Is this Smart or Stupid ?
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Is this Smart or Stupid ? (by Roy [AL]) Feb 15, 2021 12:47 PM
       Is this Smart or Stupid ? (by NE [PA]) Feb 15, 2021 1:01 PM
       Is this Smart or Stupid ? (by Moshe [CA]) Feb 15, 2021 1:49 PM
       Is this Smart or Stupid ? (by plenty [MO]) Feb 15, 2021 1:51 PM
       Is this Smart or Stupid ? (by Robert J [CA]) Feb 15, 2021 2:00 PM
       Is this Smart or Stupid ? (by Dave [MO]) Feb 15, 2021 2:02 PM
       Is this Smart or Stupid ? (by NE [PA]) Feb 15, 2021 2:07 PM
       Is this Smart or Stupid ? (by RB [MI]) Feb 15, 2021 2:08 PM
       Is this Smart or Stupid ? (by S i d [MO]) Feb 15, 2021 2:16 PM
       Is this Smart or Stupid ? (by Sisco [MO]) Feb 15, 2021 2:23 PM
       Is this Smart or Stupid ? (by Allym [NJ]) Feb 15, 2021 2:36 PM
       Is this Smart or Stupid ? (by JB [OR]) Feb 15, 2021 2:36 PM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 15, 2021 2:39 PM
       Is this Smart or Stupid ? (by NE [PA]) Feb 15, 2021 2:47 PM
       Is this Smart or Stupid ? (by razorback_tim [AR]) Feb 15, 2021 3:01 PM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 15, 2021 3:02 PM
       Is this Smart or Stupid ? (by Jim in O C [CA]) Feb 15, 2021 3:05 PM
       Is this Smart or Stupid ? (by Rich [PA]) Feb 15, 2021 3:08 PM
       Is this Smart or Stupid ? (by NE [PA]) Feb 15, 2021 3:10 PM
       Is this Smart or Stupid ? (by WMH [NC]) Feb 15, 2021 3:16 PM
       Is this Smart or Stupid ? (by Sisco [MO]) Feb 15, 2021 3:17 PM
       Is this Smart or Stupid ? (by RB [MI]) Feb 15, 2021 3:26 PM
       Is this Smart or Stupid ? (by myob [GA]) Feb 15, 2021 3:27 PM
       Is this Smart or Stupid ? (by Bill [KY]) Feb 15, 2021 3:45 PM
       Is this Smart or Stupid ? (by Ray-N-Pa [PA]) Feb 15, 2021 3:47 PM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 15, 2021 4:27 PM
       Is this Smart or Stupid ? (by plenty [MO]) Feb 15, 2021 4:37 PM
       Is this Smart or Stupid ? (by myob [GA]) Feb 15, 2021 4:40 PM
       Is this Smart or Stupid ? (by Still Learning [NH]) Feb 15, 2021 4:50 PM
       Is this Smart or Stupid ? (by Moshe [CA]) Feb 15, 2021 5:00 PM
       Is this Smart or Stupid ? (by Robin [WI]) Feb 15, 2021 5:22 PM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 15, 2021 6:20 PM
       Is this Smart or Stupid ? (by Dave [MO]) Feb 15, 2021 8:19 PM
       Is this Smart or Stupid ? (by PG [SC]) Feb 15, 2021 9:14 PM
       Is this Smart or Stupid ? (by Ray-N-Pa [PA]) Feb 15, 2021 10:09 PM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 15, 2021 10:35 PM
       Is this Smart or Stupid ? (by JB [OR]) Feb 16, 2021 12:51 AM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 16, 2021 6:35 AM
       Is this Smart or Stupid ? (by myob [GA]) Feb 16, 2021 7:31 AM
       Is this Smart or Stupid ? (by MMIT [VA]) Feb 16, 2021 8:24 AM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 16, 2021 9:15 AM
       Is this Smart or Stupid ? (by Moshe [CA]) Feb 16, 2021 12:18 PM
       Is this Smart or Stupid ? (by plenty [MO]) Feb 16, 2021 1:22 PM
       Is this Smart or Stupid ? (by plenty [MO]) Feb 16, 2021 1:22 PM
       Is this Smart or Stupid ? (by plenty [MO]) Feb 16, 2021 1:23 PM
       Is this Smart or Stupid ? (by RentsDue [MA]) Feb 16, 2021 4:33 PM
       Is this Smart or Stupid ? (by Roy [AL]) Feb 16, 2021 7:19 PM
       Is this Smart or Stupid ? (by RentsDue [MA]) Feb 16, 2021 7:33 PM
       Is this Smart or Stupid ? (by Sisco [MO]) Feb 16, 2021 7:39 PM

