Landlords: How are you doing this year?

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ww340
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Re: Landlords: How are you doing this year?

Post by ww340 » Thu Jul 02, 2020 11:46 pm

We have a mix of commercial and residential. So far we only have one office building tenant one month behind. Everyone else is current.

One duplex tenant just gave notice, but I don’t expect any problems leasing that unit. In fact, I plan to increase the rental rate on the unit.

One of our commercial properties is leased to a car dealer who gave us upfront warning they might not be able to pay during the pandemic, but are current so far.

We feel blessed, as we initially thought we were in for a really bad time of it, but so far things are good. We have properties in high property tax locations like Texas, so we were really very concerned at the outset of the covid virus. We have sold a property very quickly that will give us a nice financial cushion, so we are currently feeling very relieved. However the worse may still be in front of us.
Last edited by ww340 on Fri Jul 03, 2020 6:39 am, edited 1 time in total.

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unclescrooge
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Re: Landlords: How are you doing this year?

Post by unclescrooge » Thu Jul 02, 2020 11:58 pm

Cycle wrote:
Thu Jul 02, 2020 11:07 pm
unclescrooge wrote:
Thu Jul 02, 2020 10:02 pm
Cycle wrote:
Wed Jul 01, 2020 9:09 pm
One property (2 units), lots of maintenance requests this year, for dumb stuff... E.g. tenant was turning key wrong way to unlock door, tenant closes window too hard and glass shatters, tenant reports garage door broken (replaced remote batteries). Have 2nd kid due in August and no longer want to do this stuff.

It goes live on the market on Friday... My landlord days may soon be over.
Why are you the property manager? Why haven't you outsourced this?
I live nearby, i am handy. I got quotes for management a couple years ago, it seemed steep, I want to say $400 per month for the building plus then every call has a charge.
I feel ones time is better served by more tedious or repetitive with, unless one really enjoys it.

That's why my rentals are 2,000 miles away, in a state I've never been to.

av111
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Re: Landlords: How are you doing this year?

Post by av111 » Fri Jul 03, 2020 2:07 am

unclescrooge wrote:
Thu Jul 02, 2020 11:58 pm
That's why my rentals are 2,000 miles away, in a state I've never been to.
Well done. I have thought about buying SFH or MF in the Texas and Arizona because of better CAP rates. Came close to buying a couple in Phoenix. But I have never bought far away from home. So took too long to think and prices went up 50% in a short while. Will buy in future when CAP rates come back to 7 or 8
AV111

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Harry Livermore
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Re: Landlords: How are you doing this year?

Post by Harry Livermore » Fri Jul 03, 2020 5:58 am

Cycle wrote:
Wed Jul 01, 2020 9:09 pm

lots of maintenance requests this year, for dumb stuff... E.g. tenant was turning key wrong way to unlock door, tenant closes window too hard and glass shatters, tenant reports garage door broken (replaced remote batteries).
Oy. I have had some "dumb stuff" over the years:

tenants move in, 3 days later they tell me the bathroom outlet is dead. I ask if they pushed the button on the GFI. They say yes. Then they say they have taken the cover off and are messing with a multi-meter. I tell them to please stop, and then I send the electrician, because I'm out of town for work. The GFI was tripped. And they were pressing TEST, not RESET. The electrician took mercy on me: $100. I let that go and taught them about GFI.

same tenants did not use the bathroom exhaust fan while showering. After about a month, the bath door was so warped it would not close, and mildew was everywhere. I had to teach them about bleach. They also did not want to run the central AC, so the house was always humid. I have since had a clause put in the lease about acceptable temperature and humidity.

I had a nice single older lady tenant. She ran into personal finance issues and, while paying rent on time, was cutting back on all sorts of things, including heating the house. At one point she shut off the upstairs zone and closed off the second upstairs bedroom. Then she wanted the heat back on but by then a pipe had frozen somewhere. When I opened the door to bedroom #2, the windows were frosted over and I could see my breath. Luckily, no pipes had split. We put 5 space heaters upstairs and ran them until the water started circulating (like 10 hours!) I explained she could keep the heat very low, but the water had to circulate and at least be warm; it's in a 2x4 wall with just a little bit of insulation around it. If it's -4 degrees Farenheit outside (which it was that weekend), it could be 30 degrees warmer in the wall, and 40 degrees warmer in the room, and the pipe would still freeze!

