Why are you NOT buying rental properties?

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barberakb
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Re: Why are you NOT buying rental properties?

Post by barberakb » Sun Apr 05, 2020 2:46 am

FIREchief wrote:
Sat Apr 04, 2020 12:56 pm
tomtoms wrote:
Sat Apr 04, 2020 10:17 am
Unlike the stock market, the RE market is not efficient.

I stick to single family homes. I only buy in a good neighborhood with good schools. Every tenant is checked for income, credit score and eviction history.
How do you check for eviction history?
Online, same way you check their credit score, back ground etc...

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abuss368
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Re: Why are you NOT buying rental properties?

Post by abuss368 » Sun Apr 05, 2020 8:23 am

oldfort wrote:
Sat Apr 04, 2020 12:29 pm
tomtoms wrote:
Thu Jan 09, 2020 10:52 am
watchnerd wrote:
Thu Jan 09, 2020 10:07 am
tomtoms wrote:
Wed Jan 16, 2019 2:28 pm


Here are two scenarios (I am simplifying them to make a point on leverage):

(1) Put $80 k in RE ETF. Let’s assume you make 8% per year (after fees). After 9 years, your money would double to $160 k and after 18 years, your money would double again to $320 k.

(2) Put $80 k (20% down payment) on $400 k house. Lets assume a modest 4% appreciation per year and your tenants pay for all expenses (mortgage, property tax, fixes, property manager, etc). After 18 years, the house would double to $800 k.

Isn't the more fair comparison to also use leverage on the RE ETF? To buy it on margin?
No bank is going to lend you money to buy RE ETF.
Maybe, not directly, but you could take out a HELOC to invest in REITs. For some reason, that advice doesn't seem too popular on bogleheads.
Investing on margin? No! I would not invest on margin as the investment can go down and you still owe the debt. I remember watching Jack Bogle advising against this.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

michaeljc70
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Re: Why are you NOT buying rental properties?

Post by michaeljc70 » Wed Apr 08, 2020 1:21 pm

https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.

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willthrill81
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Re: Why are you NOT buying rental properties?

Post by willthrill81 » Wed Apr 08, 2020 1:27 pm

michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Yep. Another reason to not be 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

BalancedJCB19
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Re: Why are you NOT buying rental properties?

Post by BalancedJCB19 » Wed Apr 08, 2020 1:44 pm

I could never buy rental properties because I could never evict a tenant who fell on hard times. I'm not holier than thou, I just know I couldn't do it and it would be a losing proposition for me.

stoptothink
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Re: Why are you NOT buying rental properties?

Post by stoptothink » Wed Apr 08, 2020 1:46 pm

BalancedJCB19 wrote:
Wed Apr 08, 2020 1:44 pm
I could never buy rental properties because I could never evict a tenant who fell on hard times. I'm not holier than thou, I just know I couldn't do it and it would be a losing proposition for me.
I don't think I could ever be a landlord because I could evict a tenant, and I have seen through the experiences of several friends and my brother how difficult (and expensive) that can be.

flaccidsteele
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Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Apr 08, 2020 2:38 pm

michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Doesn't seem that bad compared to the stock decline of 30%+ :D
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

flaccidsteele
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Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Apr 08, 2020 2:38 pm

stoptothink wrote:
Wed Apr 08, 2020 1:46 pm
BalancedJCB19 wrote:
Wed Apr 08, 2020 1:44 pm
I could never buy rental properties because I could never evict a tenant who fell on hard times. I'm not holier than thou, I just know I couldn't do it and it would be a losing proposition for me.
I don't think I could ever be a landlord because I could evict a tenant, and I have seen through the experiences of several friends and my brother how difficult (and expensive) that can be.
Why are your friends and your brother doing their own evictions?

Weird

My property management company has evicted tenants occasionally in the past. They haven't told me that it was hard. Maybe I should ask them
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

michaeljc70
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Re: Why are you NOT buying rental properties?

Post by michaeljc70 » Wed Apr 08, 2020 3:16 pm

flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Doesn't seem that bad compared to the stock decline of 30%+ :D
I can sit back without cash flow from stocks for years for the stock market to come back. Many landlords with mortgages cannot do the same.

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amp
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Re: Why are you NOT buying rental properties?

Post by amp » Wed Apr 08, 2020 3:22 pm

tomtoms wrote:
Sat Apr 04, 2020 2:01 pm
randomguy wrote:
Sat Apr 04, 2020 12:02 pm
tomtoms wrote:
Sat Apr 04, 2020 10:17 am
randomguy wrote:
Sat Apr 04, 2020 9:56 am
barberakb wrote:
Sat Apr 04, 2020 1:31 am
Just because you don't know how to do it shouldn't make it laughable...
I have heard people use the same logic for picking individual stocks:) People were largely employed in March. It will not be until like June when things really ramp up. It could be messy but it might also end up hitting some real estate investors a lot heavy than others. And for the ones it doesn't hit, they will all like to think it was skill and not luck. And the ones that get hit will think it was all bad luck and not lack of skill...
Unlike the stock market, the RE market is not efficient.