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Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 15, 2021 12:47 PM
Message:

You buy a brand new 3/2/2 house (1,500 sq. ft or less) that cost $150K in a good class B neighborhood that has appreciation potential. You also have a 15 year mortgage and you are able to rent the house out for your mortgage payment which includes insurance, taxes and some maintenance added in. You are going to rent the house at your monthly break-even cost.

Fast forward 15 years,...you now have paid off mortgage that your tenant(s) have paid 90% of (the other 10% you had to pay during a vacancy) . You also have a house that has appreciated in value but only at the rate of inflation being 1%-3% but that is still better than nothing.

Does this house buying strategy make sense assuming you don't need the rent money for your personal needs?

--68.63.xxx.xxx




Is this Smart or Stupid ? (by NE [PA]) Posted on: Feb 15, 2021 1:01 PM
Message:

Well, you just said in your other post the other day that being financed is leveraged and is stupid, so I'm assuming your question is hypothetical?

Don't forget about all your rehab costs during turnover as well. Plus in 15 years you're going to be starting to replacing mechanicals and other facets of the property.

I would not buy a brand new house as a rental. Some people in some areas do, but I wouldn't here. --70.44.xxx.xx




Is this Smart or Stupid ? (by Moshe [CA]) Posted on: Feb 15, 2021 1:49 PM
Message:

Your figure of 1% - 3% inflation is a government average, and one with specific purposes in mind. You are probably thinking about Consumer Price Index for UrbanWage Earners and Clerical Workers (CPI-W), the Bureau of Labor Statistics consumer price index measure of the "average change over time in the prices paid by urban consumers for a market basket of consumer goods and services". That market basket doesn't really reflect YOUR actual cost of living, and it certainly doesn't reflect the appreciation in cost of residential real estate.

You may have noticed that the CPI for seniors (governing cost of living for social security recipients) was recently changed to reflect how seniors MIGHT POSSIBLY change their purchasing habits to better suit retirement income. That means that seniors who may have been accustomed to Ben & Jerry's ice cream, with retirement income may need to re-accustom themselves to Safeway plain vanilla. There are a lot more statistical quirks involved. Basically, the CPI reflects how much the government is willing to pay for cost of living adjustments, rather than the actual rate of inflation.

Residential real estate goes up with supply and demand. Thus, CA real estate, for example, has gone up so extremely profitably, because so many people move there. The stock market goes up and down also with supply & demand, but the supply & demand is artificial. In the pandemic environment, toilet paper and cleaning supplies have been in short supply and costs have risen enormously, perhaps never to return to what we used to call normal.

You need to ascertain the ACTUAL prospects of real estate in your area to determine potential appreciation prospects. If they are not excellent, you may want to consider other investments.

--47.139.xx.xxx




Is this Smart or Stupid ? (by plenty [MO]) Posted on: Feb 15, 2021 1:51 PM
Message:

Suppose in areas where rents are high and goin up and interest rates are goin down, why not? My two best houses are newer and cash flow well and in the end they are still nice houses and attract good people who so far take care of things and i have few calls there. Have replaced a few windows as the seals fail. And carpet a few times. But deposit has taken care of most upkeep. --172.56.xx.xxx




Is this Smart or Stupid ? (by Robert J [CA]) Posted on: Feb 15, 2021 2:00 PM
Message:

Real Estate is supposed to be a leveraged investment, putting around a 20% down payment and working with the Bank's money.

