Real Estate Investing

R1234

R1234

I wanted to start a thread about Real Estate investments. Specifically, owning rental properties for income.

Lately I have been looking at the unused money in my bank account that is not collecting enough interest to keep up with inflation (the fed says we don't have inflation - Yeah Right!)

So I have been seriously considering using some of that money to buy a multifamily property as an investment and to collect income for years to come.

I just got pre-approved for a mortgage and might make an offer relatively soon on a two family property. But before making an offer I still need to do some due diligence such as request to see proof of rent rolls, recent repairs, maintenance, etc.

I think at this juncture there is a window of opportunity where doing this type thing is feasible - mortgage rates are low, prices are highly negotiable (at least in my area), rents are very attractive.

Guys/gals feel free to share your experiences doing this type of thing. I think it would be educational to see some real life experiences, good or bad .....
 
With the contraction of money supply it`s not a good idea.I have friends with the commercial properties with ghosts and phantoms.Maybe it`s just only in Russia now though.
 
fordewind said:
With the contraction of money supply it`s not a good idea.I have friends with the commercial properties with ghosts and phantoms.Maybe it`s just only in Russia now though.
More...
what contraction of money supply are you talking about?
 
R1234 said:
I wanted to start a thread about Real Estate investments. Specifically, owning rental properties for income.

Lately I have been looking at the unused money in my bank account that is not collecting enough interest to keep up with inflation (the fed says we don't have inflation - Yeah Right!)

So I have been seriously considering using some of that money to buy a multifamily property as an investment and to collect income for years to come.

I just got pre-approved for a mortgage and might make an offer relatively soon on a two family property. But before making an offer I still need to do some due diligence such as request to see proof of rent rolls, recent repairs, maintenance, etc.

I think at this juncture there is a window of opportunity where doing this type thing is feasible - mortgage rates are low, prices are highly negotiable (at least in my area), rents are very attractive.

Guys/gals feel free to share your experiences doing this type of thing. I think it would be educational to see some real life experiences, good or bad .....
More...
Need way more info.
So much depends on the property, the location, and the potential tenants.
If its on the lower end of the rent spectrum, ... Its a pain in the ass. Not worth it.

If you live in a vibrant city with fortune 500 companies operating big offices downtown... buying a nice single family home in the best neighborhood you can get approved for and making it an executive rental is the best way to go. Way more money in it.

Buy the house and tastefully furnish it buying quality articles second hand, (make it very homey); put the electric, gas, water, cable/net, phone......everything in your LLC name....make it 100% move in ready. Accept pets. Then market it as an executive rental.
You can charge 3 times your mortgage, ins, and taxes... again, if you are in a good city.
Require a cleaning service bi-weekly.

3 month minimum contract, you can go less but add 30% to the monthly rate. Negotiate long term leases greater than 1 year.
In the right city, these are in demand, down time will be minimal and your rent comes from a corporate office. After two years and a track record, you'll be replicating it with more properties. If you like this kind of thing.
 
As a general rule you want your rent to add up to be 10% annually or higher of your purchase price. Not sure where you live but a viable long term stable strategy is to target student renters around a large university. This will help keep your units filled even during economic downturns. If you are not a handy person then you are going to need to seek a reliable and trust worthy network consisting of painters, plumbers, electrician and hvac.
 
I currently have 3 rental properties. All single family homes. Two are in nice family towns (good schools) with yearly or multi year leases, the other is weekly/monthly beachfront rental.

Just some random thoughts-
1- NEVER EVER EVER get into section 8 or low income rentals. If you can actually get the tenants to pay on time and in full (not likely), when you finally get them out (usually by court order after months of missed payments and multiple court appointments) your house will be wrecked and filthy beyond your worst nightmares.

2- Find a solid handyman in the area. I don't do any of the painting, plastering, plumbing, etc in my rentals. I have a great semi-retired and honest construction guy who takes care of all the issues/upkeep in my properties.

3- Thorough tenant screening is the most important thing you can do. A solid tenant is priceless. A bad tenant will make you curse the day you became a landlord.

4- Before you bid-
When doing your numbers...factoring costs like vacancy, upkeep, and incidentals...take the worst case scenario then add 25% to it just to be safe. If the numbers still work, move forward.

5- Lowball multiple properties. I bid on probably a dozen properties a year with the intent to buy one.
My personal rule of bidding... If my realtor doesn't get cursed or laughed at by the listing agent when presenting my offer, then I started my bidding too high. (Thankfully my realtor has bought/sold a fortune worth of properties with me and she knows the routine and is a bulldog when it comes to her job). You can always raise your bid later if you really want the property.

6- Rental Contract with Late fees-
Make sure you have a solid legal Rental agreement with clear cut late fees for tardy monthly payments. I give every one of my tenants one "free pass" on late payments. After that I make clear that the late fee will be enforced in full.

Have to run now. Great thread. Real estate is a passion of mine.
Good luck to all.
 
volente_00 said:
As a general rule you want your rent to add up to be 10% annually or higher of your purchase price. Not sure where you live but a viable long term stable strategy is to target student renters around a large university. This will help keep your units filled even during economic downturns. If you are not a handy person then you are going to need to seek a reliable and trust worthy network consisting of painters, plumbers, electrician and hvac.
More...

That 10% is a good rule of thumb. A friend who does local RE investing said the same thing.

So I made an offer on a multifamily building. After a bunch of negotiating I finally got it down to a price which makes the deal worthwhile. Inspection is tomorrow and hopefully contracts will be drawn up in the next week.

Slightly apprehensive but excited at the same time. But I feel it is prudent over the long term as a diversifier and inflation hedge - I currently have most of my assets in liquid markets such as stocks, etc.
 
Just curious....How many units and what's the rent/unit. What year was it built? Tenant history (longest/shortest)? City(?) if you feel like sharing.
 
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