Making Money (by Patch [MD]) Jul 24, 2018 4:35 PM|
Making Money (by Festus [GA]) Jul 24, 2018 4:42 PM
Making Money (by NE [PA]) Jul 24, 2018 4:47 PM
Making Money (by razorback_tim [AR]) Jul 24, 2018 4:49 PM
Making Money (by DJ [VA]) Jul 24, 2018 5:14 PM
Making Money (by bet [MA]) Jul 24, 2018 5:22 PM
Making Money (by NE [PA]) Jul 24, 2018 5:25 PM
Making Money (by Hoosier [IN]) Jul 24, 2018 5:31 PM
Making Money (by Jeff [OH]) Jul 24, 2018 5:32 PM
Making Money (by Jim in O C [CA]) Jul 24, 2018 6:13 PM
Making Money (by Tom [FL]) Jul 24, 2018 6:37 PM
Making Money (by Old Tex [TX]) Jul 24, 2018 6:40 PM
Making Money (by Vee [OH]) Jul 24, 2018 7:06 PM
Making Money (by GKARL [PA]) Jul 24, 2018 7:14 PM
Making Money (by Kurt [MI]) Jul 24, 2018 7:35 PM
Making Money (by fred [CA]) Jul 24, 2018 7:57 PM
Making Money (by Deanna [TX]) Jul 24, 2018 8:06 PM
Making Money (by tbird [KY]) Jul 24, 2018 8:16 PM
Making Money (by AllyM [NJ]) Jul 24, 2018 8:17 PM
Making Money (by Jason [MI]) Jul 24, 2018 8:20 PM
Making Money (by tbird [KY]) Jul 24, 2018 8:43 PM
Making Money (by Terence [MD]) Jul 24, 2018 8:45 PM
Making Money (by BRAD 20,000 [IN]) Jul 24, 2018 9:52 PM
Making Money (by Roy [AL]) Jul 24, 2018 11:24 PM
Making Money (by Newish gal [OR]) Jul 25, 2018 1:23 AM
Making Money (by WMH [NC]) Jul 25, 2018 4:46 AM
Making Money (by S i d [MO]) Jul 25, 2018 5:11 AM
Making Money (by David [NC]) Jul 25, 2018 5:15 AM
Making Money (by AllyM [NJ]) Jul 25, 2018 6:01 AM
Making Money (by Roy [AL]) Jul 25, 2018 6:09 AM
Making Money (by bet [MA]) Jul 25, 2018 6:17 AM
Making Money (by Vee [OH]) Jul 25, 2018 7:34 AM
Making Money (by myob [GA]) Jul 25, 2018 7:46 AM
Making Money (by plenty [MO]) Jul 25, 2018 7:49 AM
Making Money (by myob [GA]) Jul 25, 2018 8:36 AM
Making Money (by Robert J [CA]) Jul 25, 2018 12:24 PM
Making Money (by Pmh [TX]) Jul 25, 2018 3:13 PM
Making Money (by Iosid [CA]) Jul 25, 2018 8:36 PM
Making Money (by cjo'h [CT]) Jul 25, 2018 11:45 PM
Making Money (by cjo'h [CT]) Jul 25, 2018 11:54 PM
Making Money (by Patch [MD]) Jul 26, 2018 6:13 PM
Making Money (by Andrew [PA]) Jul 27, 2018 6:16 PM
Making Money (by Chris [CT]) Jul 31, 2018 1:21 PM
Making Money (by Patch [MD]) Posted on: Jul 24, 2018 4:35 PM
So here's a silly question - how do LLs make money renting SFHs? Seriously, I don't see it in the numbers. Unless it is used as a sort of retirement plan, and the benefit is dependent exclusively on a significant increase in equity over time, it's not making sense to me. Pulling a house off Zillow, a $200,000 house, with 20% down, will have a mortgage of $1074/mo. But Zillow gives an estimated rental cost of $1250/mo. At that rate, you would be lucky to earn back your down payment before you die, forgetting about ever making a profit from rent. So, unless you can get a house significantly below market value, or pay cash for it, I don't see how money can be made. What am I missing? --74.96.xxx.xx
Making Money (by Festus [GA]) Posted on: Jul 24, 2018 4:42 PM
All are ways to make money in real estate. --24.125.xxx.xxx
Making Money (by NE [PA]) Posted on: Jul 24, 2018 4:47 PM
You're running #'s on the wrong house. --50.32.xxx.xxx
Making Money (by razorback_tim [AR]) Posted on: Jul 24, 2018 4:49 PM
What NE said. --70.178.x.xx
Making Money (by DJ [VA]) Posted on: Jul 24, 2018 5:14 PM
You're also mistaken in thinking that Zillow has good information.