When I buy a $100,000 home, I put down $20,000. Then in 15 years the property is valued around $250,000. So my return is based on my cash input of $20,000 and not the purchased price. So I've made over 12 times my investment in 15 years -- that's an annual 80% return on my money...... Not 1, 2 or 3%. --47.155.xx.xxx




Is this Smart or Stupid ? (by Dave [MO]) Posted on: Feb 15, 2021 2:02 PM
Message:

I would never buy a rental for appreciation. To me that is not investing.

Investors want cash flow appreciation is a bonus but doesnít alway happen. As, N.E. Stated you have repairs maintenance, taxes and insurance increases.

Not for me, I would want a minimum of 10% CAP on a new or newer home. Higher CAP on older homes . --174.234.xx.xxx




Is this Smart or Stupid ? (by NE [PA]) Posted on: Feb 15, 2021 2:07 PM
Message:

As Dave mentions, taxes. Not sure about Alabama, but in PA, new construction's assessment is set at the max valuation right out of the gate.

So it's tough to appeal down because everything is brand new.

I have a beat up NASTY old duplex that I appealed way down in value. It's rents are the same as a newly remodeled duplex with a higher tax assessment. Sometimes bigger and newer isn't always better. --70.44.xxx.xx




Is this Smart or Stupid ? (by RB [MI]) Posted on: Feb 15, 2021 2:08 PM
Message:

Age, health and beneficiaries play a factor in the

equation.

Surely, this is a hypothetical question for a friend.

--199.192.xxx.xxx




Is this Smart or Stupid ? (by S i d [MO]) Posted on: Feb 15, 2021 2:16 PM
Message:

Depending on what your goals are, I think the question we should be asking is what is the optimal choice among many investment alternatives?

Let me up the stakes for you a bit and see if it help clarify the issue: let's say you could buy a $5 million piece of commercial property and rent it for just enough to cover the costs of ownership on a 15-year lease purchase. We will further assume that the economy of the local town would remain stead enough so that all the property would do is appreciate equal to inflation.

Would you do it?

P.S. See how I removed the risk of debt and still accomplished the goal of owning something that someone else paid for? --107.216.xxx.xxx




Is this Smart or Stupid ? (by Sisco [MO]) Posted on: Feb 15, 2021 2:23 PM
Message:

I never bought a similar property. I do know several people who do and it seems to have worked out well.

These investors have signed up with property management company from day one. Itís appeal to my acquaintances is an income stream in the future that funds a bump in retirement lifestyle. I should point out that these individuals have significant assets but not enough income.

As I said, this type of investment doesnít appeal to me, but I sometimes think that those who do have laid out a better plan for retirement income than I have. --67.43.xxx.xxx




Is this Smart or Stupid ? (by Allym [NJ]) Posted on: Feb 15, 2021 2:36 PM
Message:

Sometimes a house isn't just a number. If it's a corner lot or you put up fencing for child or pet safety or it's near a desirable workplace, the value is so much more than the MBA numbers. Look at the other aspects of the house and pick a new house if you want, that has something else special going for it. Near a good school is a real plus. --108.24.xx.xx




Is this Smart or Stupid ? (by JB [OR]) Posted on: Feb 15, 2021 2:36 PM
Message:

So you are breaking even at current rents. What happens when they decide to quit paying rents for a few months? Maybe even trash the place while you are trying to get them out? Why take such a risk?

If you really wanted to purchase a new property like that, you'd be much better off getting the 30 year loan and giving yourself a cash flow cushion. --73.25.xx.xxx




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 15, 2021 2:39 PM
Message:

This is not hypothetical. I have met people at Mr. LL conventions and they have told me they use this strategy as a means of creating paid off assets when they retire from their day job. In retirement, they can continue to rent the house or sell it and get their money back. It is like investing in the stock market but someone else (tenants) is buying your stocks for you.

