I am trying to figure out in my head how it is that those of you who hire everything out actually make any money on the rent. I mean, if you have a mortgage, property taxes, insurance and if you hire an assistant or your own manager and then you have a handyman that does some day to day maintenance and small things and then you hire licensed contractors to do things, how is there any money left out of the rent?

The market will only bring so much rent. I do as much as I can myself for this reason. What % of rent do you have left as profit?

I read on here how a lot of you don't really handle the rentals as you have someone for every task and you travel the world. I am trying to picture how this works and how there is any money left. I am so used to doing everything that I can myself that I can't get my head wrapped around it.

6 by 6, I'll do my best.

It comes down to how much rent does the property generate vs. how much did you pay & put into the property to bring it online and how much are you spending to keep it up. You may have heard me tout the "2% Rule", which many say is impossible. Yes, in some markets it is, but in my market it is not. It is harder to get today that it used to be, but still doable.

Back when I first started, I only knew about the 1% rule, which is the norm in higher cost of living markets. I barely was scraping out $50 a month if I was lucky, and I was doing almost all of my own repairs and cleaning. Quickly, I got sick of that and started reading Mr. LL forum and hanging out with people like Brad 20K (who should probably change his name to Brad 30K or 40K by now). I learned about making sure to bill for damages at retail. How to offer bi-weekly and bi-monthly rent payments. Charging pet fees and pet rent, all of which is non-refundable.

Too, I learned about RENT INCREASES! I started studying the market closely to ensure I was right at market rate. I added an automatic annual rent bump. Rents that used to be $400 15 years ago are now $650 or higher. That was back in the day when I borrowed money from banks like everyone else, and those payments haven't gone up. Some are very close to being paid off.

I learned how to avoid vacancy using online pre-screening, lock box showings, and digital move-ins which keeps my vacancy rates low.

I learned to take money on the day it is due instead of wish and hope tenants will pay using ACH services, keeping my uncollected rents to a minimum.

I learned to do the 2 minute in home inspection that has saved me thousands of $$$ in costly turn over and kept wear and tear to a minimum.

Also, I invest exclusively in Class C residential units, which often can be fixed for less and still look nice. "Clean, safe, and functional" is our motto. Paint and flooring are not very expensive, and if done correctly I outperform 95% of my competition and can charge a premium. Class B and Class A rentals often do not cash flow nearly as well since owners have to keep them updated with the latest trends and paint schemes.

I also pay myself 10% of gross rents as a managers' fee before we take home any other money from the biz in a given month. This ensures that any profits left over are truly investment returns. I don't work for free any more.

Hope that helps!

I think they might be using rentals for tax shelters to get the depreciation or have tenants basically pay for the house and then flip it to make money.

6x6,

Here is the real way it is done, in my opinion.

First, a little background on rentals and amounts of rent in general:

You MUST either buy places at a low price OR be in an area where there is large, rapid appreciation of both property value and of rent amounts. Period.

Some examples: When I say buy at a low price, I mean at a price so low that after you fix the place and rent it, you have AT LEAST a 50 percent profit per month after all expenses. Maybe a little less than that after you pay the mortgage. To get properties like this, you need to buy from desperate sellers OR you need to have bought them back in the 60's and early 70"s. (In those days you could buy a 3/2 tract house for 12,000 or so and a nice semi executive place for about $25,000 in many places).

The other way was to buy in a place with very high appreciation, like Calif coastal. There, the same 3/2 tract houses now sell for 1.2 million and up with rents over $2500 per month (still not enough to pay the mortgage if you buy now unless you put an insane amount downpayment).

THEN, if you have a place you bought very cheap, you have to fix it. If you are a contractor or serious handyman, you either do it yourself or put your crew on it during slow times (when they are not working for others and making you a profit). Otherwise, you are paying RETAIL for everything, materials and labor, which is a sure way not to make anything.

The other ways many landlords have problems is that:

1. Rents do not go up as fast as expenses.

2. If you do not put down a large downpayment, there is little left after expenses and mortgage.

3. In many areas,, especially in areas that are not appreciating rapidly, you barely break even. After YEARS, if you're still doing it, maybe you pay off the place and then the income gets better. Maybe.

