Real Estate Investing: Why invest in rental properties instead of the stock market? |
- Why invest in rental properties instead of the stock market?
- Frustrated with Lack of Multi-Families. Should I change my criteria?
- BP Changing for the worse?
- Day jobs/careers
- How did you start?
- Are we in a bubble?
- Turning around a money losing property-what would you do?
- Looking to house hack.
- Would you ever buy a rental property located in a flood zone?
- Cozy vs. TurboTenant vs. Zillow
- Buyers market in another 6 months?
- Cashout refinance question
- Can a refinanced mortgage be transferred?
- Renting out a mobile home for cash flow
- Refinance Question: Does this look good? No one seems to give me 2.75% with 0 points
- Opinions on first potential RE investment
- Am I thinking in the right direction?
- With our current economic situation do you think raw land prices will go down in the US?
- Best strategy to use heloc?
- International Investing and Flipping
- Best way to begin
- Chicago Trump Tower Price
- How to inherit without capital gains ??
- tools for determining how to negotiate/determine cash flow
| Why invest in rental properties instead of the stock market? Posted: 04 Aug 2020 05:28 PM PDT I've been considering investing in some rental properties, but after doing the math I don't see how they're worth it... but I'm assuming I'm missing something. If a good return on your rental property investment is about 10% (this is just what I've read a few places online) and the building appreciates at roughly 4% per year, your investment has made you about 14% per year. If you invest that same money into safe stocks/ETFs with 3-4% Div/yield and the market increase by around 10% each year you're essentially making the same amount of money with a lot less work and greater diversification in your investment. So what am I missing? Is the normal return on rental properties actually higher than that 10%, or is it something else? Thank you for any insights or feedback! [link] [comments] |
| Frustrated with Lack of Multi-Families. Should I change my criteria? Posted: 04 Aug 2020 06:46 AM PDT Hi All, I'm a first time home buyer and newbie investor. I've been looking for a Multi-Family to owner-occupy, and I don't have much money for renovations, so I'm looking for something mostly turnkey. However, I haven't been able to find much in my area in my price range (less than $400K). In 7 months I've written one offer and lost by $5K... That said, I'm thinking about switching it up in a couple months if this keeps up. If so, what would be your recommendations? I was thinking SFH in the $100-$250K range in a good school district in the burbs? It seems like SFH's in that price range offer better cash flow compared to the $300K+ in the city. Just want take action... [link] [comments] |
| Posted: 04 Aug 2020 07:01 PM PDT I've been a BP member for years now and I feel like I once used to regard it as a great place to network share ideas and discuss strategy by and large. When I use the service now however, it seems as if it's filled with a lot of polarizing political opinion, click baity posts, and overall repetitive posts. Am I alone in this? Maybe I've just been on it for too long so I'm seeing the same stuff over and over where as when I first joined maybe I missed all of these things due to the newness. [link] [comments] |
| Posted: 04 Aug 2020 09:06 PM PDT Have most people worked in real estate prior to getting involved in real estate investing? Anyone have a totally different career (like a doctor, lawyer, etc.) and then get into re investing? Did you leave your day job to manage your properties full time or do you still keep it? [link] [comments] |
| Posted: 04 Aug 2020 08:01 PM PDT Hello to everyone seeing this. You guys might hear this a lot, but Im wondering how you guys started off in real estate? I'm an engineering student at the University of Wisconsin-Madison, but I am also really interested in real estate. Id like to start buy buying, upgrading, and reselling a house, but I'd like to have more ideas on how people generate revenue through real estate. I understand that the umbrella term "real estate" covers a lot of methods. So I'm into hearing them all. I'd love it if you guys told me how you started off with your first purchase, and then your journey from there. Thanks in advance. [link] [comments] |
| Posted: 05 Aug 2020 01:45 AM PDT I'm currently getting a home that should have go up in value and i got a low interest rate. I'm wondering if now is a smart time to buy or a terrible one. I know that it's a sellers market all the way. [link] [comments] |