On the surface, this strategy appears brilliant. Even if the house did not appreciate at all, you still have a free and clear income producing asset that someone else paid for!!!

--68.63.xxx.xxx




Is this Smart or Stupid ? (by NE [PA]) Posted on: Feb 15, 2021 2:47 PM
Message:

SO what's the difference between a new house financed break even for 15 years vs a well maintained much cheaper older house that cash flows well for 15 years? It's boards and a roof and paint. No magic in new. --70.44.xxx.xx




Is this Smart or Stupid ? (by razorback_tim [AR]) Posted on: Feb 15, 2021 3:01 PM
Message:

There is no on-size fits all answer to this.

As RB said, "Age, health and beneficiaries"

If you are 65 years old with no W-2 income or real retirement assets, this probably isn't a good strategy. Most of us would look at that 65 year old and say this wasn't a good program for them - they'll be lucky to still be on this side of the dirt when they pay off.

However, if a 25 year old couple started doing this once a year until they were 44 and stopped, at 60 years old, they would own 20 paid for houses worth $4-5 million generating a healthy six-figures annual cash flow. Most of us would look at that 60 year old couple and say that they made some really good decisions in their 20's, 30's, and 40's. --70.178.x.xx




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 15, 2021 3:02 PM
Message:

NE,

You are missing the entire point here. I used the example of 'new house' since the maintenance cost (roof, hvac, etc) would be low for the first 15 years. Yes, you would have some repairs during vacancies, but that is not the point I am trying to make here.

I was hoping someone who currently uses this strategy to come forward and explain how this strategy actually works in practice though. One key issue here is: each month you are operating at your break-even point (no profit) and this can be dangerous. Just how dangerous is it though? --68.63.xxx.xxx




Is this Smart or Stupid ? (by Jim in O C [CA]) Posted on: Feb 15, 2021 3:05 PM
Message:

I have been successful in buying either breakeven or negative income homes. The tenant is paying all or a huge percentage of the cost and as a landlord you end up owning the property.

I had a $300 a month negative before depreciation and after two years it went break even and after four years it was profitable. Today my $125,000 property is worth $500,000 and rents for $2500 a month as compared to $985 a month when purchased. --99.23.xxx.x




Is this Smart or Stupid ? (by Rich [PA]) Posted on: Feb 15, 2021 3:08 PM
Message:

Your rents should also follow the same 1 - 3% annual appreciation rate. So in 15 years time, your rents should be up 25 - 50%, your home has appreciated 25 - 50% and, since your largest bill is your fixed mortgage, your gross cash outlay should be appreciated at a lower percentage. As Robert stated, your rate of return would be based on your initial cash outlay and not the $150000 purchase price.

Of course, once your mortgage is paid off, this is when the house turns into an ATM machine. This will last as long as you (and your beneficiaries) chose to hold on to the house. --108.39.xxx.xxx




Is this Smart or Stupid ? (by NE [PA]) Posted on: Feb 15, 2021 3:10 PM
Message:

Roy, I don't think you like a lot of the answers you get to your questions. Someone may be doing it because the math works for them. Many people don't do it because the math doesn't work.

Is this for you or someone else to do?

I personally wouldn't borrow on a break even, zero cash flow property. Makes no investment sense. (To me.) I'm in this for cash flow and instant equity.

You buy a brand new house, you are MAXED. Maxed on material costs, labor costs, land cost, taxes, etc., because you are buying retail.

You buy an older house for pennies on the dollar, rehab and rent it out for 50% ARV with a 15 year loan. 9 times out of 10, you have instant cash flow, instant equity, built in sweat equity, possibly appealed taxes, discount labor, discount materials and on and on.

Seems simple to me.