I had some tenants get "ambitious" about gardening (the lease was silent about this) I give all tenants a small guidebook that explains the house systems and best practices, and it asks tenants to check with me before removing existing plants or adding new ones. I came over one day and they had ripped out 100' of a Pachysandra border and replaced with sparsely planted annuals. I asked where they had thrown it all (in the woods) and calmly requested that they put it all back (Pachysandra is pretty hardy and it had only been a few days) I pointed out that I had spent many years creating a landscape full of perennials and that's why it looks so good in the summer, and that they had basically removed like $1K worth of plants. I taught them about perennials versus annuals, and asked to check with me before removing anything (you know, like the instruction book says)

It certainly has not worn me down yet, but it is surprising how people who are professionals, highly paid, highly educated, can sometimes be so dumb.
Cheers

Stoic9
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Re: Landlords: How are you doing this year?

Post by Stoic9 » Fri Jul 03, 2020 9:12 am

All are paying so far but not sure it will stay that way, 1 renewed in May for a year, next up is for renewal has till 6 July to decide to renew or not, others are later in the year. While ours are single family homes for some reason we currently have a majority of divorced dads that want to stay near their kids. It's an interesting development.

WildBill
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Re: Landlords: How are you doing this year?

Post by WildBill » Fri Jul 03, 2020 10:43 am

tomtoms wrote:
Thu Jul 02, 2020 12:07 pm
Has anyone heard of this?

1) Sell 5 of your rental properties at one time
2) Do a 1031 exchange and buy an expensive house
3) Rent out the expensive house for a couple of years
4) Finally, move into the expensive house and make it your primary residence

Is this a legal loophole to not pay taxes?
Howdy

Within the rules, so theoretically possible. Good luck timing the 5 sales within the 1031 time limits. I have seen people do similar, but not with 5 properties.

This is not really a thing unless you plan to stay in the new house. If you sell the expensive house at any point you will be liable for depreciation recapture, which will be dependent on your original basis in the properties you exchanged.

W B

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Sat Jul 04, 2020 2:01 pm

moral dilemma question:

I have friends who can’t even a home and here I am buying one after another. Have you ever felt like you shouldn’t invest in rental properties because you are taking inventory off the housing market?

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Re: Landlords: How are you doing this year?

Post by abuss368 » Sat Jul 04, 2020 2:03 pm

tomtoms wrote:
Wed Jul 01, 2020 10:04 am
My brother and I own close to 10 rental properties...all single family homes just outside of a big city. We have been very fortunate. Rent collection is 100%. Surprisingly, no one has asked for any maintenance or repair work.

How is everyone doing this year? Do you see yourself buying more rental properties?
That is interesting and reassuring. I am glad it is consistent and calm.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

Stormbringer
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Re: Landlords: How are you doing this year?

Post by Stormbringer » Sat Jul 04, 2020 2:10 pm

No problems yet, but bracing for the next couple months when the government programs run out. Between tax refunds, stimulus checks, and enhanced unemployment, tenants have been flush with cash the past few months. That may end soon.
"Compound interest is the most powerful force in the universe." - Albert Einstein

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ohboy!
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Re: Landlords: How are you doing this year?

Post by ohboy! » Sat Jul 04, 2020 3:27 pm

tomtoms wrote:
Sat Jul 04, 2020 2:01 pm
moral dilemma question:

I have friends who can’t even a home and here I am buying one after another. Have you ever felt like you shouldn’t invest in rental properties because you are taking inventory off the housing market?
Practical dilemma, where can you buy good cash flowing properties these days? Or are you counting on appreciation in your business model?

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unclescrooge
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Re: Landlords: How are you doing this year?

Post by unclescrooge » Sat Jul 04, 2020 4:03 pm

tomtoms wrote:
Sat Jul 04, 2020 2:01 pm
moral dilemma question:

I have friends who can’t even a home and here I am buying one after another. Have you ever felt like you shouldn’t invest in rental properties because you are taking inventory off the housing market?
Unless you are keeping your new house completely vacant, I didn't see how you've taken it off the market.

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unclescrooge
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Re: Landlords: How are you doing this year?