I stick to single family homes. I only buy in a good neighborhood with good schools. Every tenant is checked for income, credit score and eviction history.

I could have better cash flow by buying multi-family building in a bad neighborhood but that came with more risk (and headache).
And people with good incomes living in single family homes in good neighborhoods aren't among the 10 million people who have filed for unemployment benefits in the past 2 weeks much less whatever happens over the next 2-3 months? :)
Like I said...it is about risk. Obviously there is no guarantee but that doesn’t mean you can’t manage risk. Renting your property to a couple of nurses is better than renting it to drug reps. I think you get the point.
I'm sorry, but I'm completely missing the point. Before the current crisis, why would anyone believe that renting to nurses was less risky than renting to drug reps? Except for some concern about having attorneys as tenants, I've never heard anyone discuss the risk of renting to people in different professions.

renue74
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Re: Why are you NOT buying rental properties?

Post by renue74 » Wed Apr 08, 2020 3:26 pm

flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
stoptothink wrote:
Wed Apr 08, 2020 1:46 pm
BalancedJCB19 wrote:
Wed Apr 08, 2020 1:44 pm
I could never buy rental properties because I could never evict a tenant who fell on hard times. I'm not holier than thou, I just know I couldn't do it and it would be a losing proposition for me.
I don't think I could ever be a landlord because I could evict a tenant, and I have seen through the experiences of several friends and my brother how difficult (and expensive) that can be.
Why are your friends and your brother doing their own evictions?

Weird

My property management company has evicted tenants occasionally in the past. They haven't told me that it was hard. Maybe I should ask them
Ease of evictions are on a state by state basis. I landlord in SC and the state is a very landlord friendly state. I can get someone out in 3 weeks at a cost of $50 paid to the local magistrate's office to serve papers. Takes 2 trips to the magistrates office and is very painless. In 7 years, I've only had to evict one time. I've heard CA is a difficult state to evict.

I use MySmartMove, a website from TransUnion that vets tenants through background checks, credit checks, etc. and tells me where the tenant would be suitable for my properties.

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SmallCityDave
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Re: Why are you NOT buying rental properties?

Post by SmallCityDave » Wed Apr 08, 2020 3:31 pm

michaeljc70 wrote:
Wed Apr 08, 2020 3:16 pm
flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Doesn't seem that bad compared to the stock decline of 30%+ :D
I can sit back without cash flow from stocks for years for the stock market to come back. Many landlords with mortgages cannot do the same.
They are doing it wrong ;)

stoptothink
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Re: Why are you NOT buying rental properties?

Post by stoptothink » Wed Apr 08, 2020 3:33 pm

flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
stoptothink wrote:
Wed Apr 08, 2020 1:46 pm
BalancedJCB19 wrote:
Wed Apr 08, 2020 1:44 pm
I could never buy rental properties because I could never evict a tenant who fell on hard times. I'm not holier than thou, I just know I couldn't do it and it would be a losing proposition for me.
I don't think I could ever be a landlord because I could evict a tenant, and I have seen through the experiences of several friends and my brother how difficult (and expensive) that can be.
Why are your friends and your brother doing their own evictions?

Weird

My property management company has evicted tenants occasionally in the past. They haven't told me that it was hard. Maybe I should ask them
What exactly is your point? They are not physically handling the evictions, but the process with the management company is still a drawn out and expensive headache. At least in my brother's case, it has taken several months (of no rental income) all 3 times. He's likely in that position again because he has a tenant that was laid off a few weeks ago and was already 2 months behind before he did not pay April. This individual had a high income and should be receiving unemployment now, but nothing my brother can do.

EddyB
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Re: Why are you NOT buying rental properties?