--70.44.xxx.xx




Is this Smart or Stupid ? (by WMH [NC]) Posted on: Feb 15, 2021 3:16 PM
Message:

No break-even, no cash-flow for me. Too risky. --50.82.xxx.xxx




Is this Smart or Stupid ? (by Sisco [MO]) Posted on: Feb 15, 2021 3:17 PM
Message:

I have not found a market in which rents will support 15 year amortization rates debt service + expenses + management on new construction. --67.43.xxx.xxx




Is this Smart or Stupid ? (by RB [MI]) Posted on: Feb 15, 2021 3:26 PM
Message:

Right on, Razorback.

Cheers !

--199.192.xxx.xxx




Is this Smart or Stupid ? (by myob [GA]) Posted on: Feb 15, 2021 3:27 PM
Message:

of my 80 original purchases only the first was with cash (never again). All others were for 90 to 100% owner financing (VA foreclosures)

Didn't buy any that needed major major fix up because fix up expenses on a new rental have to be rolled into the cost basis. As time went on and we had many rentals-- we preplanned needs. By that I mean -- I knew I was buying a real dog and would bill my fix up expenses-- to a current rental not the future new purchase. My first major IRS audit I got caught on that. No biggie mind you but was embarrassing since I didn't know that. THAT being "if it's not a rental yet fix up is cost basis". --99.103.xxx.xxx




Is this Smart or Stupid ? (by Bill [KY]) Posted on: Feb 15, 2021 3:45 PM
Message:

I agree with Sisco. If this hypothetical couple is just buying 1 house with this strategy, probably not a ton of risk if they have the income to make the payments. Try this strategy with several houses today in a hot real estate market with the future unknowns of the housing market, economy, and the free rent movement, I foresee a lot of sleepless nights for this hypothetical couple. --71.29.xxx.xx




Is this Smart or Stupid ? (by Ray-N-Pa [PA]) Posted on: Feb 15, 2021 3:47 PM
Message:

You could create a housing ladder of 15 units and have one of them pay off year. You could do then do cash refi's on the one place that got paid off that year.

That would get you a years worth of cash free income in one shot. Can you do that with a new home at a $150K price point based on current rents - not around here.

It is possible at the 70K price point and even give yourself 20K of additional improvements. I can't speak to AL, but NE is correct how they tax new construction homes in Pa. A solid 30 year home makes more sense here. You mileage may vary

--24.154.xx.x




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 15, 2021 4:27 PM
Message:

Jim in OC (CA)

Thank-you for your answer. You have actually done this! You and I are now on the same page here.

Now, would you recommend this break-even or negative cash flow situation to anyone else here? And if that $125K house had never appreciated (some houses do not appreciate), would you have sold the house sooner or kept it or what?

What I am trying to find out is just 'how risky' it is to have a house that just breaks even each month? What is the worse that can happen? --68.63.xxx.xxx




Is this Smart or Stupid ? (by plenty [MO]) Posted on: Feb 15, 2021 4:37 PM
Message:

The question is "what's your risk level?" --172.58.xxx.xxx




Is this Smart or Stupid ? (by myob [GA]) Posted on: Feb 15, 2021 4:40 PM
Message:

Gee Roy I did 79 of my 80 that way. Guess that's not enough proofing for you??? Unbelievable!!!! --99.103.xxx.xxx




Is this Smart or Stupid ? (by Still Learning [NH]) Posted on: Feb 15, 2021 4:50 PM
Message:

Not entirely what we did/are doing but along those lines. We were above a break even but in the beginning about 10 years ago the bank account balance would be very low and at year end, when I cut myself a mileage check, I might or might not have needed to wait to cash it until after winter plow bills. My husband supports the family with his W2 job and any any surplus money pays down the mortgages. The goal was to pay them off within 15 years. Rents have gone up significantly as have property values. I will pay the first multi off this month 10 years after purchase. If things continue as they are, the second multi should be paid off in hopefully 3 more years about 10 years after its purchase. We then can cash out with a nest egg or more likely either continue to manage myself with income instead of paying mortgages or hire property management and have a little less income. I explain this to all the high school and college students I get to come help me scrub dirty apartments so they understand why I do this. --73.17.xx.xxx




Is this Smart or Stupid ? (by Moshe [CA]) Posted on: Feb 15, 2021 5:00 PM
Message:

Actually, the important thing, here, is NOT the issue of initial breakeven price and operation. As for any other investment, the real issue is potential for the future.