Money is made when you buy it. You need the worst house on the street, with the right things wrong, in a good, working-class neighborhood. Not retail price.
Need to know how to squeeze the best, appropriate improvements out of a budget.
And a lot more.... --68.10.xxx.x
Making Money (by bet [MA]) Posted on: Jul 24, 2018 5:22 PM
One roof, one foundation, need as many units as possible under that one roof. Why would anyone just buy one unit under one roof. --108.20.xxx.xxx
Making Money (by NE [PA]) Posted on: Jul 24, 2018 5:25 PM
Bet: math --50.32.xxx.xxx
Making Money (by Hoosier [IN]) Posted on: Jul 24, 2018 5:31 PM
I am getting $1,100 a month for a house I paid $72,000 for...so not sure I'd trust the Zillow info. --99.92.xxx.xxx
Making Money (by Jeff [OH]) Posted on: Jul 24, 2018 5:32 PM
Every market is different. Research other houses and regions for better deals. I could buy all day long $65k houses that rents for $750. Thatís not even a deal...just retail. --107.10.x.xxx
Making Money (by Jim in O C [CA]) Posted on: Jul 24, 2018 6:13 PM
My tenants have bought all my homes for me. On one the first rent was $410. Todayís rent is $2550. My last tenant was there 6 years and paid over $135,000 in rent.
Another the first rent was $600 and today it is $2850. --10.0.xxx.xx
Making Money (by Tom [FL]) Posted on: Jul 24, 2018 6:37 PM
Patch of MD, you are correct that house in your example is not the house to purchase for a rental. PLUS several realtors will tell you oh the numbers will work for the house. NO it will not.
Like NE of PA says its the wrong house. You need to continue to look for the right house. And be patience and you will find it. --99.56.xx.xx
Making Money (by Old Tex [TX]) Posted on: Jul 24, 2018 6:40 PM
Patch, you got to know how to buy houses right. I didnít know this when I bought my first house 15 years ago, so I was only clearing $250! A month the first year. I quickly figured it out. The next few houses I bought I paid cash, ( borrowed from dad ) all around 70-75 k, I instantly refinanced out at 91 days, effectively getting a 100 percent loan. I ended up with many houses that I had 0 cost in. Those houses I began clearing about $400. After several years I had enough cash to buy one or two a year for cash. Those houses I was clearing $1000 per month . I havenít had a job myself since prior to buying the first rental, my wife retired in her 40s , 4 years ago. Now we are clearing on rentals in a couple months , what normal working folk make in a year. So yes. One can make money on rentals. --75.141.xxx.xxx
Making Money (by Vee [OH]) Posted on: Jul 24, 2018 7:06 PM
Study your area closely, the example you gave will surely not work - but many of us have printing presses in the basement of the empty places! Just kidding... --76.188.xxx.xx
Making Money (by GKARL [PA]) Posted on: Jul 24, 2018 7:14 PM
I had this question myself at one point and that extended to duplexes as well. I didn't see how folks could make money so I focused on MFH. Many folks here own SFH's and it's been an education for me--so much so that I've been tempted to pick a few of them up. I've not pulled the trigger though and have stayed in the MFH realm. Like others have said, it's all about the numbers. In my area there are SFH's one can pick up for $ 50K and rent for $ 900+ a month. If you're not leveraged, that will net you $ 500+ a month. I would avoid being leveraged on that sort of purchase if I could. There's no one way to go about this. It gets down to how one prefers to do it. My preference is MFH mainly because that's more efficient for me from a management standpoint. --209.122.xx.xxx
Making Money (by Kurt [MI]) Posted on: Jul 24, 2018 7:35 PM
Appraisals give market rates. Market rates are what owner-occupants pay.
Investors need to buy well below market appraisals. They must hold out for a deal as all sellers won't agree to it.
Otherwise you are right. Landlords wouldn't make money or they'd have to charge so much in rent people would just buy. --107.5.xxx.xx
Making Money (by fred [CA]) Posted on: Jul 24, 2018 7:57 PM
Patch, I'm sorry, but if you're expecting to make money right off the bat, you are fooling yourself.