Post by EddyB » Wed Apr 08, 2020 3:57 pm

michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
That's not even twice the rate at which renters typically don't pay rent in the first five days of the month (and this month the fifth was on a Sunday, which has to be good for a few percent). I don't think that one piece of information is as meaningful as you seem to have assumed.

flaccidsteele
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Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Apr 08, 2020 4:04 pm

michaeljc70 wrote:
Wed Apr 08, 2020 3:16 pm
flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Doesn't seem that bad compared to the stock decline of 30%+ :D
I can sit back without cash flow from stocks for years for the stock market to come back. Many landlords with mortgages cannot do the same.
You’re not comparing the same thing

I have no debt either and my rentals produce more cash flow

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

flaccidsteele
Posts: 395
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Location: Canada

Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Apr 08, 2020 4:05 pm

stoptothink wrote:
Wed Apr 08, 2020 3:33 pm
flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
stoptothink wrote:
Wed Apr 08, 2020 1:46 pm
BalancedJCB19 wrote:
Wed Apr 08, 2020 1:44 pm
I could never buy rental properties because I could never evict a tenant who fell on hard times. I'm not holier than thou, I just know I couldn't do it and it would be a losing proposition for me.
I don't think I could ever be a landlord because I could evict a tenant, and I have seen through the experiences of several friends and my brother how difficult (and expensive) that can be.
Why are your friends and your brother doing their own evictions?

Weird

My property management company has evicted tenants occasionally in the past. They haven't told me that it was hard. Maybe I should ask them
What exactly is your point? They are not physically handling the evictions, but the process with the management company is still a drawn out and expensive headache. At least in my brother's case, it has taken several months (of no rental income) all 3 times. He's likely in that position again because he has a tenant that was laid off a few weeks ago and was already 2 months behind before he did not pay April. This individual had a high income and should be receiving unemployment now, but nothing my brother can do.
He clearly picked the wrong location

Why would an eviction take “several months”?
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

michaeljc70
Posts: 6641
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Re: Why are you NOT buying rental properties?

Post by michaeljc70 » Wed Apr 08, 2020 4:07 pm

flaccidsteele wrote:
Wed Apr 08, 2020 4:04 pm
michaeljc70 wrote:
Wed Apr 08, 2020 3:16 pm
flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Doesn't seem that bad compared to the stock decline of 30%+ :D
I can sit back without cash flow from stocks for years for the stock market to come back. Many landlords with mortgages cannot do the same.
You’re not comparing the same thing

I have no debt either and my rentals produce more cash flow

Seems ok to me
I wasn't talking about you personally.

manuvns
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Re: Why are you NOT buying rental properties?

Post by manuvns » Wed Apr 08, 2020 4:18 pm

willthrill81 wrote:
Wed Apr 08, 2020 1:27 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Yep. Another reason to not be a landlord.
may be not here is a great video of professionally managed landlord co .
https://www.youtube.com/watch?v=vmt1Li1Rnes

stoptothink
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Re: Why are you NOT buying rental properties?

Post by stoptothink » Wed Apr 08, 2020 4:19 pm

flaccidsteele wrote:
Wed Apr 08, 2020 4:05 pm
stoptothink wrote:
Wed Apr 08, 2020 3:33 pm
flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
stoptothink wrote:
Wed Apr 08, 2020 1:46 pm
BalancedJCB19 wrote:
Wed Apr 08, 2020 1:44 pm
I could never buy rental properties because I could never evict a tenant who fell on hard times. I'm not holier than thou, I just know I couldn't do it and it would be a losing proposition for me.
I don't think I could ever be a landlord because I could evict a tenant, and I have seen through the experiences of several friends and my brother how difficult (and expensive) that can be.
Why are your friends and your brother doing their own evictions?

Weird

My property management company has evicted tenants occasionally in the past. They haven't told me that it was hard. Maybe I should ask them
What exactly is your point? They are not physically handling the evictions, but the process with the management company is still a drawn out and expensive headache. At least in my brother's case, it has taken several months (of no rental income) all 3 times. He's likely in that position again because he has a tenant that was laid off a few weeks ago and was already 2 months behind before he did not pay April. This individual had a high income and should be receiving unemployment now, but nothing my brother can do.
He clearly picked the wrong location

Why would an eviction take “several months”?
OK, that doesn't change the fact that evicting a tenant in many parts of the country can take a long time and be expensive.

michaeljc70
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Re: Why are you NOT buying rental properties?

Post by michaeljc70 » Wed Apr 08, 2020 4:21 pm

EddyB wrote:
Wed Apr 08, 2020 3:57 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
That's not even twice the rate at which renters typically don't pay rent in the first five days of the month (and this month the fifth was on a Sunday, which has to be good for a few percent). I don't think that one piece of information is as meaningful as you seem to have assumed.
"Only 69% of tenants paid any of their rent between April 1 and 5, compared with 81% in the first week of March and 82% in April 2019, the data show."

https://www.marketwatch.com/story/no-re ... 2020-04-08

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HomerJ
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Re: Why are you NOT buying rental properties?

Post by HomerJ » Wed Apr 08, 2020 4:40 pm

Duplicate
Last edited by HomerJ on Wed Apr 08, 2020 5:04 pm, edited 1 time in total.
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.”

