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Thread: Real Estate Questions

  1. #11
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    Thanks, Steve, you were indeed the person I was looking for. This is really helpful for me to read. We are getting older, and the part of this that makes me think twice is all the repairs you have had to do, and how we would fund them out of retirement money.

  2. #12
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    I have a friend who recently sold her two rentals and stashed the money somewhere - I don't know where . She figured that with encroaching age, constant maintenance, rising taxes, it made sense to sell now. I was a landlord for a short while as the house we bought here had tenants in it and we had to honor their lease. All I can say is I never want be a landlord again. Perhaps it is different if a family member you like and trust. I would sell the two and buy a nice house if it were me.

  3. #13
    Senior Member iris lilies's Avatar
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    Steven Twin cities may be one of those exceptions to flyover country, but if your real estate prices are where they were or a bit better than ten years ago, you arent San Francisco or Seattle etc.

    look, the OP has given no numbers, so it is impossible to say if he will make money on rentals.

    First order of business: make a business case for the real estate investments. That includes all costs, projected costs, projected vacancy rate. Compare bottom line to no risk savings accounts earning 2%. That is far more important than people’s stories about tenants being a PITA.

    I agree that tenants are a PItA. I have not had a tenant in the 30 years we have been married because I do not want the headaches of landlording. DH had rental properties when we got married and sold them off pretty soon after.
    Last edited by iris lilies; 9-2-19 at 2:27pm.

  4. #14
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    Quote Originally Posted by iris lilies View Post

    First order of business: make a business case for the real estate investments. That includes all costs, projected costs, projected vacancy rate. Compare bottom line to no risk savings accounts earning 2%. That is far more important than people’s stories about tenants being a PITA.
    .
    Good point about figuring in all costs, etc. A good book for that that I have been using is Frank Gallinelli's What Every Real Estate Investor Needs to Know about Cash Flow.

    Doing the calculations in the book discouraged me from a couple of investment opportunities.

    JScmidt, you might find it useful to get the book and apply the calculations to the rentals you actually own. It's detailed, and for me, it made me realize I wouldn't make enough on those particular houses.

    I do think it's actually helpful to hear people I respect say they found being a landlord a PITA. Those stories give me pause.

    I knew of a similar situation to Bae's mom, where the guy who bought our house in upstate NY had a rental in a small town nearby that becomes valueless because of the tenants. Admittedly, the houses were only worth maybe 30,000 to start with there, but bad tenants wiped him out in that house.

  5. #15
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    The list of grievances from dealing with our tenants was long - stood on bath vanity to change light and broke marble top claiming it was already broken, parked cars in yard, acquired extra dogs that damaged woodwork, grew pot in the storage shed, threatened to sue me, burned trash in fireplace, sub-leased the basement without our knowledge, did not disclose that one of the tenants was a violent parolee by mis-spelling his name on lease. I guess we just got lucky but it sure soured me on the landlording experience.

  6. #16
    Senior Member SteveinMN's Avatar
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    Quote Originally Posted by Tybee View Post
    part of this that makes me think twice is all the repairs you have had to do, and how we would fund them out of retirement money.
    Well, a rental property should be self-funding. That's the 1% IL refers to. It gets a bit more complicated than just taking in enough money to meet expenses (since you get depreciation and other tax considerations but then you can add in the notion of being paid for your time "landlording"). Since I got the property as a foreclosure and I am renting it to close relatives on fixed incomes, I took it easy on (okay, I ignored) the 1% rule. The math more or less worked for several years, but we never thought I'd be carrying this house for as long as we have -- long enough that long-term expenses like roofs and doors came into play. Hence the rise in rent. It's still tight but at least we're not subsidizing the house out of our own pockets every year.
    Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome. - Booker T. Washington

  7. #17
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    Steve seems to be a voice of experience on this thread. It's interesting to read about peoples' first hand experiences with real estate investing; I used to think that landlords "cleaned up." One has to own a lot of apartments to make a lot of money. The margins aren't enormous and costs are better spread over many units. Oh oh! If that sounds like you have to go to school to learn the business, it's probably advisable. My two high school classmates who did well in real estate often made their own repairs and had a day job as did a third friend who worked for the city of Philadelphia and bought houses when they were much cheaper than today. Consequently he is traveling around the World. He did his own repairs and still does!

  8. #18
    Senior Member SteveinMN's Avatar
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    Quote Originally Posted by bicyclist View Post
    My two high school classmates who did well in real estate often made their own repairs and had a day job as did a third friend who worked for the city of Philadelphia and bought houses when they were much cheaper than today. Consequently he is traveling around the World. He did his own repairs and still does!
    "His own repairs" is a bit of a bone of contention with me. I don't have a problem doing my own (interior) painting, or installing ceiling fans or replacing faucets or toilet innards, or managing pest control. But I don't know anyone who is a licensed electrician and plumber and does drywall and lays ceramic tile ... Some stuff (not all of the preceding) is critical to do right and some of it is subject to municipal inspection in investment properties. The bathroom I just had remodeled was subject to plumbing and drywall inspections by the city. Does someone who does "his own repairs" have the skills to do all that stuff properly? Or is it just the "flip" mentality of making it look good even if underlying issues are never fully addressed?
    Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome. - Booker T. Washington

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