| Turning around a money losing property-what would you do? Posted: 04 Aug 2020 01:37 PM PDT tl;dr: how do you get C/C- class tenants to stick around? This turnover is killing me! I screwed up. I bought a money losing property. How I got here isn't relevant. What I do now is. I just bought this place in December and it's a smaller market so it won't be easy to unload it on the next sucker. I'm stuck with this thing for at least a few years. So I'm looking for ideas on how to turn it around, so that it at least breaks even. Mostly, this means putting a tourniquet on the turnover. I am making this post extra detailed in the hopes that it will help others evaluate properties and educate people about the real expenses that go into this kind of purchase. Location: SE Texas (aka Golden Triangle). I live in the Northeast. Property: 22 units in 2 buildings, mostly 2 bed/2 bath, built early 80s. C class at best (my major screwup-should not have bought C class but it's too late now) Rents are in the $600-800 range, a bit below market. The property has pretty low vacancy, but fairly high turnover. Mostly working class people, a couple of Section 8 units. Management: What I consider to be the best available. Responsive, honest, and experienced with the property. They have their own crew for labor and do a good job as far as I can tell, at good rates. This was actually the PM's parent's property, and they wanted to sell to retire. I bought it off market with the agreement that he would stay on as PM. He was up front about the history and challenges of the property. Beat me up all you want for getting involved in this, but I went in with what I thought were open eyes. I never expected this to be a home run, it's just turning out worse than I thought. Purchased in December for $770k with 20% down, financed through a local credit union. Amortized over 25 years, loan is due 12/2025 Financials: I've taken in about $95,500 in rent this year. I've spent about $97,600 this year, for a loss of $2100. Not the end of the world, but I am looking at a $20k property tax bill in a few months and that is really freaking me out. I can pay it, but I can't lose $25k on this property for very many years in a row before I run out of cash. Also, I had planned on actually, you know, making money and I would very much like to do that. Where's the money going? These numbers are all YTD 1/1-7/31.
(numbers do not exactly add up to $97,600 due to rounding) Careful readers will note that my PM has netted about $16,500 on this place, or ~17% of my gross income. His fee is 7%, plus a commission on new leases, a smaller commission on re-leases, and a markup on services. From what I can glean on these forums and elsewhere, this is about the right ballpark for a class C property like this. But if I can reduce turnover, I can reduce his cut dramatically. Occupancy: If it were fully rented 100% of the time and all of my tenants had paid every dime, I would have netted $110k in rents. My actual rental income was $90k. So I am running at about 82%. My PM's software (buildium) doesn't seem to have a way for me to easily calculate how much of that 18% was vacancy losses vs tenants actively not paying me (we've had a few). Currently I have only 1 vacant unit. Known capital expenses: This property is likely going to need a new roof in the next 5ish years, that could be $70-$90k after we add in some fascia work, gutters, and replace a few rooftop AC units while we have them pulled. Poison pill: My PM charges a 6% agent's commission if I sell the property. So even if I can get back what I spent (unlikely), I'll still have to cough up $46k in commissions. Oh, and this was a 1031 exchange so I would have to pay capital gains on whatever minimal amount of cash I am able to get back out of it. So what would you do to turn this around? I've looked at raising rents, and on some of the units that have just been renovated, we might get closer to the $800 end of the spectrum. But given the location and type of property, I'm not going to get too much higher. Hopefully I can average 2-3% annual increases over the next few years just to boost my eventual selling price. With a water bill of $2k some months, I tried to submeter, but it didn't work out. I don't love the idea of RUBS since it will cause friction among the tenants and I already have an issue with turnover. I'm pushing my PM to take more Section 8 tenants, but that's not necessarily going to solve my issues. I've talked to my PM about adding amenities or upgrading to nicer appliances when we renovate units, but he says in his experience it doesn't help with higher rents or reduced turnover. If I could get these units to stop turning over so fast, and get the kind of tenants who didn't leave an average of $3500 in damage every time they move out, I would be in a very different position. Still not killing it, but at least on track to cover my taxes and maybe pocket a few bucks. /u/hobbesNYC, I'd be especially interested in your thoughts. [link] [comments] |
| Posted: 04 Aug 2020 06:00 PM PDT Would a bank allow me (with little income) to buy a house and get co-signed with my parents. My parents would not be living there or even in the same state for that matter. I am 19 and have just 1 year of credit history. The houses in my area are very affordable 75k-125k but rent is pretty high because it's a college town. I can clarify more details just let me know what your thinking. [link] [comments] |
