I'm with you as well

Twice your age, but just the same, I'm glad I did. I have a good property manager and own quality properties. (Not a slum lord)
I've always heard that when you retire you will need less income? Well, maybe so but **** that!!! I wanna have as much as I make now and more.
I have a "slush fund" to take care of pop up expenses. But having the good renters is super important.
I think with the crappy state of our economy, and the attitude of lots of people, that the rental industry is gonna be a very viable industry or small business if you will.
We are buying our first foreclosure soon and buying it under an LLC. (You may want to consider this so some scumbag doesn't sue you out of what you have worked hard to get)
At 30 I'm sure you will get into apartments or commercial properties eventually. The world is your oyster young person! Taste it!
Good luck!!! Be careful, get smarter!!!!

take care, Semore

 

keep adding and before you know it youll be a real estate tycoon. i havnt punched a clock since 2009 and ive accumulated 5 properties in that time that helped my net worth increase from 300k to over 1.2mil

im pretty happy with the income from 5 and am not looking to add more, my rents go to pm's instead of more property

 

I agree that rentals can be a great investments. My extended family has been landlords for decades and made a lot doing it.

I just bought my first rental property a single family home a block from the house I own and live in.

It needed a lot of cosmetic work but mechanically it was sound. Should have it paid off in 5 years. My fiance already decided next we are going for an apartment complex once the house is paid for. :thumb:

My advice would be being handy helps cuts cost but is not necessary. Also do lots of research before buying anything such as laws, permits, ect.

I think I will quit expanding the rental empire after we get our first complex. I also run a small retail business so can't go crazy. Diversity is key (silver, guns, small business, rentals, and stocks).

 

We've been buying for a year now. We own 5 and made an offer on number 6 today. Paid cash for one, bought 2 more using savings for down payments. Now, I pull money from my 401k to make the down payments. I know, I'm paying taxes and penalty on that, but the penalty is 10%, the company gave my 50% right off the bat. And i'll pay taxes on it eventually anyway. The potential returns are much greater than anything I've been able to get in the market. One of my houses, my all in money out of my pocket is 9k. My cash flow is $355 a month. Counting only 10 months a year, that's $3550 a year on a 9k investment. Thats 40%.

I've got 3 other houses all generating between 25 and 30%. The one house that's not generating that kind of return is the one I paid cash for. I've got 55k in it, cash flows 5k a year, figuring 10 months. Thats still 9%, but it's an example of the power of using other peoples money.

 

You do know you can borrow against your 401k for up to 120 months when buying a "primary" home or resident. To avoid cashing out some of your 401k.

 

I'd put each rental property in its own LLC. That way, a catastrophe of one property (fire with a tenant death) won't poison the well of any other rental property and won't poison the well of the owner (member).

My other best advice would be to never, and I repeat never, watch the movie Pacific Heights with Michael Keaton.

https://www.youtube.com/watch?v=PrVtU25MSqQ

 

I would second this advice. I dont own rental property so no first hand experience, however I do work at a bank corporate center processing business loans and see everyones rises and falls.
However instead of going through all the work of multiple LLCs, you can actually create a "series" within your LLC. Each series is considered its own entity in theory, but you only need to keep up with half the paperwork.
e.x. youd have
So and So, LLC Series #1
So and So, LLC Series #2

just something to look into. all state laws are different so take my experience with a grain of salt.

 

We have one investment property with fantastic, long term renters. We pay a property manager to deal with day to day stuff and they call us for big stuff. We bought during the housing market mess, so we paid very little for it. We keep our rent at a medium level which keeps our renters in place.

We pull about $500 a month off of it, but for us it was the long term investment. We paid $140k for two bedrooms one bath on each side. It's current market value is $220k, so we made $90k if we sold right now. We did the same thing with the house we live in currently and the house we just sold. Bought low and held on through the mess. We just sold a property that we purchased in 2004 for $155 for $260. The funds from that house paid off the one car we still owed on and gave us a nice chunk to remodel the current house. We have also been looking for a potential new investment property but they are few and far between here.