Look at fruit trees you plant today. Can you expect fruits in a month? a year? no way.
It takes time for rents to catch up with costs - fixed and variable.
The secret is "equity", well it's not really a secret. Equity will grow faster if you have good appreciation, and that is a function of your location.
You need a class in financing. --99.59.x.xxx
Making Money (by Deanna [TX]) Posted on: Jul 24, 2018 8:06 PM
I buy a house for about $5-$10k and put another $10k-$20k in. Then I rent it for $450-$550/month. I gross my money back in about three, four, five years.
Then I do that twenty or thirty times.
Making Money (by tbird [KY]) Posted on: Jul 24, 2018 8:16 PM
Bought house at $10k. Spent $10k.
$20k all in.
Do it 10 times.
$200k all in.
Instead of $1250/mo income like your example... $7500/mo. --98.93.xx.xxx
Making Money (by AllyM [NJ]) Posted on: Jul 24, 2018 8:17 PM
You don't buy a 200 K house. My dad bought his first duplex for very little as it had a fire and he fixed it up. Other duplexes were from people trying to flee the neighborhood. One was from a son in law whose wife had died and the mother in law lived upstairs. Two fourplexes were from people who couldn't make it work and didn't know how to make improvements. One was from a widow who wanted to move elsewhere. --73.178.xxx.xx
Making Money (by Jason [MI]) Posted on: Jul 24, 2018 8:20 PM
I just bought a sfh on july 3 for 63k put 2k into it now worth low 90s. I rent it out for 900 a month minus 150 for taxes 50 insurance 60 water bill.. Positive cash flow 640..
Bought one yesterday sfh 3 bed 1 bath 60k. Need about 3k to fix. Will go for 800 a month.. 115 taxes. 45 insurance. Positive cash 640.. House will be worth around 75k. Even if used a loc at 5% that would be around 250 a month in interest.. Still making about 400 a month.. --107.77.xxx.x
Making Money (by tbird [KY]) Posted on: Jul 24, 2018 8:43 PM
As a disclaimer...that was one of my better deals --98.93.xx.xxx
Making Money (by Terence [MD]) Posted on: Jul 24, 2018 8:45 PM
There are few areas of MD where using an FMV 200k home is going to be a good rental. You can buy a fixer and build in your sweat equity. Time takes care of some marginal investments. However there aren't too many areas of MD where single family homes rent for 1250. Don't pay much attention to zillow. --174.204.x.xxx
Making Money (by BRAD 20,000 [IN]) Posted on: Jul 24, 2018 9:52 PM
OK, Iíll say it:
Renting does not work everywhere.
Unless you own it free and clear or bought it super low. Congrats on seeing that.
I see examples in large cities where the market rent is lower than a monthly mortgage payment so people rent rather than buy.
All real eatate is local. EVERYTHING depends on YOUR local market or the market you choose to work in. The numbers have to be right. And it takes more margin than most LLs calculate.
NE hit it on the head. The house you describe is NOT a good rental. That $200k house needs to bring in $2000 rent to break even after taxes, ims, maint, and vacancy. NEVER trust Zillow. Check around and see if any homes will rent for that. Do NOT buy based on realtor advice. Get real data.
Learn how to buy at a discount. I never pay list price for houses. And learn how to buy with nothing down so the return on investment is higher and you can buy more houses.
And NEVER plan on appreciation. Thatís how people got burned im the bubble. They bought HOPING the value would go up. Be happy IF it happens. Every property must be profitable on itís own from day one.
Multis make a lot of sense for beginners. Right now in my area an apt actually rents for MORE than my SFHs. Crazy!
Education is key.
Making Money (by Roy [AL]) Posted on: Jul 24, 2018 11:24 PM
Learn how to buy houses for $5K. It is not as difficult as you may think it is. --68.63.xxx.xxx
Making Money (by Newish gal [OR]) Posted on: Jul 25, 2018 1:23 AM
Portland/multnomah county property taxes = noooo way to find great deals. Gotta be from $$$ out of USA to score here. --172.58.xx.xxx
Making Money (by WMH [NC]) Posted on: Jul 25, 2018 4:46 AM
Landlording is often a "get rich slow" business. And we actually don't care about appreciation, it's all about the income for us.
Our first few purchases were very very bad deals. But we learned...For this area, we won't pay more than $75k/unit and they will rent for $1100-$1200 (more sometimes but not enough people here with that kind of money.)