Those with the big cash flow from rentals have most likely owned their places for years.

If you want to make real money at this business and you do not live in a rapidly appreciating area, my advice is this:

1. Buy distressed properties only and FLIP them until you build up a large enough money supply to buy one and fix it up for cash. Then do that and you will have one that cash flows.

It may take 3 to 5 places to get the cash amount to be enough, considering taxes.

2. To get MORE cash, do this: When you get and fix a place if you are not going to flip it, as soon as you get it fixed and a stable tenant in the place, EXCHANGE it for another place that is a distress property and repeat doing this over and over. As you do this, you will get larger properties (apartment buildings or more expensive houses).

3. If you wish to build a portfolio of properties that provide long term cash flow, either get them SO CHEAP they are paid off quickly or keep flipping and then get a keeper when you can pay cash. Otherwise, you will have places that barely cash flow and little profits and much maintenance.

4. Again, you need to get places FIXED UP at wholesale prices.

Another thing I've seen: The price of houses has gone up WAY MORE than wages since the 60's and 70's. Back then, a bottom level worker made about $3.00 per hour but paid rent of about $85-120 per month, or about 20-25 percent of wages. NOW, they nuke about $7.25 per hour ($300 per week) but rent is $500 minimum and often up to $1200 for a 3/2 tract house. That's OVER 2 weeks wages OR MORE! Even with 2 incomes these tenants struggle. And this is for minimal housing.

Recent reports showed the average prices for newer houses was ,what $220,000 or more. No $7.25 an hour worker or even 2 of them are going to be able to afford payments on that number.

Don't keep waiting on that PERFECT DEAL. It's not gonna happen.

Everyone has a starting place-- I don't think anyone here is buying for a tax shelter??? So lets start.

Right out of the gate-- you ain't making a million-- you ain't makin 100K-- your lucky to break even. That's a fact. This from the investors I see posting here.

So start out slow and just break even or usually less but not enough to sink you. As an example the 400.00 a month mortgage payment your making-- maybe your getting 500.00 rent. That's right your still not making money. The time value of money-- you have to let it work for you. Your mort is 400.00 for 30 yrs-- is the rent staying 500? of course not. My 400.00 mort-- are nothing now because in 20 yrs the rent is now 1000.00. (I don't have any mortgage but using an example) When my profits got to a point that my bank acct had money-- I sat and figured which prop to pay off. Which had highest interest loan-- but more important which property had the most potential for more income. It is a balancing act but strictly math.

Almost 100% of my property's were 100% financing AND some I offered more than they wanted just to get them. Offering 3K more @ 6% over 30 yrs--- I should lose an investment of 175K over 3K? Think about that and how many property's you could have had?

6x I wanted to address your second paragraph. Now that all but 2 properties are paid-- for us anyway--

I SPEND EVERY PENNY I MAKE. The rest of you stop laughing.

I have a small 401-- maybe 250K but my cash reserve is my houses. Lets face it if I need money quick-- I could sell one for half price tomorrow--- or sell 10 so WHY DO I NEED MONEY? / cash.

I'm trying to be serious and I think many will say he's crazy.

I carry no balances-- I boot tenants after 4 or 5 years and redo rentals for top condition. I pay my #2-- AKA wife (who is really #1) she gets whatever she needs. When she says "that's nice" -- it's delivered next day from Amazon. Until C-19 we traveled all over. I pay to the max. I give cash bonus constantly.

WHY do I need INCOME?

With that said: We worked 10 to 15 years straight day and night 7 days a week. I worked second shift for 15 years so I could work the rentals in the morning. Every vacation was used to work the property's. My sons gave so much for this and I hope I have and continue to be able to pay them for their hard work and time with friends that was missed.

6x6,

Some more thoughts.

Like Sid, I invest only in Class C units. Around where I am, people who can afford class A or B units usually buy them. However, there is a large percentage of retirees here. In fact, it is the fastest growing segment of the population for the county. MANY of these retirees only have social security and maybe small amounts of savings. The bulk of the workforce here makes under $15 per hour.