Even if you buy with an initial position of breaking even regarding mtg, upkeep, taxes, maintenance, etc, you will be spending your time to act as landlord. In exchange for what? What compensation will you receive, now or in the future?

If your acquired property does not appreciate, including rents, then it is all for nothing. Any other investment should be expected to do at least 10% per year (mot uniformly). Real estate in particular will appreciate in fits and spurts as vacancy rates adjust to population changes. If your catchment area does not support such development, then it is not particularly a good investment.

--47.139.xx.xxx




Is this Smart or Stupid ? (by Robin [WI]) Posted on: Feb 15, 2021 5:22 PM
Message:

Here's how I'd look at it, in very simplified terms:

Assume you put 20% down, or $30k. Assume that management costs are pretty minimal because you have a great screening process and lease. When the house hits the 15 year mark, you sell it for the 150K you put into it so you don't have to replace the roof, furnace, etc as they age. Assume that the inflation appreciation covers the sale costs.

Those are a lot of assumptions, but if they hold true, you've made $110K on your $30K investment over 15 years. That works out to a 24% rate of return over the 15 years. I'd say that's pretty darn good. I think what the others are pointing out is that you have to be very careful, because if even one of those assumptions is wrong then you could be in hot water.

With today's "Housing is a Right" movement, I'd be wary about investing in a property that doesn't cash flow from the start, because it doesn't give you any cushion if the govt. starts messing with your business. --104.230.xxx.xx




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 15, 2021 6:20 PM
Message:

Moshe,

I agree with you. It has more to do with the unknown future than anything else. In my example though, even if no appreciation happened, you would still have a $150K house that was paid for by someone else. That 'could be' worth the hassle of being someone else's LL.

Myob - I thought about you when I first posted this question. I know you had a bought a ton of VA foreclosures and was mortgaged to the hilt for many years. Now, knowing what you know now, would you recommend your house buying strategy to other people here? --68.63.xxx.xxx




Is this Smart or Stupid ? (by Dave [MO]) Posted on: Feb 15, 2021 8:19 PM
Message:

If this type of investment worked everyone would be buying a $150k rental and telling the banker all I have to do is break even every month and my rental will be paid off in 15 years and I will sale at market, pay income taxes and pocket the rest.

I think 2006 -2008 took care of those investors.

The only person I think this investment would remotely work is someone with a high income position and didnít need the rent income.

I remember years ago I put a bid in on a 24 unit apartment complex and was outbid by a Dr. he didnít need the income, so in that case it worked. He was looking for a write off. --173.216.xxx.xx




Is this Smart or Stupid ? (by PG [SC]) Posted on: Feb 15, 2021 9:14 PM
Message:

Roy - Any sound investment is based on minimizing the risk.

You assume the house will appreciate. Was that the case in the 2008 RE downfall?

You assume rental rates will rise to satisfy the break even, maybe in some areas but not most areas.

Consider this - A break even number for a 15 year pay off, at today's rate, would require the rent to be about 1500. A little high for most areas of the country, but not all. Maybe in some parts of the country where RE has extreme highs and lows. CA or FL - buy full retail on the low end of the RE cycle may work, but full retail when the RE cycle is high as it is today????

The recent - Lowest Offer - post was about strategies most LL used to purchase units at the lowest possible price - not full retail.

To much risk for me.

--184.21.xx.xx




Is this Smart or Stupid ? (by Ray-N-Pa [PA]) Posted on: Feb 15, 2021 10:09 PM
Message:

Roy,

How do you address the breakeven point of your plan when banker questions why the DCSR isn't 1.2?