Right now, prices are back in a bubble so we are not buying, we are concentrating on keeping existing units maintained and updated so that we can command as much rent as possible. But the deals are still out there if we were really looking. --50.82.xxx.xx
Making Money (by S i d [MO]) Posted on: Jul 25, 2018 5:11 AM
I bought two houses last year for $14,000 each. Put about $2500 into each for fix ups. The rent $500/month.
Redo your math and see if you like my numbers. ;-)
As Brad said, your market may not have any $14K houses that can be fixed and made livable for $16,500. If not, time to find another market.
I don't see how folks make money in multi-units. Crazy tenants fighting with neighbors, having to pay an on-site manager, wear and tear on common areas that you can't prove "who did it" and bill them, etc. J/K, I know it can be done, but it's not my area of expertise.
Every class of rentals has its pluses and minuses. The people who make money figure out how to make the income more than the outgo. The people who don't figure that out go broke and I buy their houses cheap....which is one way I make money on SFHs. --173.19.x.xxx
Making Money (by David [NC]) Posted on: Jul 25, 2018 5:15 AM
some of it is the power of time. If your plan is to buy and hold (like you have a real job and this is going to be your retirement plan), then to a certain extent it doens't matter what you pay. Does it matter if you pay 90K or 100K for a house that will be worth 200K in 30 years? Yes you want to get a good deal, and many people here get great deals. My deals have been fair. As a general rule, my costs after reno for 3/2 SFH have been 85K to 130K and the fair market value of the house after reno is only a few thousand to 10 thousand more than what I have in it. My rents are 850 to 1200. So my rent is about 1 to 1.2% of the cost of the house. I don't need the money now. I have a full time job. These houses will pay me to sit at home when I retire. I chose SFH because they are easier to sell than MFH. I chose 3/2 because in my town there is a lot of 2/1 homes from the 40s and lots of 2/1 and 2/2 apartments. Find a niche that works for you. Everyone here has a specialty. Some have low cost shacks that are little money generators. Some have multi-family housing. Some do vacation rentals or sort term rentals.
Once you have a rental business, many things become deductions. Need a new laptop? Instead of buying it with after tax dollars, you buy it with pre-tax dollars because you expense it before you pay tax. Now you go see properties and you take a mileage deduction off your taxes. Lawn need trimming? Hire your kid to mow the yards. They get money and you get a deduction. Need a weed eater, lawn mower, trailer, grass seed, light fixture, etc - all deductions paid pre-tax.
So you work hard for 15 to 20 years, never make a dime on these things and what happens now? Suddenly they are owned mortgage free, they are generating income which you don't work too hard for, and they are worth double what you paid for them. --192.203.xx.xxx
Making Money (by AllyM [NJ]) Posted on: Jul 25, 2018 6:01 AM
My two multis were cash cows. Figure the maintenance on one heater rather than four for example. It's all about tenant selection and management skills and being nice to people. Some folks just don't see tenants as customers or clients. Snobbery has no place in landlording. --73.178.xxx.xx
Making Money (by Roy [AL]) Posted on: Jul 25, 2018 6:09 AM
Remember this: not all houses will automatically appreciate in value. Many houses will even depreciate if the neighborhood changes or the economy takes a nosedive. And then you have a situation where houses only appreciate at the rate of inflation which is like a football game ending in a tied score.
In my opinion, betting on future house appreciation is a fools game. Positive monthly cash flow should be your number one priority. --68.63.xxx.xxx
Making Money (by bet [MA]) Posted on: Jul 25, 2018 6:17 AM
Back when we were buying a lot and fast we bought on the 1% percent rule and that is what Brad mentioned. But I still like the many units under one roof. Our two families are pulling in $2300 a month, bought at then $180k. So you could get a single for $90k and rent out for $1150, but now you have 2 roofs/foundation/siding/landscape etc to deal with instead of one. When the market hit rock bottom in 2008 to 2010 you could buy at 2% rule but those were scary times when every other house in the city was boarded up. Hard to believe we have come so far from that now where a lot of house are for sale and selling and not making anywhere near the 1% rule. --108.20.xxx.xxx
Making Money (by Vee [OH]) Posted on: Jul 25, 2018 7:34 AM
Nobody has a printing press? to make money - hehe --76.188.xxx.xx
Making Money (by myob [GA]) Posted on: Jul 25, 2018 7:46 AM
Vee maybe not a printing press but a pyramid can be built. Too many have gone by the wayside-- thinking positive cash flow. That's squat compared to what you could be making or should be. Most don't or can't get it. Oh I make 50.00 positive cash flow --- oh boy! oh boy!