Sent from my SM-G900V using Tapatalk

 

Glad I bought a Rental

I have 1 rental property since 2006. I had a bad experience with my first renter which was on Section 8 program. The money was good but they trashed the place when they moved out. Now I'm smarter about who I rent to. I wanted to go gung ho at the time and buy more properties but decided to just try to get that one paid off since I didn't but it at a very cheap price.. I'll have it paid off in another 5 years so all said, I'm still glad I did it because it will be a help for retirement .. It's a headache sometimes because I manage all the repairs and do some of them myself ... I'm still glad I bought one though ... wish I had bought a few more ...

 

#1 Its about the state/laws. Here in Ca i cant get a renter out because he gets a low income free lawyer. A specialized how to screw the system/property owner Renters specific lawyer all paid for by tax dollars.

Were talking not not take your trash out for 7 months (its free,trash service paid for by me)
but instead stack it 8 feet high 15' deep in your garage, then complain about roaches.

Then your insurance gets involved and they weigh the pros/cons of just paying the guy a settlement to leave ($10k min). Rather than fight him in court with a jury that is all welfare/renters/sympathetic to a free ride.

Guess what their decision will be??? (here's a tip insurance company gets paid the same either way, so why work at all?)

We wont get into the laws that you legally forced to house X # of section 8'ers.

 

Local laws as well. Back in the 70s when inflation was rampant some cities passed laws limiting rate increases. Today some cities are working to pass laws where you can't background check an individual prior to renting. Just a credit history.

 

Always prequalify your tenants. Check credit scores, work history, references and criminal background. Nicer homes with higher rents weed out a lot of undesirabiles

 

That can really limit your choices of properties. I agree that you should buy the best you can, but in many cities you put yourself in a negative income cash flow for a number of years with quality rental property

YMMV

 

I've had four rental properties. After 25 years and lots of work, court, throw-outs, crying children, cleaning, cleaning and cleaning, repairing, repairing and repairing, fixing, fixing and more fixing I would not done it again.

There are far better ways to make money work for you than being this exposed.

 

I've had four rental properties. After 25 years and lots of work, court, throw-outs, crying children, cleaning, cleaning and cleaning, repairing, repairing and repairing, fixing, fixing and more fixing I would not done it again.

There are far better ways to make money work for you than being this exposed.

Such as? And I'm talking about actual ROI, not beans and bullets (bullion can have ROI if you actually sell it)


Little tip I picked up along the way, figure out a sneaky way to take a peek in your potential tenants vehicle (if they have one). Generally speaking tenants/ people keep their cars like they keep their homes. Otherwise check credit and verify employment. Ignore current LL reference, talk to the previous LL if they have one.

Also 10-31 exchange your way to a nice small apartment building and put all your problems under 1 roof, not 6.

 

I had a number of properties in the past and plenty of stories to go with them!

Then the real estate bubble burst about the time that I was divorcing making liquidating said properties a nightmare. I survived but I learned many a valuable lesson about not growing too fast too quick and making sure that each property is squared away and had decent tenants prior to the next purchase.

Best of luck to you. It can be great!

 

Own three myself. Helps with taxes and is one of the only things that make you money while you sleep. Congrats on your progress. A good property management company is worth it's weight in gold.

 

Be Warned

Just be VERY careful who you put in your property! I'm currently helping a friend put his rental property back to some semblance of normalcy after a one year tenant absolutely DESTROYED the place. It's a nice 3 bedroom duplex in a quiet suburb. Last summer I helped him do a full, top-down renovation. We repainted, refinished, recarpeted, repaired, and replaced... every surface in the whole home. It looked like a brand new home, and it cost them thousands of dollars (and a LOT of work) to make it nice.

One year of a DISASTROUS tenant, and everything needs to be redone. We're pulling up year old carpets that are covered in stains, burns and ground-in grime. We're patching holes in walls and doors. We're fixing or replacing broken appliances, and have filled a 10-yard dumpster with all the trash and filth they left behind.

This tenant paid next to nothing, cost them more than ten thousand in damages... and at least 5 thousand in legal fees to get them out. The tenant eventually ended up in jail on drug and other charges (which means my friend will probably never recover a single dime).

Lesson: Spend some money up front to investigate and fully vet your tenants. A good tenant is worth their weight in gold. A bad tenant can cost you a fortune, and quite possibly your sanity!