These people cannot afford more than about $600 rent.

I have a number of mobile homes on land. These could be bought pretty cheaply for a bit, but now even these are getting too expensive, so I am cashing out at the top.

What with the govt creating problems, it's just not worth it unless I have all my places filled with social security retirees. The low wage workers are so close to the edge that if any get sick or their kids get sick or anything, I have instant problems with them paying.

When I was really getting busy with housing, I had a construction company that did many many rehabs. It was because of this that I had access to materials at cost or less and was able to put workers onto the houses during slow times. This cut repair prices by 50 percent or more in many cases.

So, one thing you might consider is this: in your area, if there is enough business, start your own rehab company! Do the repairs, the cleanouts,etc. OFTEN and I do mean OFTEN you will make $5000-$10,000 or even more sometimes on a house for someone else that would only give them a $100 per month return with a tenant in it. That's 5-10 years of profits.

Now in a rapidly appreciating area, you'd still lose the appreciation, BUT in an area with little appreciation, you'd be ahead, Plus you would get materials at cost or less and labor for yours at coct. Then the profit from doing the work would be yours. As you do a lot of these, you learn what works best in your area and what does not work. This allows better decisions when you buy for yourself.

As I recall, you have a 3 story property with 3 units in it. I'd sell that immediately. If the profit on it is small, I'd just sell and pay whatever tax is due. If large, I'd exchange it.

I like simple houses and mobile homes. One story. Ranch style. Gently sloped roofs. A Basic rectangle or L-shaped place. Built after 1976, so no lead or asbestos to worry about. I like ones on a slab or raised foundation without a basement. I like if they have a garage but that's not a deal killer. Mobile homes, I like single wide models. I prefer both houses and mobiles on flat lots. If they have city utilities, all the better. Wells and septic tanks are just things to go bad. Small yards if possible with small trees. Big trees are expensive to remove if they die or go down in a storm.

6x6 back in the 1970's when I bought my first 3 family for $45K I didn't know how I could ever afford to own it since each of the rents were less than $450.00 a month & it needed tons of work. Looking back I wish that I had had the courage to buy a dozen more at that price.

By networking with other LLs, joining & participating in several local LL groups and discovering the wealth of practical wisdom on this site, I was able to learn how to acquire more properties & even more important how to profitably manage them. I truly believe that if you start off with the right attitude, develop a flexible game plan, learn to organize your work, develop systems to run your business, learn from your failures as well as from your successes and have realistic goals that you can do very well with RE.

I've only ever dealt mostly in lower end units (not slums). The cash flow is considerable. My upgrades/repairs are nothing like I see on here. For many years, I did a lot of the routine work - yard work, snow removal, cleaning, painting, basic repairs, clean up (different than "cleaning" in these type units). I have children that always helped. When I needed, I paid someone by the job. I always hired out roofing, electrical, anything other than the most basic plumbing, drywall, etc. Now, I basically hire out everything unless I'm there and can do something quick and easy.

One difference is when you have a few places and need just a little work here and there, you will pay top dollar. If you have a lot of work and keep someone consistently busy, you will get cheaper rates and faster service.

The hard truth :

By owning / operating more than 1- rental.

Ya ever see a Circus Plate Spinner ?

The trick is to keep,em up and running.

Most (here) were gifted, inherited, took over rentals

obtained from a Family member, have partnerships,

or mortgaged to their eyeballs and still working

a W2 job, or their Wives are.

Looks good on paper and feels good when ya walk into

a room full of Investors.

6er,

Great ideas already!

My personal take after coaching many LLs is the holes in their bucket.

First, debt controls them.

Then they let dollars slip thru their fingers

- overall, not treating it as a business. Most LLs are part time with a job for living expenses. When I went full time I had new "eyes". It HAD to be profitable and I wanted a return on MY time.

- most don't KNOW their numbers. They don't know if they are profiting or losing until April 15 taxes are filed.

- no app fee (that was ME for 40 years!)

- ignoring trends for weekly payments and ignoring the extra income of PayDayPlanRent.

