Why are you NOT buying rental properties?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
SovereignInvestor
Posts: 582
Joined: Mon Aug 20, 2018 4:41 pm

Re: Why are you NOT buying rental properties?

Post by SovereignInvestor » Mon Jan 13, 2020 1:27 pm

I won't buy for same reason I generally avoid individual stocks. It has more risk although some individuals may well do very well with RE either due to luck or good skill especially at doing repairs and renovation to boost values and/or recognizing and capitalizing on local market inefficiencies.

But for me since I'm not super handy and returns in my local area wold be low to low rental yield rates, I don't buy any investment RE. Also any gains need to be in excess of implied pay for it being additional "work".

User avatar
JAZZISCOOL
Posts: 1017
Joined: Sat May 18, 2019 11:49 am
Location: Colorado - 5,700 ft.

Re: Why are you NOT buying rental properties?

Post by JAZZISCOOL » Mon Jan 13, 2020 2:41 pm

flaccidsteele wrote:
Mon Jan 13, 2020 1:05 pm
stoptothink wrote:
Mon Jan 13, 2020 10:18 am
JAZZISCOOL wrote:
Mon Jan 13, 2020 10:13 am
I sense the post-2008 financial crisis presented a once-in-a-lifetime RE opportunity for some investors who had the dry powder. But I agree there are various strategies now if one wants to pursue RE.
+1. Unfortunately I, and most of the people I know personally who have invested in residential real estate, were on the wrong side of that once-in-a-lifetime opportunity.
Back when I was buying, we (Canadians) were the largest foreign buyers of US RE

Most were snowbirds looking for winter homes, but I was in my 30s and wanted cash flow. Specifically cash flow in US$ (since my expenses are in C$). I couldn't care less about a winter home
JAZZISCOOL wrote:
Mon Jan 13, 2020 10:34 am
Agree. And psychologically, even if they had the capital to invest, many investors IMO would not have had the ability to pull the trigger at that time (or at least I don't think I would have) after the horrible equity losses in the public markets.
Canadians and other foreigners weren't as psychologically invested in US RE at the time. So we bought with less anxiety. We just saw 1) B class property in B class locations priced at less than replacement value - everywhere and 2) our currency being as strong as the US$

Both occurrences were rare - the combination was once-in-a-century
Interesting. I didn't know that about Canadian buyers! :happy

barberakb
Posts: 170
Joined: Fri Apr 21, 2017 11:14 pm

Re: Why are you NOT buying rental properties?

Post by barberakb » Wed Jan 15, 2020 2:14 am

Mako52 wrote:
Thu Jan 09, 2020 8:54 am
Because the ROI on real estate is terrible, and it's even worse with rentals.

Why would I buy a home for $600,000 in the DC suburbs to rent it for $2,700/month and pay $600/mo in property taxes?
You probably shouldn't. But saying "ROI on real estate is terrible, and it's even worse with rentals." is a purely ignorant blanket statement.

It all depends on your market.

LawProf
Posts: 145
Joined: Sun Feb 03, 2013 12:32 am

Re: Why are you NOT buying rental properties?

Post by LawProf » Wed Mar 18, 2020 4:07 pm

I really want to see how some of the assumptions on this thread play out in the current crisis.

stoptothink
Posts: 7615
Joined: Fri Dec 31, 2010 9:53 am

Re: Why are you NOT buying rental properties?

Post by stoptothink » Wed Mar 18, 2020 4:13 pm

LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.

User avatar
willthrill81
Posts: 18514
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Why are you NOT buying rental properties?

Post by willthrill81 » Wed Mar 18, 2020 4:15 pm

stoptothink wrote:
Wed Mar 18, 2020 4:13 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.
The fact that it is a high-end home may be part of the problem.

From what I've seen and heard, 'starter' homes and those that are one notch above them tend to be the most consistent. Even in a recession, people need somewhere to live, but that doesn't mean that they need to live in a Mcmansion.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

stoptothink
Posts: 7615
Joined: Fri Dec 31, 2010 9:53 am

Re: Why are you NOT buying rental properties?

Post by stoptothink » Wed Mar 18, 2020 4:25 pm

willthrill81 wrote:
Wed Mar 18, 2020 4:15 pm
stoptothink wrote:
Wed Mar 18, 2020 4:13 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.
The fact that it is a high-end home may be part of the problem.