| Would you ever buy a rental property located in a flood zone? Posted: 04 Aug 2020 12:44 PM PDT Hi, So I found a nice 4 unit that I really liked that just came back on the market, it generates some excellent returns(~27% COC), B+ Area with strong rents, and I was about to place an offer on it today. Just happened to notice it's in a flood zone(partial) RE agent mentioned to me and aside from having to get flood insurance and preparing for worst case scenario anything else I should know? Would you ever consider placing an offer on a 4 unit rental property in a flood zone? Not sure what other info to include just trying to keep this post straight to the point. Thanks [link] [comments] |
| Cozy vs. TurboTenant vs. Zillow Posted: 04 Aug 2020 03:13 PM PDT What do you guys prefer? Looking to buy my second property, the first one is currently being managed by a property manager, but I'd like to be fully in charge this time. [link] [comments] |
| Buyers market in another 6 months? Posted: 04 Aug 2020 01:27 PM PDT Assuming we are saving an average of 2k / month, new home buyers or rental buyers will be more in another 6months? If we are hitting a buyers market and the interest rate & property rate will be high? Can we see a boom in real estate market in another 3-6months? [link] [comments] |
| Posted: 04 Aug 2020 03:48 PM PDT Is there any way to get around the 6-month waiting period from purchase to apply for a cash out refi? I am planning to purchase a home for 60k cash that has an assessed value of 110k. I would like to do a cash out refi to purchase another home but most banks are telling I need to wait 6 months. [link] [comments] |
| Can a refinanced mortgage be transferred? Posted: 04 Aug 2020 03:45 PM PDT Are there any " assumable" cash out refinance mortgages? I would like to do a cash out refinance and then transfer the remaining mortgage balance to an LLC. [link] [comments] |
| Renting out a mobile home for cash flow Posted: 04 Aug 2020 09:18 PM PDT Is it wise to buy a mobile home around 170k ( I live in CA), put 20% down. I plan to get a 3 bedroom, live in 1 room rent out other 2 rooms for some cash flow and basically live there for free? Or should I save up for a couple more years and get a regular house? [link] [comments] |
| Refinance Question: Does this look good? No one seems to give me 2.75% with 0 points Posted: 04 Aug 2020 09:09 PM PDT So I have reached out to a few brokers/companies and I have a few quotes back. I cant seem to get my primary home (SFH) to go to the 2.75% with no points that some are proclaiming here. I wonder if it's just me, maybe my lenders suck? Anyways, Im currently at 222,000 owed on the house valued 470,000. Been there for 7 years. Currently at a 4%. I want to get this one down though to use that *saved money* to work towards a 3rd property (second investment one). My current investment property is at 4.75 and I cant seem to find anyone that will get me below 3% on it... I figured my primary for sure would be possible, but this is the best I find? This is a crappy one I am guessing? Thanks in advance for any insight *see image* : https://ibb.co/qnTgnm0 [link] [comments] |
| Opinions on first potential RE investment Posted: 04 Aug 2020 08:53 PM PDT 3 Unit Property 10 minutes from a college Total Value: $680,000 Mortage: 20% Down with estimated interest at 3% (still talking with banks) Vacancy Rate: 10% Property Management: 10% Average rent per unit: $1800 - $2,000 PITI: $2700 per month CoC : 6%-10% My thoughts: As it is my first rental property that I am interested in purchasing, it does look nice in my opinion. Even though there is low CoC, my assumption is that since it is near a college, I can easily keep all the units filled. It is out of my state so I will have a property manager taking care of it. Some other questions: If my family member who goes to this college lives there, can I get an FHA loan? [link] [comments] |
| Am I thinking in the right direction? Posted: 04 Aug 2020 04:53 PM PDT I would like some input on whether or not I am thinking along good lines or if I am way off the mark. My son and I would like to get into some low level home rehabs for resale and/or hold for rentals. I have a full time decent paid day job I plan to keep unless this takes off several years down the road. He is currently studying up to take the exams for getting a real estate licence but it is mostly so we can gain access to the MLS and possible other contacts he might garner from hanging his licence with a broker. I am very handy and have a wide range of tools that between the two would allow me to do just about any work on a house that does not require a licensed contractor by my region. So I would only need to contract out the mechanical trades. I will also be the money end. The plan is to get him setting up and learning what he can in the local market and how to find