- "Working with" late payers (seldom gets paid and adds frustration)

- WAITING for payment, allowing mail, allowing personal checks...

- DIY. Taking 3 weeks to paint a house and losing 3 weeks of rent.

- Super biggie: not charging for their time and real turnover costs. We are guilty of that for years. I thought it was "cost of doing business" then realized some peopele CAN leave a home in perfect condition. *I* was the problem by not demanding a clean return of the home and not charging for it.

Profit is NOT a curse word. It makes the world go 'round.

BRAD

Thank you all for the replies thus far and the explanations.

My current rental I paid cash for and is a C class property and I do most of the work my self that I can but I am not a contractor. This one has provided me pretty good cash flow but I often think about how a lot of you have mortgages and hire out labor and I just couldn't figure how that worked.

It makes since that after several years that it starts to pay off and I agree that you really need to buy them cheep. The explanation of the mortgage remaining the same and yet the rents increase and homes appreciate makes since. I guess that it was hard for me to realize that as I did not experience that with my rental.

The one thing that throws me off as well is the paying retail for labor as that would surely eat the profits. This is probably the biggest area that I have trouble seeing how people pay this labor and still come out ahead.

6x6,

I agree with Richard mostly. You have to buy dirt cheap properties for cash, then fix them and rent them out. Buying dirt cheap means shopping in Class C and D hoods which many investors do not have the stomach for. Most of my long term rentals which are my best cash cows are small 2/1 or 3/1 houses and I paid on the average between $5-$15K for them. I tell people that if you can afford to buy a 20 year old used car once a year, then you can afford to do what I do.

I've been doing this about ten years now.

2020 was the first year I cleared six figures, gross. (It should have been 2019, but I had an extended vacancy in my most expensive rental that skewed my numbers short.)

In 2020, I also spent six figures on repairs and renovations. (Because that's totally what I do... I pick up a crummy house, sink money into it, fix it up clean/safe/functional, and then let it give me back my money slow and steady.)

There was only $3k difference between what I brought in, gross, and what I spent. But even that $3k wasn't profit... I easily spent more than that in biz stuff I didn't submit for deductions.

But the point is, every penny--- and then some extra pennies--- gets rotated back into the biz. I do as much as I can, and hire out what I'm not suited for. Because the point (for me) for the first x years is to grow aggressively... even if it means delayed gratification. And when we hit the arbitrary number that DH has chosen, then we can stop, and grow only when we feel like it. (Really, I can quit anytime... seriously...)

Because right now, the rentals aren't supposed to be our living-off-of income. The rentals are our retirement. And so we're trying to accumulate a certain number of units, and get them into decent shape, so that they can (a) put our kids through college, and (b) take care of us later. DH is in a high-stress side job that pays well... and the rentals will replace that income, so that he can take a break. Me, I'll keep working on the rentals...

Not everyone needs to wait until their retirement years before they start tapping into that which they've built up. But I've seen it from local ll's in my town (who I've bought houses from) that they made the mistake of using all the funds coming in... and that leaves nothing to make repairs when repairs are necessary. (Right now, I've got two roofs, a fence, a waterline, and a door replacement on the calendar.) So if they go for too long without making necessary repairs, that affects the calibre of tenant who's willing to rent from them.

For the first five houses, we had to do pretty much everything ourselves. It wasn't until the tenth house that we had the luxury of being able to hire out stuff because it was tedious, rather than because it was skilled. There were a lot of nights and weekends involved along the way before we got to this point.

6 if you want to deal your whole investing life with C&D rentals-- follow that advise. I have B&A and had 80 at one time and didn't wait on cash offer to get them.

Very interesting to read of the different approaches.

Does any one look at the return on equity? My half paid off rental cash flows well, but then I ran some numbers on the ROE and wasn't impressed. Minimal depreciation left too.

Myob,

6x6,

I disagree with Richard (MI) that you MUST get properties at a low price or live in places with fast appreciation.

Is it better to get a low price? Sure! Do I always try to get the best price? Yes! But I've bought mine at "fair" prices and I still make very good money. I don't live in an area of high appreciation either.

