buyer changing. had a couple taken thru condemnation for street projects,thats a frustrating deal.
i'm like you i find commercial more "fun" [except when it's vacant]
land has been the kiss of death for me,guess i don't know whats desirable or not.YOU ONLY NEED TWO TOOLS IN LIFE - WD-40 AND DUCT TAPE. IF IT DOESN'TMOVE AND SHOULD, USE THE WD-40. IF IT SHOULDN'T MOVE AND DOES, USE THEDUCT TAPE.
I actually like land even better than commercial.
I bought a lot in a small west Texas town that I paid almost nothing for and rent it to a drilling co. as a lay down yard for a good monthly amount with no calls about repairs or anything.
I drive by occasionally when I'm in the area just to look at it and write off the trip.
Every car, truck and tractor in America should run on natural gas- it's the future.
FWIW, I had my single family house in the S.F. Bay Area rented out for several years trough a local property management company. They found the tenants, collected the rents, got repairs done (not necessarily well...), put the proceeds in my checking account, and gave me a complete accounting for taxes. They charged 7% of each months rent plus half of the first months rent to find a new tenant. I was not thrilled with some of the tenants they found, but that is probably par for the course. Being deaf, I really would have had a nearly impossible task in doing it all myself. Some other property mangement firm, located in a more upscale area, that I talked to wanted 8% per month. The management firm did manage to find really cheap workers for painting and minor repairs, unfortunately, the quality (or lack thereof) was rather evident.
All I can say is don;t mess with single family deal with two plex. four plex etc.If one is vacant you at least have a buffer if there is a mortgage.
Wallyo
Edited 1/10/2009 2:24 pm by wallyo
Im gonna suggest you dont .
tim..suggest he don't what ?Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Well he said this ;" my job doesn't really afford me the ability to manage rentals."
Considering I know theres a lot more involved than management I suggest he doesnt enter into it . Really afford means to me hes making money too valuable to mess with it . Overbudget stated it truthfully that if youre gonna hire management and maintenence then its really not too profitable . If he knew there was value in the future in selling then that might be a horse of another color. To say its going to be a rental venture alone then it needs to be his operation because rentals are about saving money and stretching it . Its a long haul deal thats a way of life you live every day being a cheap skate collecting as many Benjamens as you can horde.
Some people that need a tax break do it and let someone manage but I doubt theres real money made. Management always makes mistakes over and over of the same caliber becuase its not their investment . Over and over real estate companies that manage keep making the same mistakes because they are not penalized for making them. They are in another business themselves so they arent concerned with a sideline business they collect by just answering the phone and taking someones money. They dont bear the labor or cost to fix whats torn up so as long as the money is laid in green on the desk they get their cut until it stops . Then they might lose money they never earned while the landord has to clean up the mess and remodel all from his losses. Lets say if management was penalized with money if somthing was torn up it could be a fair deal. For them its kinda like us working for time plus with no time table promised.
Tim
rental property managers are kinda like stock brokers. they get paid either way. no matter if you are selling at a loss or selling for a gain they still get paid.
Every car, truck and tractor in America should run on natural gas- it's the future.
I have a problem with that when Im losing money. Always have had.
That's what I have against stock brokers as well as property managers.
Hijack: I bought the backhoe - getting a thumb put on it this week.
Every car, truck and tractor in America should run on natural gas- it's the future.
Cool.
No advice on literature. But i'll second the advice here, and from what i've heard from others doing the same. It's kind of like owning a boat: your second happiest day will be buying a rental, your happiest day will be selling it.
Tenants are the biggest hassle. Make sure you've got a steady market to draw from, and be picky. It makes all the difference, even if you're accepting less rent to keep a good tenant.
The only people who seem to be o.k. with rentals are those in it for the long haul, with lots of properties and/or making their livings from it. Then the headaches are just a part of the job. Otherwise, it's a second job, regardless of how many you own.
We kept about 30k after selling our duplex. But we had it for 10 years, and the property had doubled in value. It was also sold in a seller's market, in a large city near a big university. And we lived in one side for a few years, which was worth it at the time. But if i were looking for an investment and wasn't starting out or semi-retired, i'd find something else.
I've no delusions of it producing income.
The question comes up because I am in a position to be able to buy. That apparently is a not as common as it used to be.
There are A LOT of twins and rows in the city with a solid tenant availability out there. Few would produce considerible income monthly.................but................The prices and terms are right ....................AND.....................The potential for upward price move when the mortgage situation gets straight is pretty attarctive.
Can't argue with that. Strike when the iron's hot.
Not a bad plan per se. Just that it can wear on you after awhile.
Personally, I think people shouldn't buy rental property unless they are willing to deal with people and their proplems. It's going to come up and while it isn't your proplem you should be willing. That's just me though.
And unless you buy the right one you won't make that much buy sitting on it, having someone else take care of it, and selling it later.
Stick with other investments.
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