 

when i first started planning a RE portfolio my plan was to buy 1 property all cash, rent it out and save then finance that property to the max and buy another all cash, always keeping 1 property paid off, rinsing and repeating until mogul status is achieved but it just so happened that the whole thing crashed in 2008. i unloaded everything on it and abandoned that plan but i believe it is a viable plan

 

Rental income is nice. I've had good and bad experiences. Right now, I have one house that nets about 1000/mo. My property is free and clear. The problem is that if the SHTF, and everybody's economic position takes a nose dive, it will be very hard to "reclaim" you property and the mortgage companies will "reclaim" theirs if the system begins to function again. This is a pretty good investment opportunity for those who believe the system is going to continue to function more or less as is for the next decade or more. My question is, "Is it a prudent move for someone who doesn't have a BOL, an EMP hardened vehicle, an off-line power supply, communications, a stable water supply, and a deep stockpile of all the stuff that people on this site normally suggest. BTW, I would never consider using my BOL as a rental property unless it was rented to someone I would unquestionable trust with my and my family's lives.

 

We recently went to rent a house at a shore point. I added up what they were charging (figured 12 prime weeks, anything else in bonus) and was thinking about buying it just to pay it off (including any excess cash flow). With a rental property, is there any way to get a loan without putting 20% down?

 

It depends, a good financial/loan officer might be able to find a way, but you can give up that hope if it's any where near the home you already own. More than likely though, any income property will be hit with the 20%. I think my financial officer told me that if I intended to live in it for two years and signed a federal letter stating I risked going to prison for up to 10 years and some ridiculous fine if I sold it early or made it an income property, I could wave the 20%. Wasn't worth the dance, so I've always just paid the 20%.

 

Had 3, mine and 2 rental houses, never had a problem. Sold the 2 rentals because I wanted to be out of country more than was feasible with rentals, and knew I's never live in either of those cities again.

My best friend has 7 rental condos now, picked up between the bottom of 2010 and last year, no problems.
Well, we had to clear a sewer line last week, but hey, **** happens. Took us all of an hour and a half..

Kids lived in a nice lakefront condo for 5 years, rented it for 2, no problems. Just sold it for 2 1/2 times what they paid for it.
With the 500k fed tax exemption, they pay income tax on only 45k of the profits, and long term cap gains at that.. Pretty good deal if you ask me. Paid off their new house in the mountains in full, and had enough to buy a rental up there.

Not bad, at 32..

Trick to rentals is good tenants.
Verify the info. You have the right to do this.
EMPLOYED ONLY.
Credit score over 650, ABSOLUTELY NO bad credit problems. EVER.

This will weed out the scum 99% of the time.
If you can't get good tenants, you have a slum. Being a slumlord is profitable, I worked for some. I just didn't care for it.

Use common sense.
If you're in Detroit, don't but rental property...

 

Had 3, mine and 2 rental houses, never had a problem. Sold the 2 rentals because I wanted to be out of country more than was feasible with rentals, and knew I's never live in either of those cities again.

My best friend has 7 rental condos now, picked up between the bottom of 2010 and last year, no problems.
Well, we had to clear a sewer line last week, but hey, **** happens. Took us all of an hour and a half..

Kids lived in a nice lakefront condo for 5 years, rented it for 2, no problems. Just sold it for 2 1/2 times what they paid for it.
With the 500k fed tax exemption, they pay income tax on only 45k of the profits, and long term cap gains at that.. Pretty good deal if you ask me. Paid off their new house in the mountains in full, and had enough to buy a rental up there.

Not bad, at 32....

most of the wealthy peopke i know did it through RE, both my grandfather and i retired at 39 through RE. im not saying its the only way to get there but it got me there.

my dad didnt like rental property because the one that he owned was a headache, he made his money with stocks and dividends

 

Question ; I live in Canada. I have been wondering if a person does not have the finances to buy an entire condominium block outright, can one accumulate condominiums in a small strata until you have majority control of the actual land and infrastructure or quietly buy out everyone over time , thus the whole of the land present day might be worth more than older units sold piece meal ?

 

Condos are the last to gain and first to fall, in most instances. They are also pricy per unit, and you are responsible for every little one of the by-laws your tenants break. Condos are full of busybodies, and they will report you if you replace your back door with one that looks like the approved one, but is a different brand, even if you have to open it and read the label to find out. Bad news all around. There are exceptions, I'm sure, but there are also better oltions every day of the week.