From what I've seen and heard, 'starter' homes and those that are one notch above them tend to be the most consistent. Even in a recession, people need somewhere to live, but that doesn't mean that they need to live in a Mcmansion.
But the last 7yrs have been a bull market yet (based upon his experience) people (with high income) still can't always be trusted to pay their bills. The current renter was already a major hassle - had to threaten eviction last year - before being laid off. He'll likely struggle to find another renter soon, but that has nothing to do with the fact that about half of previous renters were deadbeats.

User avatar
willthrill81
Posts: 18514
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Why are you NOT buying rental properties?

Post by willthrill81 » Wed Mar 18, 2020 4:33 pm

stoptothink wrote:
Wed Mar 18, 2020 4:25 pm
willthrill81 wrote:
Wed Mar 18, 2020 4:15 pm
stoptothink wrote:
Wed Mar 18, 2020 4:13 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.
The fact that it is a high-end home may be part of the problem.

From what I've seen and heard, 'starter' homes and those that are one notch above them tend to be the most consistent. Even in a recession, people need somewhere to live, but that doesn't mean that they need to live in a Mcmansion.
But the last 7yrs have been a bull market yet (based upon his experience) people (with high income) still can't always be trusted to pay their bills. The current renter was already a major hassle - had to threaten eviction last year - before being laid off. He'll likely struggle to find another renter soon, but that has nothing to do with the fact that about half of previous renters were deadbeats.
Interesting.

Another reason why I don't want to become a landlord.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

michaeljc70
Posts: 6629
Joined: Thu Oct 15, 2015 3:53 pm

Re: Why are you NOT buying rental properties?

Post by michaeljc70 » Wed Mar 18, 2020 4:34 pm

stoptothink wrote:
Wed Mar 18, 2020 4:25 pm
willthrill81 wrote:
Wed Mar 18, 2020 4:15 pm
stoptothink wrote:
Wed Mar 18, 2020 4:13 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.
The fact that it is a high-end home may be part of the problem.

From what I've seen and heard, 'starter' homes and those that are one notch above them tend to be the most consistent. Even in a recession, people need somewhere to live, but that doesn't mean that they need to live in a Mcmansion.
But the last 7yrs have been a bull market yet (based upon his experience) people (with high income) still can't always be trusted to pay their bills. The current renter was already a major hassle - had to threaten eviction last year - before being laid off. He'll likely struggle to find another renter soon, but that has nothing to do with the fact that about half of previous renters were deadbeats.
Sounds like it could be a location and/or screening issue. I have a friend that has 60+ apartments and has only evicted a handful of people in 35+ years. He would rather let it sit empty than rent to a deadbeat. He runs credit checks on everyone (at their cost) and requires co-signors if they aren't up to par. The apartments are all in pretty good suburbs though.

Frisky77
Posts: 4
Joined: Fri Feb 14, 2020 5:37 pm

Re: Why are you NOT buying rental properties?

Post by Frisky77 » Wed Mar 18, 2020 4:44 pm

Here in Cook County, Illinois (Chicago and near suburbs) all pending eviction orders will not be executed for at least 30 days from this last Monday.

All civil court cases (including pending eviction cases) will not be heard for at least 30 days from yesterday.

The President's announcement today of the suspension of eviction today only applies to HUD or fed gov't owned properties.

But I suspect that many local jurisdictions will follow suit regarding the suspensions.

I make no comment re: the appropriateness of such measures. Just with keeping with the point of this thread- there are many property owners in the area that will suffer great financial hardship from this. Although honestly this is unprecedented and I don't think any reasonable prospective property owner would have considered this a reason NOT to buy a rental property. Other than it being in the category with other black swan type events.

annu
Posts: 584
Joined: Mon Nov 04, 2019 7:55 pm

Re: Why are you NOT buying rental properties?

Post by annu » Wed Mar 18, 2020 7:37 pm

I know it will be tough as a landlord, but I bet it will be tougher as a renter to survive in this economy. I will be frankly okay if one of our tenants let's us know they cannot pay, will just make sure they dont stop taking care of the home they live in, now that it is "free", beyond that hoping we dont lose more people over this virus and we find a fix soon

flaccidsteele
Posts: 392
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Mar 18, 2020 9:27 pm

LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
Working out better than I could have dreamed of a decade ago

Cash flow keeps coming in and redeployed into the US stock market

Win win
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

quantAndHold
Posts: 4498
Joined: Thu Sep 17, 2015 10:39 pm

Re: Why are you NOT buying rental properties?