I like the concept, but it has to pass the banker test or you don't have financing to scale this plan. --24.154.xx.x




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 15, 2021 10:35 PM
Message:

Ray N PA,

This is not my plan. It is actually someone else's plan which I am just trying find the logic that supports it, if there is any logic to it. I would assume someone would need a 6 figure day job to make this plan work, especially if you have several houses in your inventory.

I have known people with plenty of money, who will buy houses and just let them sit empty. They hope that long term appreciation will produce a profit someday. Their rationale is that buying houses is a better place to park their cash instead of in a bank at 1% interest.

I also know people who buy Blue Chip stocks that pay little or no dividends. And there is no guarantee that any of these blue chip stocks will ever appreciate in value. Why do people do this?

--68.63.xxx.xxx




Is this Smart or Stupid ? (by JB [OR]) Posted on: Feb 16, 2021 12:51 AM
Message:

Why do people go to the casino? --73.25.xx.xxx




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 16, 2021 6:35 AM
Message:

JB,

Casinos are a type of entertainment more than anything else. The few people who I know that visit casinos know they are going to lose money even before they walk in the door. They will make comments like, 'I am going in with $100.00 to spend and if I lose it, I am done for the day". And they usually lose it in slot machines even though their odds would have better playing black-jack. --68.63.xxx.xxx




Is this Smart or Stupid ? (by myob [GA]) Posted on: Feb 16, 2021 7:31 AM
Message:

Roy I would never recommend this to ANYONE who is weak and thinking "get rich quick". Financing to the max on every deal from 1986 to 2001 is not for everyone. Two men I mentored brought 6 of my property's. Almost all nothing down to them. What a disaster. After a year one mans wife said when the heck we gonna make some money? I told her maybe 7 or 8 years she flipped out. Her statement was NO FREAKIN WAY!!!!! 6 weeks later they were at my door handing me 6 deed in lieu of's. They had put on new roofs, new carpeting new HVAC's man oh man they had no concept of budgeting RE.

So directly I would not suggest this to anyone with heart problems or in old age. It's the time value of money program for me and my family.

WATCH THE PENNY'S AND THE DOLLARS WILL FOLLOW! 1986 to 2001 we had no life but our rentals. --99.103.xxx.xxx




Is this Smart or Stupid ? (by MMIT [VA]) Posted on: Feb 16, 2021 8:24 AM
Message:

Several people in the local REI group have done a similar plan.

Their plan was to buy as many houses as they could in their 20's and 30's using 30 year mortgages.

Most of the houses they bought were nice houses (class b and c) in good school districts.

They focused on tenants with young kids who might want to stay in the house for many years.

They set rents at the lower end of the market and did not raise rents very often. Many of the tenants stayed for decades.

Over the past 30 years, the profits were put back into the properties.

30 years later, they quit their W2 jobs and are paying houses off every month.

--70.188.xx.xx




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 16, 2021 9:15 AM
Message:

MMIT,

I would not want to be a slave to my lender for 30 years. 15 yes,..but definitley not 30. --68.63.xxx.xxx




Is this Smart or Stupid ? (by Moshe [CA]) Posted on: Feb 16, 2021 12:18 PM
Message:

" I also know people who buy Blue Chip stocks that pay little or no dividends. And there is no guarantee that any of these blue chip stocks will ever appreciate in value. Why do people do this? "

Just to keep the record straight, the Fidelity Blue Chip Growth Fund has averaged growth of 13.23% since the beginning of the fund in 1987. This growth rate is compounded for long-term shareholders and if the shares are held in a ROTH IRA, then they are entirely tax-free. If distributions are re-invested, then the growth rate is even further compounded. Maybe that's why do people do this.

By the way, over 15 years, that's 645% on $30,000 (20% of $150,000) = $193,500. And its liquid plus tax-free, and no plumbing calls. And it can keep on growing for more tham 15 years.