Post by unclescrooge » Sat Jul 04, 2020 4:04 pm

ohboy! wrote:
Sat Jul 04, 2020 3:27 pm
tomtoms wrote:
Sat Jul 04, 2020 2:01 pm
moral dilemma question:

I have friends who can’t even a home and here I am buying one after another. Have you ever felt like you shouldn’t invest in rental properties because you are taking inventory off the housing market?
Practical dilemma, where can you buy good cash flowing properties these days? Or are you counting on appreciation in your business model?
There are many cities in the US where properties cashflow. Unfortunately, most of these cities have had declining or stagnant population, employment and median income rates for 20 years.

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Sat Jul 04, 2020 4:27 pm

ohboy! wrote:
Sat Jul 04, 2020 3:27 pm
tomtoms wrote:
Sat Jul 04, 2020 2:01 pm
moral dilemma question:

I have friends who can’t even a home and here I am buying one after another. Have you ever felt like you shouldn’t invest in rental properties because you are taking inventory off the housing market?
Practical dilemma, where can you buy good cash flowing properties these days? Or are you counting on appreciation in your business model?
The location I have been buying has pretty much dried up. Everyone is looking for single family homes right now. I would have to pay at least 12% more than I did just a couple of years ago which means it would no longer cash flow if I had put down the same down payment. If I want to keep on buying then I would have to look for a home in another neighborhood.

My business model is to buy single family homes in an up and coming neighborhood. So yes, I am betting on appreciation. However, appreciation is nice but not necessary. I also make money from:

1) Buying below market value which is not easy in a competitive market. I usually don’t offer the highest price but my finance is solid and I have waived mortgage and appraisal contingency to make my offer more attractive. I usually offer short 10 days inspection contingency. For sellers who want to sell fast and want a sure thing, my offer is attractive. I also look for homes that went back on the market because the buyer couldn’t perform. Those sellers tend to be more motivated and like my simple offer. Waiving contingency can be risky so you have to know how much risk you can handle.

2) I think about 20% of rent goes toward mortgage pay down by my tenants (after interest payment)

3) Extra rent money. I put away 20% of rent toward future repairs and vacancies. Anything that is left over is extra. So far, I have good tenants. You are going to find better tenants with single family homes than apartments/condos. They tend to be older, have a family and prefer not to move as much.

4) Tax benefits. I write off all my business expenses like property manager. I can also do 1031 exchange and pay zero tax.

LittleMaggieMae
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Re: Landlords: How are you doing this year?

Post by LittleMaggieMae » Sat Jul 04, 2020 4:56 pm

tomtoms wrote:
Sat Jul 04, 2020 2:01 pm
moral dilemma question:

I have friends who can’t even a home and here I am buying one after another. Have you ever felt like you shouldn’t invest in rental properties because you are taking inventory off the housing market?
I've had a bit of uneasiness about this myself. The thing is, I'm not looking at/buying "move in ready" houses/properties. I can't pay top dollar for the house/property and still make it work as a rental. I can "fix up" a property that needs some work and/or TLC. I cannot gut and rehab a property.

As far as I can tell - I'm NOT competing with people who are looking for a house to live in. I am sometimes competing with a flipper.

(For example the house I bought last year - it will need a new roof in few years, the AC lasted a week longer than I thought it would :), the range hood didn't work, it needed a new fridge and washer and dryer. Stove was new. it needed new toilets and a new sink/vanity in one bathroom, the rooms needed painting, it needed to have light fixtures (ceiling fans) correctly installed in the center of the bedrooms (not having the equalivant of an extension cord from the fixture across the ceiling and down the wall to an outlet). The outside "spigot" needed to be replaced. the patio doors needed to be serviced (so they slide nicer), two interior doors need to be replaced. we also replaced/updated all the outlets and switches and put in GCFIs as needed/wanted. ) Basically, the house needed handyman kind of "fix ups"... cause the previous owners had no clue how to do any of this stuff themselves.

I think current buyers are looking for houses they won't have to do anything to - other than move in (like when they were renting... ). Those houses are kind of expensive (and if you aren't careful will need alot of handyman work within the first few years).

So, I'm NOT really taking away houses from the people who want to buy them - if I managed to get a contract on the house - no one else wants it.

av111
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Re: Landlords: How are you doing this year?