I don't carry any mortgages, so the cash flow is great. And I agree that those with mortgages probably struggle a bit more with cash flow.

My logic is probably a little different than some on here. I don't spend money on fancy ceiling fans, repaint very often (I touch up as needed...I've had two of our places for 14 years and not repainted them yet!). I don't have fancy cabinets or expensive light fixtures, I don't change flooring unless really necessary, and so on. I spend the money on things the tenant can't damage easily. Roofs, siding, crawlspace ventilation to prevent mildew and rot, attic insulation and ventilation, electrical wiring and main panel, plumbing that's inside the walls and crawlspace.

As a result of the above, I rarely have to make significant repairs. If I do, it's usually due to age of the house, such as the fact that I've had to pay to have two sewer lines dug up and replaced because they were clay tile and had roots growing in them, leading to clogs. I must admit that my experience as a home inspector for 7 years helps me tremendously. I know what happens to houses when you don't do certain things.

I do most of the basic work myself. I do paint, flooring, trim work, hanging cabinets, minor drywall, simple plumbing like sinks/faucets/traps, minor electrical like changing light fixtures or adding an outlet, and so on. I leave the heavy or technical work to the pros, like changing a main panel, concrete work, roofing, water heaters (I've done some, depends on whether I can lug it up the stairs lol), etc. I just hired plumbers to do a tub/shower replacement, but I did all the demolition, removed the old one, and did all the painting/drywall/trim when they were done to save money.

My biggest expenses are property taxes and insurance.

I do raise rents, and that helps a LOT. But to me what makes it all work is not having a bunch of things to deal with unexpectedly. My most important metric is "# of unexpected service calls"...and I get usually 1-2 each year.

IMO here are the keys:

1) Be willing to pay a bit more for a quality item than "cheap out" on the front end then not have it last. For example, don't buy the cheapest bath vent fan you see...you'll have bathroom moisture issues. Always insulate duct vents in the attic (the one for the bath fan), because if you don't, you might get the hot steam condense when it hits cold attic air, and the moisture will cause water stains on the bathroom ceiling. I could go on and on, but these are the types of things I'm talking about.

2) Put most of the money into things the tenant can't damage. You'll see my examples above.

3) Always enter with an exit plan in mind. In other words, when you're looking at a place to buy, ask yourself..."will I be able to easily sell this later? What limitations will I have?". If it has a swimming pool or an in-law suite for example, it won't appeal to a wide segment of the population.

4) Find honest and quality minded contractors and build relationships with them. This takes time.

5) Do as much as you can yourself, but know your limits. If you try to wire a circuit and do it wrong, it will cost you more in the long run or you'll cause a fire or injury.

6) Screen, screen, screen. Avoid problem tenants. Treat your best tenants great! Treat the rest of them fairly and honestly, but be firm and expect them to follow the lease.

7) Be willing to leave a unit empty if you don't find a good tenant right away. This is much easier if you don't have a mortgage payment due.

8) Strive for standardization where possible. For example, don't paint every house a different color. Use the same security lights on all units. This way, you can keep 1 of everything and be ready for a replacement more easily.

You are a great listener and are learning fast. IMO the hardest part about learning from this forum is the wide difference of opinions. Seems like every topic has many of us split on how to deal with it. You'll have to decide what's best for YOU!

I agree with myob. Some on here (I'm thinking the minority) preach no debt but unless you have significant income/cash flow, debt is needed if you want to grow when you are starting out. I have minimal debt but I also have been at this over 40 years.

Even if you cash flow at $500 a month for a single property, how long will that take you to save up for another property, plus the closing costs to purchase it? I'm betting MANY years.

MANAGED debt is not a bad thing. Not managing it properly (your fault or the fault of circumstances) is what can get you into trouble.

6, this group of forum participants operate their rentals far, far better than average. Many (most?)investors in residential rentals aren't profitable, it has always been this way and I suppose it always will be so. There are lots of inherited houses that are rented, and lots more later in life marriages that result in an extra house that is rented in order to make payments; this is a big part of the competition, people who aren't even trying to be profitable. Profit from these people by solving their problems.

one observation, today's market prices... there is no cash left over if you put 20% down. Its breakeven, you do the work. Back in 2009-10, same thing... but my rent was 1/3 less. I have kept taxes, insurance, and mortgage nearly the same... but rent is up. I could hire some stuff and still be $$ ahead. That's buying it cheap long ago and reaping the awards today....