--47.139.xx.xxx




Is this Smart or Stupid ? (by plenty [MO]) Posted on: Feb 16, 2021 1:22 PM
Message:

Interesting. Youtube Why Cash is Not King Anymore. Jaspreet Singh. The payment on a 15 year loan may make this plan short on cash. And i can not buy a new house for $150k more like $250k to $300k. I can hardly buy a house built in 1970 for $150k more like $185k. Housing prices are going up. How high? How long? Interest rates are low, lending good, i can see some upside in this plan as i have three properties that are doing well with this type of strategy. Managing them is simple. They turn over quickly. Waa told by other investor that I paid to much. And I've reviewed that a few times in my head. Only wish I had a dozen more like these three. All in excellent school districts where people want to live, two working adults with kids or single people with no kids. This has been an interesting thread. Rent on! --172.56.xx.xxx




Is this Smart or Stupid ? (by plenty [MO]) Posted on: Feb 16, 2021 1:22 PM
Message:

Interesting. Youtube Why Cash is Not King Anymore. Jaspreet Singh. The payment on a 15 year loan may make this plan short on cash. And i can not buy a new house for $150k more like $250k to $300k. I can hardly buy a house built in 1970 for $150k more like $185k. Housing prices are going up. How high? How long? Interest rates are low, lending good, i can see some upside in this plan as i have three properties that are doing well with this type of strategy. Managing them is simple. They turn over quickly. Waa told by other investor that I paid to much. And I've reviewed that a few times in my head. Only wish I had a dozen more like these three. All in excellent school districts where people want to live, two working adults with kids or single people with no kids. This has been an interesting thread. Rent on! --172.56.xx.xxx




Is this Smart or Stupid ? (by plenty [MO]) Posted on: Feb 16, 2021 1:23 PM
Message:

Interesting. Youtube Why Cash is Not King Anymore. Jaspreet Singh. The payment on a 15 year loan may make this plan short on cash. And i can not buy a new house for $150k more like $250k to $300k. I can hardly buy a house built in 1970 for $150k more like $185k. Housing prices are going up. How high? How long? Interest rates are low, lending good, i can see some upside in this plan as i have three properties that are doing well with this type of strategy. Managing them is simple. They turn over quickly. Waa told by other investor that I paid to much. And I've reviewed that a few times in my head. Only wish I had a dozen more like these three. All in excellent school districts where people want to live, two working adults with kids or single people with no kids. This has been an interesting thread. Rent on! --172.56.xx.xxx




Is this Smart or Stupid ? (by RentsDue [MA]) Posted on: Feb 16, 2021 4:33 PM
Message:

This is what we do ( sort of) when we build a rental. There isnít much monthly rental profit. So what, we have other income . In 15 years, you own the home that the tenants paid for. 15 years comes quick. --75.133.xxx.xx




Is this Smart or Stupid ? (by Roy [AL]) Posted on: Feb 16, 2021 7:19 PM
Message:

RentsDue

I have never known anyone who builds new for the rental market. Describe the rental houses you build. This is interesting! --68.63.xxx.xxx




Is this Smart or Stupid ? (by RentsDue [MA]) Posted on: Feb 16, 2021 7:33 PM
Message:

Mostly duplexes. Huge Class A homes with all the bells and whistles. Everybody wants to live in a new house and the income worthy will pay top dollar for it. Even five years or ten years later it is still the newest rental around here.We are not wealthy but have excellent credit. The first one will be paid off soon and is currently appraised at $378,000.00. Tenants paid for that. We do self builds. I donít think it would work if you had to hire a GC. --75.133.xxx.xx




Is this Smart or Stupid ? (by Sisco [MO]) Posted on: Feb 16, 2021 7:39 PM
Message:

Roy, #22 MO builds new rental single family houses. Maybe he will jump on this thread and share some of the finer points of this business model.

I do know that his aim was not a 15 year payoff, but rather an exit after 7 years of renting. --67.43.xxx.xxx



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