Post by av111 » Sun Jul 05, 2020 8:07 am

AV111

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Sun Jul 05, 2020 6:19 pm

Question for landlord: when did you realize you should stop buying rental properties?

I am debating if I should keep on buying rental properties. The neighborhood I have been buying is becoming too expensive. I would need to spend some time researching another neighborhood if I want to keep on buying.

scubadiver
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Re: Landlords: How are you doing this year?

Post by scubadiver » Sun Jul 05, 2020 6:22 pm

tomtoms wrote:
Sun Jul 05, 2020 6:19 pm
Question for landlord: when did you realize you should stop buying rental properties?
Not really a well-posed question as it presumes the rental property that we own now was purchased with the intent of it being a rental property. :wink:

I suppose the most appropriate response would be "never".

kevdude
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Re: Landlords: How are you doing this year?

Post by kevdude » Sun Jul 05, 2020 7:27 pm

tomtoms wrote:
Sun Jul 05, 2020 6:19 pm
Question for landlord: when did you realize you should stop buying rental properties?

We haven't bought since 2011. At the time we had 29 units. We managed 24 of them and had the rest managed by a management company as they were in DFW area and we live in the Seattle area.

I stopped working in 2013 at age 49 and made a conscious decision to not grow any more as I didn't want to turn the rental business into a full time job or hire any employees - just be semi-retired. I also didn't want to hire a management company as they won't care for the property like we would, as well as it would reduce our cashflow. Since then I sold the Texas properties in 2017 and a fourplex last year in an attempt to reduce my schedule even more - currently I devote about 10-15 hours per month to the rentals unless we have a vacancy or an emergency. And that amount of time is just fine with me. They provide more than enough cash flow for us to live on comfortably and pay for college expenses for 2 kids - one about to enter college and the other a soon to be sophomore in high school.

Kiter
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Re: Landlords: How are you doing this year?

Post by Kiter » Sun Jul 05, 2020 7:33 pm

SFH 's all good, NYC 3 apt's good ,Restaurant 3 months behind.

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Re: Landlords: How are you doing this year?

Post by AerialWombat » Sun Jul 05, 2020 7:55 pm

tomtoms wrote:
Sun Jul 05, 2020 6:19 pm
Question for landlord: when did you realize you should stop buying rental properties?
Very simple: When you have purchased enough properties to meet your long-term financial objectives, stop buying.

barberakb
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Re: Landlords: How are you doing this year?

Post by barberakb » Mon Jul 06, 2020 12:13 am

AerialWombat wrote:
Sun Jul 05, 2020 7:55 pm
tomtoms wrote:
Sun Jul 05, 2020 6:19 pm
Question for landlord: when did you realize you should stop buying rental properties?
Very simple: When you have purchased enough properties to meet your long-term financial objectives, stop buying.
Im shooting for 10. So Im halfway there. That should get me to my goal of $5000 a month of extra income.

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Re: Landlords: How are you doing this year?

Post by flaccidsteele » Mon Jul 06, 2020 1:45 am

tomtoms wrote:
Sun Jul 05, 2020 6:19 pm
Question for landlord: when did you realize you should stop buying rental properties?
I never stop investing

The time between purchases just increases when bull markets run long
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

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midareff
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Re: Landlords: How are you doing this year?

Post by midareff » Mon Jul 06, 2020 6:12 am

Wife has about a dozen AirBNB units in Bangkok...... they are empty, no traveling there.

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Mon Jul 06, 2020 5:52 pm

midareff wrote:
Mon Jul 06, 2020 6:12 am
Wife has about a dozen AirBNB units in Bangkok...... they are empty, no traveling there.
I have thought about owning an Airbnb property where I can also use it here and there. What is your business model?

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midareff
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Re: Landlords: How are you doing this year?

