Rental Houses

[bowhntrmatt]

I only have one rental now, and I bought it just right before Covid. I haven't been able to find anything else that comes close. The only way I can find to make one really cash flow is to put like 40% or more down. Taxes and insurance are just as big of a factor as interest rates. I'm really shifting more toward stock market investing and may even sell my one rental and just move the money into stocks.

[mooch]

I only have one rental now, and I bought it just right before Covid. I haven't been able to find anything else that comes close. The only way I can find to make one really cash flow is to put like 40% or more down. Taxes and insurance are just as big of a factor as interest rates. I'm really shifting more toward stock market investing and may even sell my one rental and just move the money into stocks.

This is exactly what I’m doing also. I got in to real estate to diversify from the stock market and as part of our retirement plan but I can’t find any real estate to compete with even modest stock market returns.

[HogHunter34]

Yeah I purchased all of mine 3 years ago. They do really well with zero vacancy in the past 3 years. If I go off of purchased price I net around 7.5% return but If I go off of current market value I net about 5.5-6% return. Still not bad returns in comparison to dividend payouts on most stocks that are not higher risk/volatile. Keep in mind the home value always seems to go up for the most part with less volatility than stock value. But I agree right now in terms of higher market value on homes, higher interest rates, increased price on property tax and insurance the cap rates are tougher to hit where I'm at.

[bowhntrmatt]

Yeah I purchased all of mine 3 years ago. They do really well with zero vacancy in the past 3 years. If I go off of purchased price I net around 7.5% return but If I go off of current market value I net about 5.5-6% return. Still not bad returns in comparison to dividend payouts on most stocks that are not higher risk/volatile. Keep in mind the home value always seems to go up for the most part with less volatility than stock value. But I agree right now in terms of higher market value on homes, higher interest rates, increased price on property tax and insurance the cap rates are tougher to hit where I'm at.

If I sold mine now, my cash-on-cash return of the 3-4 years i've owned it would be north of 150%. The house I paid 225 for was worth over 300 like 4 months after I bought it, and still is today. That's what has me thinking of selling. How much higher can a 1100 ft tract home go?

[toledo]

If I sold mine now, my cash-on-cash return of the 3-4 years i've owned it would be north of 150%. The house I paid 225 for was worth over 300 like 4 months after I bought it, and still is today. That's what has me thinking of selling. How much higher can a 1100 ft tract home go?

How much less valuable can our dollars become? Skys the limit.

I got up to 29 financed rental units at one point. Been selling off and using proceeds to pay off and keep the best ones in an effort to maintain cash flow. Prop taxes destroyed my monthly numbers.

Rents are starting to catch back up.I just did increases of $100-$200 per house and most are renewing.

Maybe ill start buying again in a couple years if the numbers get right.

[DFA]

Im about to rent out my house, and some very good info here. Glad I saw this

[HogHunter34]

If I sold mine now, my cash-on-cash return of the 3-4 years i've owned it would be north of 150%. The house I paid 225 for was worth over 300 like 4 months after I bought it, and still is today. That's what has me thinking of selling. How much higher can a 1100 ft tract home go?

Yes no doubt if you are looking for overall growth return on principal then yes that's a good idea. Same for stock market on growth of principal will normally beat typical years on home value appreciation as the past 1-2 years has been an atypical situation. However, on %return for income stream at 6-7% is not bad coupled with appreciation on home value each year in comparison to stock dividend payout. Some stock or REITs do pay a good dividend payout % but typically when they are hitting double digit payouts they are higher risk and more volatile. I also have REIT investments on the side that are in the 4-6% payout on dividend but the past year they have reduced in value due to market situation for REITs.

[mooch]

Yes no doubt if you are looking for overall growth return on principal then yes that's a good idea. Same for stock market on growth of principal will normally beat typical years on home value appreciation as the past 1-2 years has been an atypical situation. However, on %return for income stream at 6-7% is not bad coupled with appreciation on home value each year in comparison to stock dividend payout. Some stock or REITs do pay a good dividend payout % but typically when they are hitting double digit payouts they are higher risk and more volatile. I also have REIT investments on the side that are in the 4-6% payout on dividend but the past year they have reduced in value due to market situation for REITs.