Post by quantAndHold » Wed Mar 18, 2020 9:31 pm

flaccidsteele wrote:
Wed Mar 18, 2020 9:27 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
Working out better than I could have dreamed of a decade ago

Cash flow keeps coming in and redeployed into the US stock market

Win win
So your entire tenant base all have recession proof jobs? And your local government hasn’t put a moratorium on evictions?

You live a charmed life. At least for now.
Yes, I’m really that pedantic.

User avatar
willthrill81
Posts: 18514
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Why are you NOT buying rental properties?

Post by willthrill81 » Wed Mar 18, 2020 9:33 pm

Frisky77 wrote:
Wed Mar 18, 2020 4:44 pm
Here in Cook County, Illinois (Chicago and near suburbs) all pending eviction orders will not be executed for at least 30 days from this last Monday.
The governor just proclaimed the same moratorium on residential evictions for all of WA state: 30 days.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

flaccidsteele
Posts: 392
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Mar 18, 2020 10:50 pm

quantAndHold wrote:
Wed Mar 18, 2020 9:31 pm
flaccidsteele wrote:
Wed Mar 18, 2020 9:27 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
Working out better than I could have dreamed of a decade ago

Cash flow keeps coming in and redeployed into the US stock market

Win win
So your entire tenant base all have recession proof jobs? And your local government hasn’t put a moratorium on evictions?

You live a charmed life. At least for now.
I’m definitely blessed 👍
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

User avatar
HomerJ
Posts: 14589
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why are you NOT buying rental properties?

Post by HomerJ » Thu Mar 19, 2020 1:06 pm

stoptothink wrote:
Wed Mar 18, 2020 4:13 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.
He may not even be ALLOWED to evict a tenant. How does that new rule (in some states? most? all?) impact all the landlords on this site?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

fareastwarriors
Posts: 1206
Joined: Tue Feb 14, 2012 12:31 pm

Re: Why are you NOT buying rental properties?

Post by fareastwarriors » Thu Mar 19, 2020 2:34 pm

HomerJ wrote:
Thu Mar 19, 2020 1:06 pm
stoptothink wrote:
Wed Mar 18, 2020 4:13 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.
He may not even be ALLOWED to evict a tenant. How does that new rule (in some states? most? all?) impact all the landlords on this site?
Suck it up and wait. What else can be done?

It's definitely harder to be a small time landlord these days. I keep telling people you either sell and move on or try to scale up so you have resources to comply with existing laws and handle the changing laws and tenant issues.

User avatar
unclescrooge
Posts: 4764
Joined: Thu Jun 07, 2012 7:00 pm

Re: Why are you NOT buying rental properties?

Post by unclescrooge » Thu Mar 19, 2020 3:14 pm

HomerJ wrote:
Thu Mar 19, 2020 1:06 pm
stoptothink wrote:
Wed Mar 18, 2020 4:13 pm
LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
My brother's renter is in oil & gas and just got laid off. Sounds like this may be the 3rd time in 7yrs he'll have to evict a tenant, and it may be even more difficult this time. And this is a high-end home.
He may not even be ALLOWED to evict a tenant. How does that new rule (in some states? most? all?) impact all the landlords on this site?
My property manager sent a very polite letter to all her landlords saying that we should give our tenants some leeway in rents this month, and expect them to be late. Besides the courts are closed so it's like we can evict them anyway.

User avatar
abuss368
Posts: 19642
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why are you NOT buying rental properties?

Post by abuss368 » Thu Mar 19, 2020 8:58 pm

Wow! I’ll stay with a couple very low cost index funds.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

flaccidsteele
Posts: 392
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Thu Mar 19, 2020 9:45 pm

Damn. I’m glad I got my properties during the credit crisis when they were free

It doesn’t hurt that they funded my index funds either!
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

User avatar
avenger
Posts: 846
Joined: Mon Dec 02, 2013 12:11 pm

Re: Why are you NOT buying rental properties?

Post by avenger » Thu Mar 19, 2020 9:48 pm

I’m returning to this thread with popcorn. Just here to watch.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [3 fund portfolio: VTI, VXUS, SV fund (yield 3.01%)]

runner540
Posts: 1199
Joined: Sun Feb 26, 2017 5:43 pm

Re: Why are you NOT buying rental properties?