Post by midareff » Mon Jul 06, 2020 6:15 pm

tomtoms wrote:
Mon Jul 06, 2020 5:52 pm
midareff wrote:
Mon Jul 06, 2020 6:12 am
Wife has about a dozen AirBNB units in Bangkok...... they are empty, no traveling there.
I have thought about owning an Airbnb property where I can also use it here and there. What is your business model?
Unfortunately she doesn't have one other than select pre-construction units in highly desirable parts of town near shopping, restaurants, night life and so forth, rent the units out and use the income to pay her daughter's educations (finished now), and support her mother there. My business model is to avoid being a landlord and avoid all the headaches with cranky tenants, condo associations, air-conditioning and getting the units cleaned between customers. Wish I could help more but I'm try to stay as uninvolved as possible in that part of life. Her and her X both had very good jobs in Advertising and saved money to buy condos for AirBnB rentals as a means of retirement. Stock and bond markets are not like they are here. We are married near ten years now and I have been able to avoid any involvement so far. :D

co_investor
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Re: Landlords: How are you doing this year?

Post by co_investor » Mon Jul 06, 2020 6:53 pm

3 rentals here, all good so far! Almost every day I wish I had bought more when they were on sale. :(

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Re: Landlords: How are you doing this year?

Post by abuss368 » Mon Jul 06, 2020 6:54 pm

Has anyone considered selling direct real estate holdings for REITs?
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Mon Jul 06, 2020 10:26 pm

abuss368 wrote:
Mon Jul 06, 2020 6:54 pm
Has anyone considered selling direct real estate holdings for REITs?
Do you mean sell your rental properties and use that money to buy REITs?

I wouldn’t do it because 1) REITs have high fees; 2) Dividend is taxed as regular income (is this correct?); 3) Many REITs have commercial RE which has done poorly; 4) can’t leverage like rentals; 5) You don’t have direct control with REITs

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Re: Landlords: How are you doing this year?

Post by flaccidsteele » Mon Jul 06, 2020 11:16 pm

abuss368 wrote:
Mon Jul 06, 2020 6:54 pm
Has anyone considered selling direct real estate holdings for REITs?
Terrible trade for me

Paper with no depreciation, no control, no cash out refi or HELOC, and dividends taxed as ordinary income. No thanks
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

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Re: Landlords: How are you doing this year?

Post by UnitaryExecutive » Tue Jul 07, 2020 1:31 am

We have a bunch of SFH rentals in 3 different states. When covid happened, we offered to waive rent to all our tenants and none of them took us up on the offer. We're also in a fund that buys and refurbishes trailer parks and they're at 95% rent collection for April and May.

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Re: Landlords: How are you doing this year?

Post by Bulldawg » Tue Jul 07, 2020 10:16 am

2 rentals in Atlanta. 1 tenant purchased a home and moved out , but I had it rented in one week via word of mouth .
" IN GOD WE TRUST " ( official motto of the United States )

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Re: Landlords: How are you doing this year?

Post by Meg77 » Tue Jul 07, 2020 2:08 pm

Three units in Dallas and four in Mesquite TX. Shocked that all are current despite all but one unit being fairly blue collar areas/workforce housing. Had one person in May ask to pay half the rent on the 1st and the other half on the 15th. I readily agreed and they followed through.

My multifamily investments are anther story. I have one interest in a student housing building in the southeast and can't bring myself to listen to the investor conference call updates. But they are talking about a capital call, and this is a very low leveraged property with a long term low fixed rate loan. Nothing risky at all and previously was always near 100% occupancy. No clue how that will shake out.

I have a few other multifamily investments including one retirement home and one upscale condo building in Chicago as well as a Dallas area regular apartment building and one in San Antonio. All have suspended distributions but seem likely to recover/stabilize with one exception. The B class apartment building in San Antonio had a capital call a few months ago and is this week now under contract to sell at a 80% loss. Some mismanagement prior to COVID on their renovation plans, but COVID has accelerated the cash flow crunch and made them opt to sell rather than hold and do another capital call.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Tue Jul 07, 2020 4:58 pm

Meg77 wrote:
Tue Jul 07, 2020 2:08 pm
Three units in Dallas and four in Mesquite TX. Shocked that all are current despite all but one unit being fairly blue collar areas/workforce housing. Had one person in May ask to pay half the rent on the 1st and the other half on the 15th. I readily agreed and they followed through.

My multifamily investments are anther story. I have one interest in a student housing building in the southeast and can't bring myself to listen to the investor conference call updates. But they are talking about a capital call, and this is a very low leveraged property with a long term low fixed rate loan. Nothing risky at all and previously was always near 100% occupancy. No clue how that will shake out.