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HomerJ
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Re: Why are you NOT buying rental properties?

Post by HomerJ » Wed Apr 08, 2020 4:46 pm

Steele (I'm not typing your full name)... :)

Everything that has gone well for you may be the absolute truth, but you are being extremely unhelpful when you act like it's impossible for rentals to have problems for OTHER people...
"Why would an eviction take several months?"
Really? You ask that question? You have no idea that different states have different laws?

Come on man... You could be really helpful to people here, but you're just coming off as superior.
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.”

michaeljc70
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Re: Why are you NOT buying rental properties?

Post by michaeljc70 » Wed Apr 08, 2020 5:10 pm

flaccidsteele wrote:
Wed Apr 08, 2020 4:04 pm
michaeljc70 wrote:
Wed Apr 08, 2020 3:16 pm
flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Doesn't seem that bad compared to the stock decline of 30%+ :D
I can sit back without cash flow from stocks for years for the stock market to come back. Many landlords with mortgages cannot do the same.
You’re not comparing the same thing

I have no debt either and my rentals produce more cash flow

Seems ok to me
You compared the stock market to owning residential real estate, not me.

"Seems ok to me". If you don't own stocks I guess the stock market seems ok too....

EddyB
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Re: Why are you NOT buying rental properties?

Post by EddyB » Wed Apr 08, 2020 5:28 pm

michaeljc70 wrote:
Wed Apr 08, 2020 4:21 pm
EddyB wrote:
Wed Apr 08, 2020 3:57 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
That's not even twice the rate at which renters typically don't pay rent in the first five days of the month (and this month the fifth was on a Sunday, which has to be good for a few percent). I don't think that one piece of information is as meaningful as you seem to have assumed.
"Only 69% of tenants paid any of their rent between April 1 and 5, compared with 81% in the first week of March and 82% in April 2019, the data show."

https://www.marketwatch.com/story/no-re ... 2020-04-08
Like I said....

19% didn't pay in the first week of March, and 31% didn't pay in the first five days of April (which ended on a weekend). I'm not calling it good news, but the static headline doesn't "say it all"---it doesn't even seem to say much. Being a landlord isn't for everyone, and it has many risks and downsides, but I don't think what's happened so far is as significant to landlords as the equity market decline was to many investors.

flaccidsteele
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Re: Why are you NOT buying rental properties?

Post by flaccidsteele » Wed Apr 08, 2020 11:43 pm

michaeljc70 wrote:
Wed Apr 08, 2020 5:10 pm
flaccidsteele wrote:
Wed Apr 08, 2020 4:04 pm
michaeljc70 wrote:
Wed Apr 08, 2020 3:16 pm
flaccidsteele wrote:
Wed Apr 08, 2020 2:38 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Doesn't seem that bad compared to the stock decline of 30%+ :D
I can sit back without cash flow from stocks for years for the stock market to come back. Many landlords with mortgages cannot do the same.
You’re not comparing the same thing

I have no debt either and my rentals produce more cash flow

Seems ok to me
You compared the stock market to owning residential real estate, not me.

"Seems ok to me". If you don't own stocks I guess the stock market seems ok too....
I did. And, owning both, it’s pretty much the same to me

Cash flow has just been better with real estate
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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AerialWombat
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Re: Why are you NOT buying rental properties?

Post by AerialWombat » Thu Apr 09, 2020 12:00 am

EddyB wrote:
Wed Apr 08, 2020 5:28 pm
19% didn't pay in the first week of March, and 31% didn't pay in the first five days of April (which ended on a weekend). I'm not calling it good news, but the static headline doesn't "say it all"---it doesn't even seem to say much.
Bingo. I saw the referenced article earlier today, and it was pure clickbait rubbish. An existing problem within the surveyed markets got slightly worse.

barberakb
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Re: Why are you NOT buying rental properties?

Post by barberakb » Thu Apr 09, 2020 2:24 am

I have gotten 70% of my April rent so far

ddurrett896
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Re: Why are you NOT buying rental properties?

Post by ddurrett896 » Thu Apr 09, 2020 6:31 am

michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
Became an accident landlord 8 years ago and sold in January 2020. Talk about market timing!!!

FoolMeOnce
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Re: Why are you NOT buying rental properties?