Post by runner540 » Thu Mar 19, 2020 10:13 pm

LawProf wrote:
Wed Mar 18, 2020 4:07 pm
I really want to see how some of the assumptions on this thread play out in the current crisis.
Good bump, LawProf. Staying tuned...

LawProf
Posts: 145
Joined: Sun Feb 03, 2013 12:32 am

Re: Why are you NOT buying rental properties?

Post by LawProf » Fri Mar 20, 2020 5:31 pm

Challenges in landlording:

(1) Does mortgage relief apply to landlords?

(2) The movement against evictions grows. Political risk tends to be an underappreciated risks of having tenants.

(3) College students are demanding to be released from their leases.

(4) Presumably real estate values are going to fall with the downturn in economic activity.

RomeoMustDie
Posts: 123
Joined: Sat Mar 14, 2020 6:07 pm

Re: Why are you NOT buying rental properties?

Post by RomeoMustDie » Fri Mar 20, 2020 6:10 pm

I saw an episode of youtube's "Millenial Money" where a young Seattle couple made hundreds of thousands of $ a year renting out a dozen leveraged properties in the city.

I'm 25, how can I enter real estate and have that level of success?

TropikThunder
Posts: 2304
Joined: Sun Apr 03, 2016 5:41 pm

Re: Why are you NOT buying rental properties?

Post by TropikThunder » Fri Mar 20, 2020 7:47 pm

RomeoMustDie wrote:
Fri Mar 20, 2020 6:10 pm
I saw an episode of youtube's "Millenial Money" where a young Seattle couple made hundreds of thousands of $ a year renting out a dozen leveraged properties in the city.

I'm 25, how can I enter real estate and have that level of success?
Start 10 years ago.

LawProf
Posts: 145
Joined: Sun Feb 03, 2013 12:32 am

Re: Why are you NOT buying rental properties?

Post by LawProf » Sun Mar 22, 2020 9:59 pm

Anything from the landlords out there? I'm interested to see what is happening on the ground in terms of tenants making their payments.

gr7070
Posts: 1003
Joined: Fri Oct 28, 2011 10:39 am

Re: Why are you NOT buying rental properties?

Post by gr7070 » Sun Mar 22, 2020 10:29 pm

LawProf wrote:
Sun Mar 22, 2020 9:59 pm
Anything from the landlords out there? I'm interested to see what is happening on the ground in terms of tenants making their payments.
Absolutely nothing is happening... right now. We're a few days, maybe weeks into this. The impact on the RE investment market will be delayed.

I suspect the actual impact will be less than the financial markets. Other than the recession 10 years ago RE has had few, if any, nationwide, substantial (30% over days!) losses in its history.

I could easily be wrong. Time will tell.

Just like with proper personal finance basics, if one applied those same, appropriate basics to their rental property business hopefully whatever impact this will have is short term and lessened.

barberakb
Posts: 170
Joined: Fri Apr 21, 2017 11:14 pm

Re: Why are you NOT buying rental properties?

Post by barberakb » Mon Mar 23, 2020 12:36 am

LawProf wrote:
Sun Mar 22, 2020 9:59 pm
Anything from the landlords out there? I'm interested to see what is happening on the ground in terms of tenants making their payments.
What are you asking?

I mean this all basically started in March, and its still March...

So March rent should have already been paid. Not much to report :confused

LawProf
Posts: 145
Joined: Sun Feb 03, 2013 12:32 am

Re: Why are you NOT buying rental properties?

Post by LawProf » Tue Mar 24, 2020 12:26 pm

barberakb wrote:
Mon Mar 23, 2020 12:36 am
LawProf wrote:
Sun Mar 22, 2020 9:59 pm
Anything from the landlords out there? I'm interested to see what is happening on the ground in terms of tenants making their payments.
What are you asking?

I mean this all basically started in March, and its still March...

So March rent should have already been paid. Not much to report :confused
I talked with a friend who owns a property management company and he said he has been inundated with calls from tenants saying that will not be able to pay their rent. Another friend who owns commercial property says that a tenant simply shuttered the business and left. I'm wondering if this is happening everywhere.

guitarguy
Posts: 1818
Joined: Mon Dec 20, 2010 4:10 pm

Re: Why are you NOT buying rental properties?

Post by guitarguy » Tue Mar 24, 2020 1:28 pm

Super interesting read.