Big money is made by transforming every call from a tenant into a cash flow item. Leaving early- to skip outs- to damages on a property can't be considered on just one tenant and one property. Once a tenant owes-- the new tenant moves in and when they leave they owe and next and next-- now your receiving payments from 4 X tenants at 15% interest per year-- then the next tenant comes in. COMPOUNDING.
sfh VS one ROOF---- NOT SAYING ANYONE is wrong-- just asking if I have 1 house and need quick cash-- i lose 1 house-- if its a multi and i need quick sale - lose the 4 6 or 10 plex. My partner in 86 said she would stick with it as long as i never brought any multi homes. Many investor have tried apt complex's and get eaten alive.
Making Money (by plenty [MO]) Posted on: Jul 25, 2018 7:49 AM
More about cost per unit ? --99.203.xx.xxx
Making Money (by myob [GA]) Posted on: Jul 25, 2018 8:36 AM
plenty MO that's short sighted for the R/E game. In 7 years no one will care about your cost per unit. --99.103.xxx.xxx
Making Money (by Robert J [CA]) Posted on: Jul 25, 2018 12:24 PM
Long ago the depreciation recapture period was 15 years, then it changed to 27.5 years. Because of my income on my job, real estate served as a tax shelter. Without those incentives it would have been harder to get ahead in the first 10 years of ownership.
First 10 years I only made a few hundred dollars a month positive income per property. The next 10 years I was making around $1,000 a month per property. The next 10 years I was making around $2,000 a month positive cash flow per property.
During 40 years of ownership of my first rental homes the market went from $70,000 up to $250,000 per home. Then down to $150,000 per home. Then it climbed back up to $550,000 per home only to fall down to $295,000 per home. How they are back up to $600,000. My friends who were mortgage to the hill and had no wiggle room had to sell.
So in short, from a $18,000 down payment to a resale value of $600,000 with $2,500 a month renal income isn't bad, if you have 40 years of time ahead of you... --47.156.xx.xx
Making Money (by Pmh [TX]) Posted on: Jul 25, 2018 3:13 PM
you are making wrong suppositions and also not buying right. my sfh houses are cash cows. then again I am in a college town. would I buy house in detroit...heck no. will I buy another hse where I am. heck yes. I look at long term cash on cash. donít go by Zillow. go by your own roi. --70.119.xxx.xxx
Making Money (by Iosid [CA]) Posted on: Jul 25, 2018 8:36 PM
Robert J are You able to find locally any good deals? With the actual prices, it is just a waiting game ... Waiting till next recession, and be ready to buy them --162.119.xxx.xx
Making Money (by cjo'h [CT]) Posted on: Jul 25, 2018 11:45 PM
Patches,It is a time thing.Don't pay too much attention to Zillow,just common sense and persistence. And being able to dicker,and not being afraid to get your hands dirty.If you can do some of the work yourself it also helps.for what its worth,I immigrated here with £20 in my waistband,wouldn't trust the pockets.the £20 is almost gone,so will have to try something different soon..........charlie.............. --174.199.xx.xxx
Making Money (by cjo'h [CT]) Posted on: Jul 25, 2018 11:54 PM
patches,don't be too quick to believe Vee,even though he doesn't admit to having a printing press.He just might.He's cagy..........charlie...................................... --174.199.xx.xxx
Making Money (by Patch [MD]) Posted on: Jul 26, 2018 6:13 PM
Thank you everyone. A wealth of information from decades of land lording, and very inspiring. --71.163.xx.xxx
Making Money (by Andrew [PA]) Posted on: Jul 27, 2018 6:16 PM
I've heard strong debates from both sides and this is one of them! If you pick your niche and build on that you will be successful. That's the beauty of the real estate business --107.77.xxx.xx
Making Money (by Chris [CT]) Posted on: Jul 31, 2018 1:21 PM
No SFH landlords make money in my area houses are to expensive.
Either they just use them as a place to park cash and are OK with a low but steady return, or they lose money. A lot of them break even or lose money every year. My aunt and uncle fall into this category, they own two SFH as rentals and lose money every year on both. --24.45.xxx.xxx