We have a very similar mindset with rentals. I also compare them to dividend paying stocks. But when the numbers are close (as they are now) I feel that the liquidity of stocks have an advantage over real estate. We’ve also been fortunate to ride the AI boom over the past 2-3 years which has far outpaced what real estate would’ve done. That will eventually buy us more real estate when the next opportunity that checks all of our boxes pops up

[HogHunter34]

We have a very similar mindset with rentals. I also compare them to dividend paying stocks. But when the numbers are close (as they are now) I feel that the liquidity of stocks have an advantage over real estate. We’ve also been fortunate to ride the AI boom over the past 2-3 years which has far outpaced what real estate would’ve done. That will eventually buy us more real estate when the next opportunity that checks all of our boxes pops up

Sounds like a good plan. I haven't dabbled in AI stock and rarely buy single stock. I like ETFs and I've done quite well in these. I think when it comes to real estate your biggest bang for the buck is Purchase Price. If you can get a heck of a deal off the market or foreclosure situation it's a win win typically. Your rental rate will still be per market basis with a below market buy and with some minor upgrades you can turn that home in 3-5 or wait out a sellers market with multi-offer situation and come out on top.

[mooch]

Sounds like a good plan. I haven't dabbled in AI stock and rarely buy single stock. I like ETFs and I've done quite well in these. I think when it comes to real estate your biggest bang for the buck is Purchase Price. If you can get a heck of a deal off the market or foreclosure situation it's a win win typically. Your rental rate will still be per market basis with a below market buy and with some minor upgrades you can turn that home in 3-5 or wait out a sellers market with multi-offer situation and come out on top.

Yep, you nailed it!

OP - sorry to derail the thread from your original question. It’s been good convo though.

[Archereject]

I love the AC filter change idea. Is it in the lease?

Yes it’s in the lease.
Of course some one is home when we change it.
I don’t go in anyones house unless they are home and I do 90% of repairs or maintenance for the most part.

[chrisk]

My wife has someone ask her all the time about buying property to rent around Rockport. The properties don’t stay for sale long!

[sasqy]

Screen your own Tenants!
You’re not allowed to discriminate, but you can figure out who doesn’t pass the smell test. Just tell them they didn’t quite make the cut, due to Yada Yada.

[RascalArms]

Ridiculous increases in both property taxes and insurance premiums have all but depleted our rental income recently. We could try to offset some of the costs by increasing the rent but it's a gamble. We've been very blessed with above average tenants that pay on time and take care of our property. I'm of the mindset that THAT goes a long way nowadays!
You are always just 1 bad tenant away of being tremendously upside down on a trashed out damaged house and major repairs. 🤨

[toledo]

Ridiculous increases in both property taxes and insurance premiums have all but depleted our rental income recently. We could try to offset some of the costs by increasing the rent but it's a gamble. We've been very blessed with above average tenants that pay on time and take care of our property. I'm of the mindset that THAT goes a long way nowadays!
You are always just 1 bad tenant away of being tremendously upside down on a trashed out damaged house and major repairs. 🤨

Im with you and have always had that mindset. A months vacancy can eat up any increase you might try to put in.

But, I encourage you to shop the rents of the comps in your area. I try to stay cheaper than the competition while still following the market upwards.

Here's the actual text I was sending people recently and getting an excellent renewal percentage.

"Checking in to see if you would you like to renew your lease? Unfortunately, with property tax and insurance increases, I have to raise rent to $1570/ month. A quick look around shows that comparable homes are renting for around $1800.
If this is ok, please let me know what email address to send the renewal to."

I also try to treat my tenants like my customers. Plenty of respect and excellent/ fast communication. They know jumping ship to another property will likely be a downgrade in service.