I'm very much planning on turning my current home into a rental property a few years down the road when we size up. We are in a great location as far as stable and ever-appreciating market / walk to bars and shops / etc, but we will want to size up when child #2 comes and/or when #1 starts school. Elementary schools in our current district are solid, but middle/high are not great. So we are in a perfect spot to rent to young, reasonably well-off couples...which our neighborhood is full of.

Our current home has about 10 years left on a 2.8% 15-yr fixed. It should cash flow about $100/m until that note is paid - for around 5 years or so after the conversion call it - and then after that it should be a cash cow. Also, I'll have 2 years to decide if being a landlord is right for me...before which I can still sell the property and pay no LTCG tax. If it *is* for me, I can also leverage via a refi or a HELOC to pull some equity out and hopefully buy another property or 2.

I am a hustler, and am excited about starting and running another business. Aside from my day job, I have an active side hustle, and enjoy that very much. I'm very "into" systematizing my current business (E-Myth kinda stuff), and look forward to doing that in the real estate realm too. With the right systems and the right team members in place - which I know I have to find and create but I believe it's very doable - I believe that managing a small rental property business can be done reasonably (but not totally of course) passively.

barberakb
Posts: 170
Joined: Fri Apr 21, 2017 11:14 pm

Re: Why are you NOT buying rental properties?

Post by barberakb » Tue Mar 24, 2020 2:59 pm

LawProf wrote:
Tue Mar 24, 2020 12:26 pm
barberakb wrote:
Mon Mar 23, 2020 12:36 am
LawProf wrote:
Sun Mar 22, 2020 9:59 pm
Anything from the landlords out there? I'm interested to see what is happening on the ground in terms of tenants making their payments.
What are you asking?

I mean this all basically started in March, and its still March...

So March rent should have already been paid. Not much to report :confused
I talked with a friend who owns a property management company and he said he has been inundated with calls from tenants saying that will not be able to pay their rent. Another friend who owns commercial property says that a tenant simply shuttered the business and left. I'm wondering if this is happening everywhere.
I have 4 rental houses in 3 states. I have not received any calls or news like this. Now that could change, but so far nothing. You have to remember some management companies have hundreds of renters. And quite of few of them in lower end housing.

gr7070
Posts: 1003
Joined: Fri Oct 28, 2011 10:39 am

Re: Why are you NOT buying rental properties?

Post by gr7070 » Tue Mar 24, 2020 5:11 pm

LawProf wrote:
Tue Mar 24, 2020 12:26 pm
I talked with a friend who owns a property management company and he said he has been inundated with calls from tenants saying that will not be able to pay their rent. Another friend who owns commercial property says that a tenant simply shuttered the business and left. I'm wondering if this is happening everywhere.
I'm sure it's not unusual with plenty of folks living paycheck to paycheck and tons of service industry employees/employers out of income.

*Today* RE investments are certainly looking better than my financial markets' investments. Tomorrow may differ!

User avatar
abuss368
Posts: 19642
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why are you NOT buying rental properties?

Post by abuss368 » Tue Mar 24, 2020 5:13 pm

Reading stories about renters not being able to make rent payments and landlords having to accommodate and work with tenants. Hopefully banks work with landlords as well.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

User avatar
AerialWombat
Posts: 1418
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Why are you NOT buying rental properties?

Post by AerialWombat » Tue Mar 24, 2020 5:27 pm

If any of my tenants are unable to pay rent for a month or two or three, we'll work it out. Probably some combination of partial rent now, and a workout plan to catch up later. I could see a promissory note or two coming into existence in the near future.

On the mortgage side, Fannie, Freddie, FHA, etc. have all announced forbearance programs for both single family and multi-family property owners. So, fn need be, I'll work out a plan with my tenants, while working out something with the lenders.

The only property I'm actually worried about is the one financed with a portfolio loan (e.g., the bank did not sell the loan to Fannie or Freddie). If that bank doesn't want to play, and the tenant (whom I believe works in oil/gas) gets layed off, then I'll have to dig into the couch cushions.

All in all, I'm really not that worried. This is precisely why landlords should maintain cash reserves based on the number of properties they own. Business owners need to be prepared for this sort of thing, and owning rental properties needs to be treated more like an active business than a passive index investment.

gch
Posts: 69
Joined: Thu May 30, 2019 2:47 pm

Re: Why are you NOT buying rental properties?