Post by FoolMeOnce » Thu Apr 09, 2020 7:01 am

FIREchief wrote:
Fri Apr 03, 2020 10:39 pm
stoptothink wrote:
Fri Apr 03, 2020 8:14 pm
FIREchief wrote:
Fri Apr 03, 2020 3:48 pm
I have a question for those who have had tenants who claim they can't pay the rent this month. Did they lose their jobs? (let's assume "yes") Did they immediately apply for unemployment benefits? Do they understand that the federal government is going to bump up their unemployment benefit, in the cases of lower income folks likely above what they were making while working? It just makes no sense that the fed has sent out free parachutes, but I see all this stuff in the media and elsewhere about folks who lost their jobs and suddenly can't buy groceries or pay the rent. I once got laid off by an employer who augmented my unemployment benefits up to about 75% of what I had been making for four months (this despite being very young and having minimal savings). I never missed a payment or failed to pay the rent. What am I missing here?
Nothing. Been in the same situation and it never even crossed my mind to not pay rent. My brother has a tenant that was making $200k+/yr in oil & gas, lost his job a few weeks ago and called my brother later that evening to tell him he can't pay the rent. Would bet my life he isn't missing the payments on his truck and jet skis. It's about priorities.
Thank you!! :sharebeer Deadbeats are deadbeats, and idiots are idiots. To bring this back on topic and answer the original question, my answer is that there are too many idiots out there and I have no way of knowing who they are until they actually become my tenant. Just as anybody can act professional in a job interview, anybody can present themselves as 'good guys' when signing the lease. You won't see their real nature until it is too late. I find it laughable that folks in this thread claim to be able to separate the wheat from the chaff when considering potential tenants.
What you might be missing is that unemployment offices are completely overwhelmed right now, causing a delay in processing fillings. Illinois, for instance, has asked people to only apply on certain days of the week, assigning certain letters of the alphabet to certain days. I know someone who did not get a response to the application for two weeks, and now still has to wait for the first payment. And this first payment will almost certainly not included the extra $600 Congress has provided. From what I can tell, only New York is ready to include that extra money. So yes, people can still be struggling to buy groceries and pay rent right now.

stoptothink
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Re: Why are you NOT buying rental properties?

Post by stoptothink » Thu Apr 09, 2020 8:48 am

FoolMeOnce wrote:
Thu Apr 09, 2020 7:01 am
FIREchief wrote:
Fri Apr 03, 2020 10:39 pm
stoptothink wrote:
Fri Apr 03, 2020 8:14 pm
FIREchief wrote:
Fri Apr 03, 2020 3:48 pm
I have a question for those who have had tenants who claim they can't pay the rent this month. Did they lose their jobs? (let's assume "yes") Did they immediately apply for unemployment benefits? Do they understand that the federal government is going to bump up their unemployment benefit, in the cases of lower income folks likely above what they were making while working? It just makes no sense that the fed has sent out free parachutes, but I see all this stuff in the media and elsewhere about folks who lost their jobs and suddenly can't buy groceries or pay the rent. I once got laid off by an employer who augmented my unemployment benefits up to about 75% of what I had been making for four months (this despite being very young and having minimal savings). I never missed a payment or failed to pay the rent. What am I missing here?
Nothing. Been in the same situation and it never even crossed my mind to not pay rent. My brother has a tenant that was making $200k+/yr in oil & gas, lost his job a few weeks ago and called my brother later that evening to tell him he can't pay the rent. Would bet my life he isn't missing the payments on his truck and jet skis. It's about priorities.
Thank you!! :sharebeer Deadbeats are deadbeats, and idiots are idiots. To bring this back on topic and answer the original question, my answer is that there are too many idiots out there and I have no way of knowing who they are until they actually become my tenant. Just as anybody can act professional in a job interview, anybody can present themselves as 'good guys' when signing the lease. You won't see their real nature until it is too late. I find it laughable that folks in this thread claim to be able to separate the wheat from the chaff when considering potential tenants.
What you might be missing is that unemployment offices are completely overwhelmed right now, causing a delay in processing fillings. Illinois, for instance, has asked people to only apply on certain days of the week, assigning certain letters of the alphabet to certain days. I know someone who did not get a response to the application for two weeks, and now still has to wait for the first payment. And this first payment will almost certainly not included the extra $600 Congress has provided. From what I can tell, only New York is ready to include that extra money. So yes, people can still be struggling to buy groceries and pay rent right now.
This will be the 4th renter my brother will likely have to evict, in 8-9yrs. All of them were highly compensated employees (it's a high-end home). Was the excuse for the other 3 that there was a delay in their unemployment?

moneyman11
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Re: Why are you NOT buying rental properties?

Post by moneyman11 » Thu Apr 09, 2020 8:54 am

The posts in this thread seems to all fall into two general categories:

1. “Here are actual real experiences that turned me off to owning rental properties.”
Or
2. “Meh. Never happened to me. You must be doing it wrong.”

FoolMeOnce
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Re: Why are you NOT buying rental properties?