 

duplicate post

 

When I started out I lived in the first rental At that time all you needed was a 12 month lease to not have to qualify to get another mortgages. I did this 11 times, then purchased my home and the profits pay for the one I live in now. The rentals not only pay for themselves and upkeep but also my personal mortgage. Doesn't hurt to have a wife that's a Realtor and property manager.

 

All depends on location, if you're in a bad one, you'll never have good renters.

As in Detroit, there are MANY cities where you just avoid owning rental property.

As for repairs, if you can't handle it, don't go there.
And no closer than 5 miles away, no farther than 10.
Had a friend who got a great deal on 3 houses up in Tahoe.
Until he spent damn near every weekend going up there to fix something...

 

It really depends. If your rental isn't going to price out 80 plus percent of the income earners in an area, don't do it. Even then check income, references, credit (no credit or bad credit means no deal, period) and criminal records.

That will weed out most of the bad apples but not all. There is always a reason someone is renting, you need to find renders that are renting either because they want to (older, very busy, hate yard work, etc) or for work (contract, consultant etc) not the renters that are unable to buy for whatever reason.

If you put your work in there is still the upkeep but yoy should be able to earn 10 percent a year if you buy right (not right now in a high market).

Real estate is a long term thing, not a 2 year buy and hold stock. If you don't plan that live in the same city and be fixing things at your rental in 5 years, skip the whole idea.

 

During my Active Duty Naval career, we collected an assortment of Multi-Family-Residences [MFRs] one at each duty station. As an enlisted sailor we collected four MFRs. When I retired we sold out and used the cash to buy our homestead.

Take some income tax classes. The IRS offers VITA for free.

MFRs will keep you fully tax sheltered. I have not paid into income taxation since 1983. Because of our MFRs.

 

My only advice to you, since you are interested in buying them as retirement income, is to set aside the maximum Roth contribution times two. At your age, that is 5,500 x 2 = 11,000. The Roth uses after tax income, so there is no deferment advantage. Start what is called a self-directed Roth IRA LLC. Fund it before Dec with this year'a max, and in Jan with next year's max.

Then, find a purchase deal where the seller is willing to take back paper, or any other arrangement where your all-in out-of-pocket expenses on the HUD-1 settlement statement total less than 11,000. You will have to manage the property with a strict corporate veil, and take no advantage or use of it before your retirement. The funds need to be strictly watched so that they never co-mingle.

So, with these restrictions, what is the advantage? Your gains are forever TAX FREE. Not tax-deferred, but truly tax-free. You get the tax exemption of a Roth with the cash flow return of leveraged funds. It will slow your roll for a month or two, but will shift your retirement from paying buttloads of taxes on the gains to paying none whatsoever.

 

I've had rental properties for over 30 years. For the most part, my tenants have been very good and long term. I will admit to one thing though. I do discriminate! If I don't like a person, I will not rent to them. I also will never have another Section 8 tenant.
For every unit you own, put so much away each month for repairs and for the remodeling that comes once the tenant moves out. (Paint, carpeting, etc.)
I do most of the work unless I need a specialist. I also mange the units myself. One tip I have to give is. Whatever rent you want for the place, add 50/month to the price and tell the tenant that if they pay before the fifth of the month, the rent is 50 dollars cheaper. It works.

 

... I also mange the units myself

You have to. If you don't then you lose all tax benefits. The investment must be fully 'at-risk' and you must be among the management team.

... One tip I have to give is. Whatever rent you want for the place, add 50/month to the price and tell the tenant that if they pay before the fifth of the month, the rent is 50 dollars cheaper. It works.

For one bedroom apartments, I try to establish a neighborhood average for 1 bdrm apts. For 2 bdrm apts, I establish an average for 2 bdrm apts. For 3 bdrm apts, I establish an average for 3 bdrm apts.

We set our target rent at 80% of the neighborhood average but add $50 to the full rent level. Once they are in, they realize that their rent is lower than all their friends' rent levels.

I also carried a clipboard listing the repairs I had planned. Each time I collected rent I asked them what they wanted repaired first.

If they know that are paying less than their friends pay, and that you value their opinions on repairs. It seems to hold the renters longer.