Post by gch » Tue Mar 24, 2020 5:36 pm

So far I’ve yet to receive a call about April rent. We’ll see this next week how it goes. I (luckily) have a number of teachers and Different types of nurses so I should still be cash flow positive even if the waiters, dental assistants, etc. cannot pay.

Loon11
Posts: 311
Joined: Wed Feb 29, 2012 6:07 pm

Re: Why are you NOT buying rental properties?

Post by Loon11 » Tue Mar 24, 2020 7:19 pm

Been landlady since 1987 - a duplex intown, hot location, and a 4 bedroom house in another state - coastal. Can't say I enjoy landlording but it has been a great investment (except this past year on the coastal - hurricane and 12 yr tenant moving, leaving lots of deferred maintenance). Have just hired a property manager this yr for the out of state property but honestly, I've spent as much time coordinating repairs, carpet, painting, etc as the manager.

we bought low (advantage of being older) so now if we sold, the capital gains and depreciation recapture would throw us into IRMAA and worse.
So either we leave it to our son who won't need to deal with capital gains, etc. or we pay a huge chunk of taxes, medicare premiums and tax tier.
It's not really that bad but at age 70, just don't want to deal with anything apart from planning some vacation trips (if we ever get through this).

In the meantime, we do enjoy a good cash flow and may consider if we are willing to suffer the consequences of capital gain. We have also considered another 1031 but don't want the hassle or want to move.

Topic Author
tomtoms
Posts: 191
Joined: Wed Mar 06, 2013 11:56 pm

Re: Why are you NOT buying rental properties?

Post by tomtoms » Tue Mar 24, 2020 11:25 pm

I have not received any call yet but I am prepared to keep on paying the mortgage if necessary. I don't want to evict anyone or take them to small claim court. However, that does not mean their credit score won't be affected or late fee doesn't apply. Nobody wants an eviction on their record.

Rent doesn't just disappear. If I don't pay my mortgage, my lender won't have the money to pay pension funds and therefore, retirees won't get their pension. It goes on and on throughout the economy.

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Why are you NOT buying rental properties?

Post by watchnerd » Tue Mar 24, 2020 11:46 pm

Our family back office owns 7 rental properties (duplexes, quadplexes) near a major AFB in AZ.

The plus side is that military personnel are a steady supply, as is their paychecks.

The downside is keeping up with inflation. We've been unable to increase rent for many years due to the local market.

And some of them have trashed places, mostly as a result of wild parties (most of our tenants were on the young side).

We have a property management company, but after the last big bill for home repairs, we decided we wanted out of the business and are liquidating the investments.

Current thoughts are either to invest more in private infrastructure (cell towers and EV chargers have done well for us), or if the public markets get to -70%, perhaps put the money there.

But no more RE for us, other than our homes.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

flaccidsteele
Posts: 392
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Mar 25, 2020 12:10 am

LawProf wrote:
Fri Mar 20, 2020 5:31 pm
Challenges in landlording:

(1) Does mortgage relief apply to landlords?

(2) The movement against evictions grows. Political risk tends to be an underappreciated risks of having tenants.

(3) College students are demanding to be released from their leases.

(4) Presumably real estate values are going to fall with the downturn in economic activity.
Can only speak for myself

1. Don’t care. Don’t have mortgages

2. Touched base with my property management companies. No change for April. Maybe May? Maybe later? Maybe never

3. Don’t care. Don’t rent to students

4. Hope so. I purchased rentals during the credit crisis. Can’t lose purchasing class B rentals in class B locations for less than replacement cost. Would love to get that lucky, twice
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

User avatar
steve roy
Posts: 1773
Joined: Thu May 13, 2010 5:16 pm

Re: Why are you NOT buying rental properties?

Post by steve roy » Wed Mar 25, 2020 12:14 am

I watched my mother buy/sell/rent/recondition and flip houses for 35 years. From time to time I was part of the work crew that went in and cleaned, repainted various units that tenants trashed. I remember thinking: "This is NOT something I want to do for a living..."

She's out of the landlording business now (apparently wading into your 90s slows one down. Who knew?) Mom built wealth doing the real estate thingie, but I chose to go another route. Too many headaches, so far as I could see.

flaccidsteele
Posts: 392
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Mar 25, 2020 12:17 am

steve roy wrote:
Wed Mar 25, 2020 12:14 am
I watched my mother buy/sell/rent/recondition and flip houses for 35 years. From time to time I was part of the work crew that went in and cleaned, repainted various units that tenants trashed. I remember thinking: "This is NOT something I want to do for a living..."