Post by FoolMeOnce » Thu Apr 09, 2020 9:10 am

stoptothink wrote:
Thu Apr 09, 2020 8:48 am
FoolMeOnce wrote:
Thu Apr 09, 2020 7:01 am
FIREchief wrote:
Fri Apr 03, 2020 10:39 pm
stoptothink wrote:
Fri Apr 03, 2020 8:14 pm
FIREchief wrote:
Fri Apr 03, 2020 3:48 pm
I have a question for those who have had tenants who claim they can't pay the rent this month. Did they lose their jobs? (let's assume "yes") Did they immediately apply for unemployment benefits? Do they understand that the federal government is going to bump up their unemployment benefit, in the cases of lower income folks likely above what they were making while working? It just makes no sense that the fed has sent out free parachutes, but I see all this stuff in the media and elsewhere about folks who lost their jobs and suddenly can't buy groceries or pay the rent. I once got laid off by an employer who augmented my unemployment benefits up to about 75% of what I had been making for four months (this despite being very young and having minimal savings). I never missed a payment or failed to pay the rent. What am I missing here?
Nothing. Been in the same situation and it never even crossed my mind to not pay rent. My brother has a tenant that was making $200k+/yr in oil & gas, lost his job a few weeks ago and called my brother later that evening to tell him he can't pay the rent. Would bet my life he isn't missing the payments on his truck and jet skis. It's about priorities.
Thank you!! :sharebeer Deadbeats are deadbeats, and idiots are idiots. To bring this back on topic and answer the original question, my answer is that there are too many idiots out there and I have no way of knowing who they are until they actually become my tenant. Just as anybody can act professional in a job interview, anybody can present themselves as 'good guys' when signing the lease. You won't see their real nature until it is too late. I find it laughable that folks in this thread claim to be able to separate the wheat from the chaff when considering potential tenants.
What you might be missing is that unemployment offices are completely overwhelmed right now, causing a delay in processing fillings. Illinois, for instance, has asked people to only apply on certain days of the week, assigning certain letters of the alphabet to certain days. I know someone who did not get a response to the application for two weeks, and now still has to wait for the first payment. And this first payment will almost certainly not included the extra $600 Congress has provided. From what I can tell, only New York is ready to include that extra money. So yes, people can still be struggling to buy groceries and pay rent right now.
This will be the 4th renter my brother will likely have to evict, in 8-9yrs. All of them were highly compensated employees (it's a high-end home). Was the excuse for the other 3 that there was a delay in their unemployment?
My response was to FIREchief's generalization about people lacking money despite fed "parachutes," not to your post about a single high earner who saved nothing. Maybe I should've only quoted that first post. Of course plenty of people should be more prepared. Others might be paycheck to paycheck on near-poverty wages and haven't seen a dime of unemployment insurance yet. FIREchief asked "what am I missing here?" I simply described a factor that might be missing.

gr7070
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Re: Why are you NOT buying rental properties?

Post by gr7070 » Thu Apr 09, 2020 10:22 am

moneyman11 wrote:
Thu Apr 09, 2020 8:54 am
The posts in this thread seems to all fall into two general categories:

1. “Here are actual real experiences that turned me off to owning rental properties.”
Or
2. “Meh. Never happened to me. You must be doing it wrong.”
You forgot

3. Whatever negatives come with financial markets investment magically disappear

Or.

4. Those negatives that come with RE investing can't possibly be reasonably accounted for

Unfortunately the Bogleheads community seems to set aside reason with regards to RE investing, sometimes on both sides of the aisle.

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FIREchief
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Re: Why are you NOT buying rental properties?