decent deals and what we need to do to secure them and for me to sock away absolutely as much cash as possible for the next year or so to build up some initial capitol. We plan to start small, around 50k-100k home somewhere in our local area. I hope to have about 20k-30k in cash by the time we get started. I also have a 750+ credit score and about another 20k in available balance on Credit Cards. What we were thinking is that we spend from now until mid next year loading up on knowledge and capitol and then see if we can take advantage of what I believe will be a high inventory period on the market next year as all this Covid19 forbearance and other issues start to unravel. Start an LLC to put the properties under and organize our profit sharing. Use the cash and a hard money loan to purchase a home that would be in the cosmetic range of needs and then do the repair work on the credit cards. We would resell the first couple houses until we can get enough to get into something worth renting out and then hold onto that one. Rinse repeat to gain more capitol. I don't want to jump into anything over our heads and we only plan to do maybe a couple a year tops for the first several years until things get rolling then we will reconsider our position. Thoughts? Thanks for reading if you got this far. [link] [comments] |
| With our current economic situation do you think raw land prices will go down in the US? Posted: 04 Aug 2020 10:54 AM PDT I want to start a community of riverside get-away-cabins and I am wondering if I can expect raw land prices to go down. It feels like it has already started but I wanted to see if anyone who was in the last bust cycle had any input. [link] [comments] |
| Posted: 04 Aug 2020 11:21 AM PDT Thoughts on peoples strategies when it comes to using funds from heloc? Have it fully fund a BRRR? Use it as a 20% down payment for a buy/hold? 20% down on a flip? Buy a rehab/flip project outright? I'm in the process of getting our heloc and want to get people's opinions or experiences on best practice. Our heloc will be about 100k [link] [comments] |
| International Investing and Flipping Posted: 04 Aug 2020 12:19 PM PDT Does anyone have experience investing or flipping properties abroad? Where'd you do it and how'd it go? [link] [comments] |
| Posted: 04 Aug 2020 05:46 PM PDT In the past I wanted to invest in rental properties as an investment, but I'm not certain that's the best route for me. To provide some context, I live in the Midwest where the CoL isn't high. I have a good paying job that keeps me busy about 50-55 hours a week, and not incredibly skilled to maintain or repair a home myself. Over the past couple of years I've begun investing in the stock market and I'm looking to diversify a bit, likely through real estate. I have great credit, and I think that real estate makes the most sense to me because of leverage. I think the better opportunity for me is to buy a home, pay someone to do the repairs, and then flip it for profit since it wouldn't require my time or skill to get the work done, though I know profit would be lower as a result. Would love advice from some people with experience doing this. I'm not sure of the best way to find homes. Are there auctions and foreclosures that will sell the home and allow the buyer to finance it rather than paying cash. I don't have any plans to quit my day job, this would be something that ideally I'm flipping a few a year in addition to my job. Maybe in time it grows beyond that, but no expectation for that in the short term. [link] [comments] |
| Posted: 04 Aug 2020 01:57 PM PDT I've been going on Zillow recently, and I've seen that Trump Tower condos are selling for extremely cheap. There's a condo on there for just $150,000. With interest rates as low as they are, I feel like I would be paying way less in interest / mortgage payments than in rent in a comparable apartment in River North. Is there something I'm missing? I get that it's a Trump property, which can be controversial. But a house is a house, right? EDIT: Thank you everyone! You are all correct. HOA is 2k+, which is ridiculous. [link] [comments] |
| How to inherit without capital gains ?? Posted: 04 Aug 2020 05:25 PM PDT Parents are getting older and thinking about what to do with the beach house we have all enjoyed for 30 years now. But as you can imagine 30 years ago versus now in a beach waterfront location property is worth a LOT more now. How can they "give " it to the three kids without us getting nailed with capital gains. Legally of course. [link] [comments] |
| tools for determining how to negotiate/determine cash flow Posted: 04 Aug 2020 11:01 AM PDT Are there any tools for determining what homes in the area sold for when negotiating a buying price? I am looking at a single family home. How to negotiate/determine cash flow from data? I am fairly new and just trying to learn as much as I can. Thanks [link] [comments] |
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