One of the most valuable tools I have in my tool kit is a sheet of paper for each place I own. It has address, tenants name and phone number and the neighbors phone numbers for the ones that I have reached out to. It has my landlord lock number on it. It has the account numbers for the utilities

Then this sheet of paper then list who would be my go to person if I had a plumbing issue, a handyman issue, an electrician, tree remover, concrete contractor, flooring person, haul out specialist and even who I would call in the event of a disaster.

I have my insurance policy number at the bottom next to my agents cell phone number.

Do I need all these people today - nope. I was able to swap out the lockset myself. I also picked up some Allure and put it into my storage locker. Will I ever need them - absolutely. When should I be calling these folks - well before you ever need them.

So if you think I keep lots of people on payroll the answer is NO. I just keep lots of people at the ready. At this point in the game I can pick and choose what I want to do and what I will outsource.

First off, I have a full time job. The idea with the rentals is to create an income for when I don’t work.

I have never had the talent to buy a house for 5K or even 50K. I did by a house for 75K once. I am looking for 3/2 ranches in B+ to A- neighborhoods to separate myself from the abundance of 2/1 homes from the 1940s and the large number of 2/1 and 2/2 apartments and duplexes. Average house price here for a low end 3/2 was 125K and now it is 150K for a move in ready house. In my experience and in my area, by the time I buy a 100K house and put 30K into rehabbing it I could have saved myself the effort and bought one ready to go.

I’d like to think the price doesn’t matter so much. Sure you want a good deal but I want move in ready house that will generate income. My 125K to 150K house is renting for $1200 to $1350. If you are grossing $14,400 to $16,200 per house does it matter if you paid 130K or 135K after 30 years? I’d rather have it and start making money. Taxes and Insurance at the most are $2500. Some houses will net 10K per year and others have issues that will net you 3K.

Loans are at historic lows. I just refinanced one for $106,000 for 15 years at 2.75% and the payment is $720. I could have gotten a 30 year for 2.875% and the payment would have been $440.

Time is your friend. The longer you have them, the more inflation and the less you are paying as your rents increase

Yes sometimes a roof or a HVAC kills your profit for the year. Maybe that 1960s ranch has a cast iron line to the street and you have to pay big bucks to dig up the yard and replace it.

The more you have the more they insulate you from 1 being a money pit.

Depreciation is your friend. Every year each of my houses lets me depreciate roughly $4K off my taxes. Find an accountant who has rental property and can take care of you.

Sooner or later you will have enough and they will get paid off and you will reap the rewards. It is not a get rich quick plan. It is a get rich slowly plan. (Although some here are better at it than others)

You need a plan that works for you. SFH or apartments or duplexes or trailers can all work if you work on it. They all have pluses and minuses. Everyone on here does something different but they make it work in their city. YOU CAN DO IT!!!!

Roy because with no experience I put all my cash at risk.....

Myob,

Took us a while to actually "make money" 6x6. But one thing we knew for SURE starting out this time, cash flow was going to be positive from the start or we were not buying.

DH is *STILL* working on our rentals, although we hire more stuff out these days because we can because now we can afford it based on multiple units. But for some jobs, you can't FIND a person you would pay to do it. Just depends.

WOW! Thank you all for the varying opinions and ideas. Please keep them coming.

Hoosier, you and I seem to be a lot alike in terms of buying with cash and in what we find as important things to repair and concentrate on. The one thing that I may do different is that I also install the tub. My rental already had ceiling fans and a dishwasher when I bought it and so I leave them in there as a selling point. I had the sewer line replaced when I first bought it and it already had a newer roof and HVAC but is getting ready for a new roof soon as it had gotten hail damage a few years back. Due to a plant fire that seemed to have caused the HVAC to go out when the electric was turned back on, I had to replace that unit but I used a fairly new one from another property with a bad house. Other then that I have also had very little trouble with maintenance. The floors are sloped and scratched and a little wavy but solid and I keep thinking about them but no one has complained and now that I am allowing pets I don't really have to worry so much about the floors because they could use an upgrade anyway.