Post by FIREchief » Thu Apr 09, 2020 1:05 pm

FoolMeOnce wrote:
Thu Apr 09, 2020 7:01 am
FIREchief wrote:
Fri Apr 03, 2020 10:39 pm
stoptothink wrote:
Fri Apr 03, 2020 8:14 pm
FIREchief wrote:
Fri Apr 03, 2020 3:48 pm
I have a question for those who have had tenants who claim they can't pay the rent this month. Did they lose their jobs? (let's assume "yes") Did they immediately apply for unemployment benefits? Do they understand that the federal government is going to bump up their unemployment benefit, in the cases of lower income folks likely above what they were making while working? It just makes no sense that the fed has sent out free parachutes, but I see all this stuff in the media and elsewhere about folks who lost their jobs and suddenly can't buy groceries or pay the rent. I once got laid off by an employer who augmented my unemployment benefits up to about 75% of what I had been making for four months (this despite being very young and having minimal savings). I never missed a payment or failed to pay the rent. What am I missing here?
Nothing. Been in the same situation and it never even crossed my mind to not pay rent. My brother has a tenant that was making $200k+/yr in oil & gas, lost his job a few weeks ago and called my brother later that evening to tell him he can't pay the rent. Would bet my life he isn't missing the payments on his truck and jet skis. It's about priorities.
Thank you!! :sharebeer Deadbeats are deadbeats, and idiots are idiots. To bring this back on topic and answer the original question, my answer is that there are too many idiots out there and I have no way of knowing who they are until they actually become my tenant. Just as anybody can act professional in a job interview, anybody can present themselves as 'good guys' when signing the lease. You won't see their real nature until it is too late. I find it laughable that folks in this thread claim to be able to separate the wheat from the chaff when considering potential tenants.
What you might be missing is that unemployment offices are completely overwhelmed right now, causing a delay in processing fillings. Illinois, for instance, has asked people to only apply on certain days of the week, assigning certain letters of the alphabet to certain days. I know someone who did not get a response to the application for two weeks, and now still has to wait for the first payment. And this first payment will almost certainly not included the extra $600 Congress has provided. From what I can tell, only New York is ready to include that extra money. So yes, people can still be struggling to buy groceries and pay rent right now.
Thanks. That makes sense, and likely fills in the blank as to what I might have been missing. I guess we'll see what our landlords have to report next month. Illinois is the only state I ever had to file for unemployment in. That was decades ago, but it sounds like they're just as screwed up now as they were then. IIRC, they used that same letter system way back then. Lets face it, Illinois hasn't exactly been a poster boy for how to run a state government. :P
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

FoolMeOnce
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Re: Why are you NOT buying rental properties?

Post by FoolMeOnce » Thu Apr 09, 2020 1:16 pm

FIREchief wrote:
Thu Apr 09, 2020 1:05 pm
Lets face it, Illinois hasn't exactly been a poster boy for how to run a state government. :P
Too true.

Topic Author
tomtoms
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Re: Why are you NOT buying rental properties?

Post by tomtoms » Fri May 22, 2020 10:59 am

any of your tenants didn't pay rent?

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Re: Why are you NOT buying rental properties?

Post by abuss368 » Fri May 22, 2020 12:03 pm

michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
That is incredible. I could not imagine dealing with that financial stress.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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alexp
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Re: Why are you NOT buying rental properties?

Post by alexp » Fri May 22, 2020 2:21 pm

Fortunately both of my tenants are paying their rents on time. However, I have beefed up my emergency fund to cover ~3 months of rent for both properties if needed.

Topic Author
tomtoms
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Re: Why are you NOT buying rental properties?

Post by tomtoms » Fri May 22, 2020 2:56 pm

abuss368 wrote:
Fri May 22, 2020 12:03 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
That is incredible. I could not imagine dealing with that financial stress.
The headline is just click bait and premature. Now we know:

By April 19, 89% of American rental households made a full or partial payment toward their monthly rent. Analyzed through the National Multifamily Housing Council’s rent payment tracker of 11.5 million professionally managed units, that figure accounts for a payment rate of 95% compared to the same time last month, when 93% of tenants had paid rent. It also lags only slightly behind rent collection for the same period a year ago.

https://www.forbes.com/sites/dimawillia ... 33a2c52685

Joylush
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Re: Why are you NOT buying rental properties?

Post by Joylush » Fri May 22, 2020 3:03 pm

Ive been a landlord since 1986. I still have 22 single family homes left. No issues at all with tenants paying rent. You have to know how to screen well. That’s being said I’ve been knock-on-wood so incredibly lucky I’ve decided to start selling whenever anyone moves. Too much nonsense to deal with these days, emotional support pit bulls, eviction moratoriums, etc....

But if the housing market plummets again...I will likely take advantage of that deal again.

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tomtoms
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Re: Why are you NOT buying rental properties?

Post by tomtoms » Fri May 22, 2020 3:15 pm

tomtoms wrote:
Fri May 22, 2020 2:56 pm
abuss368 wrote:
Fri May 22, 2020 12:03 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
That is incredible. I could not imagine dealing with that financial stress.
The headline is just click bait and premature. Now we know:

By April 19, 89% of American rental households made a full or partial payment toward their monthly rent. Analyzed through the National Multifamily Housing Council’s rent payment tracker of 11.5 million professionally managed units, that figure accounts for a payment rate of 95% compared to the same time last month, when 93% of tenants had paid rent. It also lags only slightly behind rent collection for the same period a year ago.

https://www.forbes.com/sites/dimawillia ... 33a2c52685
Don't think this is just one month of good rent collection. May is also good:

https://www.calculatedriskblog.com/2020 ... s-908.html

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abuss368
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Re: Why are you NOT buying rental properties?