I have a few other multifamily investments including one retirement home and one upscale condo building in Chicago as well as a Dallas area regular apartment building and one in San Antonio. All have suspended distributions but seem likely to recover/stabilize with one exception. The B class apartment building in San Antonio had a capital call a few months ago and is this week now under contract to sell at a 80% loss. Some mismanagement prior to COVID on their renovation plans, but COVID has accelerated the cash flow crunch and made them opt to sell rather than hold and do another capital call.
That is horrible. Capital call is like the worse case scenario. That is why I avoid investing in multi family investment funds. Those commercial loans are risky when things go down hill. Banks are going to force you to sell at a loss.

No bank is going to take away my single family homes even if they are underwater.

gophermobile
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Re: Landlords: How are you doing this year?

Post by gophermobile » Tue Jul 07, 2020 5:41 pm

Hopefully not too off-topic, but I'm curious for those with 5+ properties how you ended up with that many? I'm assuming it's not previous places you've lived and decided to rent out. Are these properties in areas you're very familiar with and decided to purchase, or something invested in with others without much direct attachment?

I live in a HCOL area and finally purchased a small home last year, and could someday see renting it out when we buy a larger home. But I'm curious how you go from that to many properties? With that many is it more of your full-time job rather than some side income?

mx711yam
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Re: Landlords: How are you doing this year?

Post by mx711yam » Tue Jul 07, 2020 5:46 pm

IMO wrote:
Thu Jul 02, 2020 1:36 am
mx711yam wrote:
Thu Jul 02, 2020 12:04 am
5 doors, all paid up. 1 just left and trashed the place, but it rented out 3 days later after a ton of time and money fixing it up. Crappy tenants are the worst.
3 days later is a "ton of time"??

3 doors, everyone's paying on time
Yeah, 3 days after getting back on the market, not after time fixing it up.

mx711yam
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Re: Landlords: How are you doing this year?

Post by mx711yam » Tue Jul 07, 2020 5:48 pm

gophermobile wrote:
Tue Jul 07, 2020 5:41 pm
Hopefully not too off-topic, but I'm curious for those with 5+ properties how you ended up with that many? I'm assuming it's not previous places you've lived and decided to rent out. Are these properties in areas you're very familiar with and decided to purchase, or something invested in with others without much direct attachment?

I live in a HCOL area and finally purchased a small home last year, and could someday see renting it out when we buy a larger home. But I'm curious how you go from that to many properties? With that many is it more of your full-time job rather than some side income?
I only have 3 rental properties, 5 doors. 1 was original my house that I turned into a rental, the other 2 properties (4 doors) were purchased as investments originally.

From my experience of 10 years now as a landlord, I would say multi is where the money is, at least here in the North Austin area. Single families don't net me near what the multi does. People will say you get better tenants in single families, my response is all tenants suck, so go for the cash.

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Re: Landlords: How are you doing this year?

Post by barberakb » Wed Jul 08, 2020 1:54 am

gophermobile wrote:
Tue Jul 07, 2020 5:41 pm
Hopefully not too off-topic, but I'm curious for those with 5+ properties how you ended up with that many? I'm assuming it's not previous places you've lived and decided to rent out. Are these properties in areas you're very familiar with and decided to purchase, or something invested in with others without much direct attachment?

I live in a HCOL area and finally purchased a small home last year, and could someday see renting it out when we buy a larger home. But I'm curious how you go from that to many properties? With that many is it more of your full-time job rather than some side income?
You assumed wrong , haha. At-least 4 me.

Was military for 20 yrs. You move alot. Bought several houses to live in, then got orders to move and kept them to rent out.

Topic Author
tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Wed Jul 08, 2020 8:58 am

gophermobile wrote:
Tue Jul 07, 2020 5:41 pm
Hopefully not too off-topic, but I'm curious for those with 5+ properties how you ended up with that many? I'm assuming it's not previous places you've lived and decided to rent out. Are these properties in areas you're very familiar with and decided to purchase, or something invested in with others without much direct attachment?