She's out of the landlording business now (apparently wading into your 90s slows one down. Who knew?) Mom built wealth doing the real estate thingie, but I chose to go another route. Too many headaches, so far as I could see.
Your mom used you as cheap labor?

Ouch. Sorry to hear

I hire people to do that. I would never have my children do that unless they wanted too. I only check my email and bank accounts once a month. Seems about as easy as my index funds tbh
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

barberakb
Posts: 170
Joined: Fri Apr 21, 2017 11:14 pm

Re: Why are you NOT buying rental properties?

Post by barberakb » Fri Mar 27, 2020 10:45 am

flaccidsteele wrote:
Wed Mar 25, 2020 12:17 am
steve roy wrote:
Wed Mar 25, 2020 12:14 am
I watched my mother buy/sell/rent/recondition and flip houses for 35 years. From time to time I was part of the work crew that went in and cleaned, repainted various units that tenants trashed. I remember thinking: "This is NOT something I want to do for a living..."

She's out of the landlording business now (apparently wading into your 90s slows one down. Who knew?) Mom built wealth doing the real estate thingie, but I chose to go another route. Too many headaches, so far as I could see.
Your mom used you as cheap labor?

Ouch. Sorry to hear

I hire people to do that. I would never have my children do that unless they wanted too. I only check my email and bank accounts once a month. Seems about as easy as my index funds tbh
Wait theres actually people that don't use their kids for cheap labor?? Who knew.

You don't make your kids do chores, mow the lawn etc?

KyleAAA
Posts: 8270
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Re: Why are you NOT buying rental properties?

Post by KyleAAA » Fri Mar 27, 2020 10:48 am

Has anybody who pays attention to these things noticed what effect, if any, all this is having or likely to have on real estate prices? Case-Shiller for Q1 isn't out yet.

toomuchRE
Posts: 109
Joined: Mon Oct 23, 2017 1:05 pm

Re: Why are you NOT buying rental properties?

Post by toomuchRE » Fri Mar 27, 2020 10:51 am

case shiller or not, expect min 15% down on home prices...

co_investor
Posts: 45
Joined: Mon Jul 15, 2013 5:19 pm

Re: Why are you NOT buying rental properties?

Post by co_investor » Fri Mar 27, 2020 11:12 am

AerialWombat wrote:
Tue Mar 24, 2020 5:27 pm
All in all, I'm really not that worried. This is precisely why landlords should maintain cash reserves based on the number of properties they own. Business owners need to be prepared for this sort of thing, and owning rental properties needs to be treated more like an active business than a passive index investment.
+1

flaccidsteele
Posts: 392
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Fri Mar 27, 2020 11:18 am

barberakb wrote:
Fri Mar 27, 2020 10:45 am
flaccidsteele wrote:
Wed Mar 25, 2020 12:17 am
steve roy wrote:
Wed Mar 25, 2020 12:14 am
I watched my mother buy/sell/rent/recondition and flip houses for 35 years. From time to time I was part of the work crew that went in and cleaned, repainted various units that tenants trashed. I remember thinking: "This is NOT something I want to do for a living..."

She's out of the landlording business now (apparently wading into your 90s slows one down. Who knew?) Mom built wealth doing the real estate thingie, but I chose to go another route. Too many headaches, so far as I could see.
Your mom used you as cheap labor?

Ouch. Sorry to hear

I hire people to do that. I would never have my children do that unless they wanted too. I only check my email and bank accounts once a month. Seems about as easy as my index funds tbh
Wait theres actually people that don't use their kids for cheap labor?? Who knew.

You don't make your kids do chores, mow the lawn etc?
Not if it damages their opinion of an investment like stocks or real estate

That would be irresponsible of me as a parent
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

User avatar
steve roy
Posts: 1773
Joined: Thu May 13, 2010 5:16 pm

Re: Why are you NOT buying rental properties?

