|
So I haven't posted in here, but I thought since the thread is slowing down and I enjoy it. I will share my landlord by accident story. I graduated college in 2004 with no debt. I got a moderately paying job in Los Angeles, and was still living with college buddies in a cheap house. After 6 months of spending way too much in discretionary spending I decided to look for a job in my home town (Bakersfield ca) and put money down on a new development there. Things worked out well, new job, secured a lot in a very nice master planned community in the first phase of development. Secured a loan for $200,000 in addition to my 40,000 down payment (2nd loan from family). First loan was a 5 year ARM at 5.5%. This was a hugely risky thing to do as a young kid a year out of college, but I figured that the roommates and the forded saving of a mortgage and 2nd would be like a forced savings plan. My job moved me in 07, and I have rented since then. I was not able to sell since 2008 and the market crashed. I have been extremely lucky in several areas. I have had only 1 month of vacancy since it became a rental in 2007. My ARM has decreased every year and I just got the notice yesterday that I have a 2.75% interest rate for the upcoming year. I have had to do repairs/painting/cleaning for around $1,000 a year. I have family in the area that keeps a good eye on the house. I would not recommend anyone doing what I did. I am aggressively paying off the mortgage and am now down to only $130,000. I just secured a new renter on a 2 year term and am $300 a month cash flow positive which is enough to cover repairs. I would have sold the house last year when prices finally rebounded, but with the low interest rate I decided to continue renting. Being a long distance landlord is not a good thing, but I have been very fortunate. Without family in the area and the rental being in a highly desired gates community, it could have been a disaster and I could have lost a significant amount of money. I would be very happy to answer questions, but I honestly think I am more of something to avoid doing even though everything worked out well.
|
#
¿
Jul 31, 2014 19:38
|
|
|
|
| # ¿ May 8, 2024 13:51 |
|
|
It IS very low and I do not have a property manager. I basically became a landlord by default and really was just trying to cover the mortgage and gain equity while the home values were down. With the recession I was underwater, but always had a renter paying the mortgage. The house values have been very volatile in CA. I purchased the house in 2004 for $240k. In 2007 before the crash my house was valued at $340k. In 2009 it plummeted to only $170k. The house is now valued at around $220k and I think I could get $240k for it in my neighborhood. Mortgage/taxes/insurance is $1,250 a month, $130 a month HOA fees, $60 a month lawn maintenance. I get $1,700 in rent. The good news is that my mortgage payment now decreases $600 in the principle every month. So while I am around $300 (actually more like $250) cash flow positive, it's about $850 monthly to the balance sheet building equity. Last year I threw a large amount at the principle, and that coupled with the new interest rate should decrease my mortgage around $200 a month to $1050, but that will not start until October. That could raise my cash flow to around $450 a month, which would give a much better cushion for any potential repairs/vacancies.
|
|
#
¿
Aug 1, 2014 15:07
|
|
|
I posted some of my numbers a few posts up. I got into it by accident and I have the same long term goal as you. Rental property management of my own small portfolio. I would recommend paying cash for your property... If the market tanks and you don't have a renter it just adds way too much volatility for my taste and exposes your primary residence to bankruptcy. What I decided to do is I have paid off my own home and I have been investing in non-traded REITS. I still fully fund my 401k and invest in REITS after the 401k. This allows me to build capital outside my retirement accounts and put away money that is getting a return and building towards having enough for a cash property. When I have enough saved I will sell the REITS and buy a property outright. That way if it sits vacant for a few month between renter it is significantly less risky.
|
|
#
¿
Aug 8, 2014 21:25
|
|
|
Scrapez posted:Sorry if this has been covered and I missed it. For those of you that own detached single family houses, do you do the yard work on them or do you have the tenants do it? I own a rental in a gated community with an HOA. I add the lawn maintenance in my rent. I charge more for rent so I don't get any letters from the HOA that my grass is dying. Honestly, even if I didn't have an HOA I think I would still do it because if the Tennant kills your lawn, the replacement cost can be pretty big when you are trying to rent it again. This is in Central California where lawns are supposed to be nice all four seasons.
|
|
#
¿
Oct 29, 2014 15:01
|
|
|
EB Nulshit posted:So basically, as long as I live in NYC, owning rental property is not feasible so long as my income is due to an ordinary job, since local property would take me a lifetime to afford, and distant property has its own management issues. Thanks! Look into real estate investment trusts. They allow you to invest in a portfolio of rental properties. Then you can always liquidate your holdings and buy your own when you have enough capital. I became a long distance landlord by default. I married and moved and my house was underwater. I actually screen the renters myself from long distance and have family meet them and give them the keys. It is very risky and a big hassle, but it has worked out since I have family in the area. This is the ONLY way I would ever say long distance landlord can work, if you have family/friends that you trust that can assist in the day to day operations. Even then it is a huge hassle and risk.
|
|
#
¿
Jan 12, 2015 16:41
|
|