I live in a HCOL area and finally purchased a small home last year, and could someday see renting it out when we buy a larger home. But I'm curious how you go from that to many properties? With that many is it more of your full-time job rather than some side income?
The hard part is getting approved by a bank. This is what the banks like:

- Low debt to income ratio
- 1 or 2 years of rental income before they count your rent as "income" (70% of rent)
- 25% down payment

You also need to find properties that will cash flow (rent > expense). If they do not then you would need to make up for the difference every month (more risk). It is also a great way to know whether or not you are overpaying for properties.

whoshighpitch
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Re: Landlords: How are you doing this year?

Post by whoshighpitch » Wed Jul 08, 2020 9:58 am

Cycle wrote:
Wed Jul 01, 2020 9:09 pm
One property (2 units), lots of maintenance requests this year, for dumb stuff... E.g. tenant was turning key wrong way to unlock door, tenant closes window too hard and glass shatters, tenant reports garage door broken (replaced remote batteries). Have 2nd kid due in August and no longer want to do this stuff.

It goes live on the market on Friday... My landlord days may soon be over.
Mine is going on the market today. Been renting a single family home for 8 year and I'm sick of it. I have 3 young kids and it's just too much.

Topic Author
tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Wed Jul 08, 2020 10:07 am

whoshighpitch wrote:
Wed Jul 08, 2020 9:58 am
Cycle wrote:
Wed Jul 01, 2020 9:09 pm
One property (2 units), lots of maintenance requests this year, for dumb stuff... E.g. tenant was turning key wrong way to unlock door, tenant closes window too hard and glass shatters, tenant reports garage door broken (replaced remote batteries). Have 2nd kid due in August and no longer want to do this stuff.

It goes live on the market on Friday... My landlord days may soon be over.
Mine is going on the market today. Been renting a single family home for 8 year and I'm sick of it. I have 3 young kids and it's just too much.
Do you have a property manager? Do you take care of the repairs?

financiallycurious
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Re: Landlords: How are you doing this year?

Post by financiallycurious » Wed Jul 08, 2020 10:34 am

I own two duplexes that I'd describe as "Class A" in a nice area that I rent for a good price to quality tenants. Two of the four tenants paid rent on time as always with no issues. I renewed both of their leases this summer with no rent increase, because I manage the properties myself on top of a full time job and young children at home, and it is really nice to have long term tenants rather than having to turn over any units, which is time consuming with repairs, cleaning, listings and showings. I've interviewed a few property managers, but I come out ahead by just keeping my current tenants at slightly below market rent. I gave the other two tenants a break rent. One of the tenants asked for free rent for the month of May, which I gave to them as an incentive to sign an extension for another year (this will be their third year in the property) because they have been fantastic tenants that always pay on time, and fix their own problems. Though they claimed to be struggling, I think they could have easily paid May rent. The last tenant has been unemployed since mid-March, but gets unemployment, so I gave her a 10% rent reduction for March through June to help her out a bit. She wanted to extend her lease at the end of June for another year, but I instead gave her a three month extension because I want to see that she has a job before signing a longer renewal term. All in all, I had zero turn over this summer, but retained one tenant who concerns me, but I don't have the heart to ask her to leave, and I lost about $3500 in rent collections that I could afford to loose (I was still cash flow positive). Everyone paid their full rent on time in July. I'm not buying anymore rental properties though. I'm maxed out in my workload, and feel like this is my sweet spot.

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AerialWombat
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Re: Landlords: How are you doing this year?

Post by AerialWombat » Wed Jul 08, 2020 10:38 am

barberakb wrote:
Wed Jul 08, 2020 1:54 am
gophermobile wrote:
Tue Jul 07, 2020 5:41 pm
Hopefully not too off-topic, but I'm curious for those with 5+ properties how you ended up with that many? I'm assuming it's not previous places you've lived and decided to rent out. Are these properties in areas you're very familiar with and decided to purchase, or something invested in with others without much direct attachment?

I live in a HCOL area and finally purchased a small home last year, and could someday see renting it out when we buy a larger home. But I'm curious how you go from that to many properties? With that many is it more of your full-time job rather than some side income?
You assumed wrong , haha. At-least 4 me.

Was military for 20 yrs. You move alot. Bought several houses to live in, then got orders to move and kept them to rent out.
Exactly. I do this on purpose. I've only purchased two of my rentals the "normal" way, and that was just last year. All the rest I intentionally purchased with the clear intent of moving out and converting them to rentals after the mandatory 1-year occupancy requirement on the owner-occupied mortgage.

barberakb
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Re: Landlords: How are you doing this year?