Post by steve roy » Fri Mar 27, 2020 5:13 pm

flaccidsteele wrote:
Fri Mar 27, 2020 11:18 am
barberakb wrote:
Fri Mar 27, 2020 10:45 am
flaccidsteele wrote:
Wed Mar 25, 2020 12:17 am
steve roy wrote:
Wed Mar 25, 2020 12:14 am
I watched my mother buy/sell/rent/recondition and flip houses for 35 years. From time to time I was part of the work crew that went in and cleaned, repainted various units that tenants trashed. I remember thinking: "This is NOT something I want to do for a living..."

She's out of the landlording business now (apparently wading into your 90s slows one down. Who knew?) Mom built wealth doing the real estate thingie, but I chose to go another route. Too many headaches, so far as I could see.
Your mom used you as cheap labor?

Ouch. Sorry to hear

I hire people to do that. I would never have my children do that unless they wanted too. I only check my email and bank accounts once a month. Seems about as easy as my index funds tbh
Wait theres actually people that don't use their kids for cheap labor?? Who knew.

You don't make your kids do chores, mow the lawn etc?
Not if it damages their opinion of an investment like stocks or real estate

That would be irresponsible of me as a parent
To expand on this: I was in my middle twenties at the time. I had a full-time job and lived in the San Fernando Valley. I drove to Santa Ana (in Orange Country, CA) because she asked, did some cleaning, hauling, painting. I received no compensation.

But I only did the reconditioning of her rental units once. What I mostly did in those olden times was help her move from house to house, since her OTHER avocation was buying houses (and living in the houses), remodeling same, then flipping them. This was in the 1970s and for awhile seemed to be my weekend hobby ... WAaay before the go-getters of HGTV came on the scene.

User avatar
Cubicle
Posts: 833
Joined: Sun Sep 22, 2019 1:43 am

Re: Why are you NOT buying rental properties?

Post by Cubicle » Fri Mar 27, 2020 8:10 pm

A family member has multiple commercial & residential rental properties. Multiple of each already "gave notice" that April rent won't be possible.
"Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

User avatar
HomerJ
Posts: 14589
Joined: Fri Jun 06, 2008 12:50 pm

Re: Why are you NOT buying rental properties?

Post by HomerJ » Sat Mar 28, 2020 12:38 am

barberakb wrote:
Fri Mar 27, 2020 10:45 am
flaccidsteele wrote:
Wed Mar 25, 2020 12:17 am
steve roy wrote:
Wed Mar 25, 2020 12:14 am
I watched my mother buy/sell/rent/recondition and flip houses for 35 years. From time to time I was part of the work crew that went in and cleaned, repainted various units that tenants trashed. I remember thinking: "This is NOT something I want to do for a living..."

She's out of the landlording business now (apparently wading into your 90s slows one down. Who knew?) Mom built wealth doing the real estate thingie, but I chose to go another route. Too many headaches, so far as I could see.
Your mom used you as cheap labor?

Ouch. Sorry to hear

I hire people to do that. I would never have my children do that unless they wanted too. I only check my email and bank accounts once a month. Seems about as easy as my index funds tbh
Wait theres actually people that don't use their kids for cheap labor?? Who knew.

You don't make your kids do chores, mow the lawn etc?
Cheap labor is the only reason to HAVE kids.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

barberakb
Posts: 170
Joined: Fri Apr 21, 2017 11:14 pm

Re: Why are you NOT buying rental properties?

Post by barberakb » Sat Mar 28, 2020 3:11 am

flaccidsteele wrote:
Fri Mar 27, 2020 11:18 am
barberakb wrote:
Fri Mar 27, 2020 10:45 am
flaccidsteele wrote:
Wed Mar 25, 2020 12:17 am
steve roy wrote:
Wed Mar 25, 2020 12:14 am
I watched my mother buy/sell/rent/recondition and flip houses for 35 years. From time to time I was part of the work crew that went in and cleaned, repainted various units that tenants trashed. I remember thinking: "This is NOT something I want to do for a living..."

She's out of the landlording business now (apparently wading into your 90s slows one down. Who knew?) Mom built wealth doing the real estate thingie, but I chose to go another route. Too many headaches, so far as I could see.
Your mom used you as cheap labor?

Ouch. Sorry to hear

I hire people to do that. I would never have my children do that unless they wanted too. I only check my email and bank accounts once a month. Seems about as easy as my index funds tbh
Wait theres actually people that don't use their kids for cheap labor?? Who knew.

You don't make your kids do chores, mow the lawn etc?
Not if it damages their opinion of an investment like stocks or real estate

That would be irresponsible of me as a parent
ummm Ok

Post Reply