One huge difference is the price of the property and the rent range in your area.

What I see here described as "C" is not what i call "C" in my area. A single family home in the suburbs (still very urban and close to each other, built in the 40s and 50s) not attached in a row with 2 or 3 bedrooms, a yard, garage/carport, basement, etc. sells for $180 or $190 minimum. To get a center city row home will now cost you $60,000 to $120,000. Mobile home on land? Easily $120,000 or more.

I just looked on realtor dot com in my area. There are 18 single family properties for $100,000 or less. Every one of these properties shows one photo of the front of the house only. 15 are contingent or pending. The other three have no description other than 'investment opportunity' and have been listed for quite a while. The 15 are all short sales.

Of course there are non-mls properties but those are ones like I buy - someone knows someone or else they go to one of the 'we buy houses' guys who inundate the mail box, television commercials, billboards, etc.

To me it's simply a matter of cost analysis.

Here's an example from personal experience. The situation, 2 turnovers the same week. Both needed painting, I was working full-time at a day job and evenings and weekends on rentals. If I tried to paint both myself it would have taken about 3 weeks to turn both. Rents were roughly $800/month on each. So, 3 weeks on 2 houses was going to cost me $1200 in lost rent. Hiring it out cost $800 and could be completed in 4 days. Simple math dictated hiring it out to make the most money in the end.

"Debt is needed...."

Equity partnerships: "Hold my beer." (*grins)

Sid,

6 by 6

There is another factor I did not see mentioned here. At some point everything is all paid for and you own it free and clear. Here is the true cash flow surprise. You did not pay it off, your residents over the years paid it for you. Sometimes it seems you are spinning your wheels, especially when the income just barley covers the expense in some months. However you have to remind yourself of the gift you are receiving. Someone, ( your residents ) are giving you a property free and clear with those monthly rent payments. So when that day comes figure the value of the property, divide by the number of months you have managed it, and viola, there is an additional cash flow number you never recognized in your pocket. Cause for celebration and by the way, your return on investment is now infinite.

Hopefully over the years you have built a portfolio of these properties. The time will come you want to retire and enjoy the fruits of your labors. Now you can sell and owner finance your portfolio to others who may want to follow in your foot steps. This is where it gets really good. Those monthly payments just keep on coming and you no longer have to answer the phone and deal with the T's. That would be tenants, toilets, taxed and all those other troubles you handled so well through the years.

Congratulations, you have now reached the pinnacle of successful landlording.

In reaching this end myself I would like to acknowledge and thank many times over Jeffery Taylor, his fine organization, and a big part of that, this outstanding forum for helping greatly along the way.

Hi, my view is that rentals are a scale game. The more scale the better in terms of dividing risk. If you just have a couple of rentals, and one needs a 6k roof, there goes tons of cash flow for the year. If you have 20 rentals, the portfolio can absorb it.

We live in the class B and C rental range. Our purchase price is anywhere from 50-80k and our rehab is 25-45k, after repair value anywhere from 100-160k.

I agree with others that said buying distress and discounted is the way to go. Definitely, with forced appreciation and instant equity.

We recycle our cash over and over and over. Buy, rehab, rent, refi, repeat. We try to get all cash out at refi or at least almost all of it.

Typical deal: buy 80, rehab 25k, rent 1400, refi 75% of new 140k value (105k less cost to refi)

Taxes: 300ish/mo

Insurance: 50/mo

P&I: 471

Cap ex+maint: 100 (we put all updates in up front so cap ex is low going forward for a long time)

Vacancy:we have very little and take 5% off the whole portfolio

Cash flow: about 400-450/mo with all cash leveraged out. And one day hopefully everything gets paid off for double cash flow, but while younger (under 60) we feel acquiring as much as possible is the way to go, at least, continue recycling that same cash over and over and over.