Post by barberakb » Wed Jul 08, 2020 11:06 am

Much lower interest rates that way. Investment property rates are usually at least 1% higher

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Wed Jul 08, 2020 4:51 pm

25% of NY renters are not paying rent: https://www.bloombergquint.com/business ... king-point

This is going to hurt.

smitcat
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Re: Landlords: How are you doing this year?

Post by smitcat » Wed Jul 08, 2020 4:59 pm

tomtoms wrote:
Wed Jul 08, 2020 4:51 pm
25% of NY renters are not paying rent: https://www.bloombergquint.com/business ... king-point

This is going to hurt.
You mean in addition to those that have rentals at college towns, vacation spots ,and near any larger employer who is transitioning to more of an online workplace.

Carefreeap
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Re: Landlords: How are you doing this year?

Post by Carefreeap » Wed Jul 08, 2020 5:03 pm

AerialWombat wrote:
Thu Jul 02, 2020 10:12 pm
tomtoms wrote:
Thu Jul 02, 2020 12:07 pm
Has anyone heard of this?

1) Sell 5 of your rental properties at one time
2) Do a 1031 exchange and buy an expensive house
3) Rent out the expensive house for a couple of years
4) Finally, move into the expensive house and make it your primary residence

Is this a legal loophole to not pay taxes?
If you continue living forever in the final house, then yes, your heirs get the step-up in basis when it transfers to them when you croak.

If your objective is to live in it for a few years, then sell it with the idea of getting the entire Sec. 121 capital gain exclusion... Think again. Look up "non-qualified use" and "depreciation recapture".

Also, good luck coordinating the timing on selling 5 to buy 1 within the 1031 time limits.
+1

People used to abuse it and the law changed in 2009. You'll have to bifurcate the gain depending on the years used as rental and primary.

I'll also add to wombat's post that with a 45 day time limit to identify the next property that many people over pay into the exchanged property. "caz you know they are saving all that money in taxes. :oops:
Every day I can hike is a good day.

scubadiver
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Re: Landlords: How are you doing this year?

Post by scubadiver » Wed Jul 08, 2020 5:29 pm

smitcat wrote:
Wed Jul 08, 2020 4:59 pm
tomtoms wrote:
Wed Jul 08, 2020 4:51 pm
25% of NY renters are not paying rent: https://www.bloombergquint.com/business ... king-point

This is going to hurt.
You mean in addition to those that have rentals at college towns, vacation spots ,and near any larger employer who is transitioning to more of an online workplace.
I'm not disagreeing with this statement as much as I'm making a distinction. College towns and vacation spot rentals are a near-term issue for property owners which will pass in 6-8 months when we are (hopefully) all vaccinated. I would think that a seismic shift by employers towards a permanent online work place would manifest as more of a slower long-term transition, if it ever materializes.

klondike
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Re: Landlords: How are you doing this year?

Post by klondike » Wed Jul 08, 2020 6:06 pm

In our beautiful costal SoCal, rental market is hot. My loadlord friend and I are doing fine. No late payment so far -- knocking on wood...

With the pending "free rent" bills at state and fed level, I don't feel like adding more rentals.

OP, BiggerPockets is a much more interesting site for RE.

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tomtoms
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Re: Landlords: How are you doing this year?

Post by tomtoms » Wed Jul 08, 2020 7:15 pm

klondike wrote:
Wed Jul 08, 2020 6:06 pm
With the pending "free rent" bills at state and fed level, I don't feel like adding more rentals.
What is this free rent bill? Nothing is free. Someone has to pay for it.

klondike
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Re: Landlords: How are you doing this year?

Post by klondike » Wed Jul 08, 2020 7:52 pm

tomtoms wrote:
Wed Jul 08, 2020 7:15 pm
klondike wrote:
Wed Jul 08, 2020 6:06 pm
With the pending "free rent" bills at state and fed level, I don't feel like adding more rentals.
What is this free rent bill? Nothing is free. Someone has to pay for it.
Free rent means landlord is not allowed to evict tenants as soon as they claim they are affected by covid19. No proof is required. Yes they still owe you rents and are payable at the end but good luck collecting them.

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