Post by abuss368 » Fri May 22, 2020 3:20 pm

tomtoms wrote:
Fri May 22, 2020 3:15 pm
tomtoms wrote:
Fri May 22, 2020 2:56 pm
abuss368 wrote:
Fri May 22, 2020 12:03 pm
michaeljc70 wrote:
Wed Apr 08, 2020 1:21 pm
https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall, but the headline says it all.
That is incredible. I could not imagine dealing with that financial stress.
The headline is just click bait and premature. Now we know:

By April 19, 89% of American rental households made a full or partial payment toward their monthly rent. Analyzed through the National Multifamily Housing Council’s rent payment tracker of 11.5 million professionally managed units, that figure accounts for a payment rate of 95% compared to the same time last month, when 93% of tenants had paid rent. It also lags only slightly behind rent collection for the same period a year ago.

https://www.forbes.com/sites/dimawillia ... 33a2c52685
Don't think this is just one month of good rent collection. May is also good:

https://www.calculatedriskblog.com/2020 ... s-908.html
This is good news. Thanks for sharing.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

barberakb
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Re: Why are you NOT buying rental properties?

Post by barberakb » Sat May 23, 2020 2:16 am

barberakb wrote:
Thu Apr 09, 2020 2:24 am
I have gotten 70% of my April rent so far
Update - all my tenants have paid in full for April and May :sharebeer

WJW
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Re: Why are you NOT buying rental properties?

Post by WJW » Sat May 23, 2020 5:05 am

I've had 0 issues with tenants paying rent the last 3 months...

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Noobvestor
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Re: Why are you NOT buying rental properties?

Post by Noobvestor » Sat May 23, 2020 5:14 am

WJW wrote:
Sat May 23, 2020 5:05 am
I've had 0 issues with tenants paying rent the last 3 months...
Same! Because I don't own any rental properties 8-)

For real, though, I'd be nervous right now if I were a landlord - there's a lot of uncertainty still unfolding. If I owned a rental property, I would be looking to sell it now and avoid an uncertain next few weeks, months, years ... but to each their own. Good luck out there.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

WJW
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Re: Why are you NOT buying rental properties?

Post by WJW » Sat May 23, 2020 5:30 am

Noobvestor wrote:
Sat May 23, 2020 5:14 am
WJW wrote:
Sat May 23, 2020 5:05 am
I've had 0 issues with tenants paying rent the last 3 months...
Same! Because I don't own any rental properties 8-)

For real, though, I'd be nervous right now if I were a landlord - there's a lot of uncertainty still unfolding. If I owned a rental property, I would be looking to sell it now and avoid an uncertain next few weeks, months, years ... but to each their own. Good luck out there.
I have no mortgage on my investment, I vet my tenants well and never had any problems with it. I would sell it if there were a place I could park the proceeds and earn a better return but there isn't so I keep on keeping on.

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Noobvestor
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Re: Why are you NOT buying rental properties?

Post by Noobvestor » Sat May 23, 2020 5:49 am

WJW wrote:
Sat May 23, 2020 5:30 am
Noobvestor wrote:
Sat May 23, 2020 5:14 am
WJW wrote:
Sat May 23, 2020 5:05 am
I've had 0 issues with tenants paying rent the last 3 months...
Same! Because I don't own any rental properties 8-)

For real, though, I'd be nervous right now if I were a landlord - there's a lot of uncertainty still unfolding. If I owned a rental property, I would be looking to sell it now and avoid an uncertain next few weeks, months, years ... but to each their own. Good luck out there.
I have no mortgage on my investment, I vet my tenants well and never had any problems with it. I would sell it if there were a place I could park the proceeds and earn a better return but there isn't so I keep on keeping on.
If it works for you, power to you. I would be less focused on past (lack of) problems and present returns than future risks, but that's just me.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

WJW
Posts: 287
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Re: Why are you NOT buying rental properties?

Post by WJW » Sat May 23, 2020 6:17 am

Noobvestor wrote:
Sat May 23, 2020 5:49 am
WJW wrote:
Sat May 23, 2020 5:30 am
Noobvestor wrote:
Sat May 23, 2020 5:14 am
WJW wrote:
Sat May 23, 2020 5:05 am
I've had 0 issues with tenants paying rent the last 3 months...
Same! Because I don't own any rental properties 8-)

For real, though, I'd be nervous right now if I were a landlord - there's a lot of uncertainty still unfolding. If I owned a rental property, I would be looking to sell it now and avoid an uncertain next few weeks, months, years ... but to each their own. Good luck out there.
I have no mortgage on my investment, I vet my tenants well and never had any problems with it. I would sell it if there were a place I could park the proceeds and earn a better return but there isn't so I keep on keeping on.
If it works for you, power to you. I would be less focused on past (lack of) problems and present returns than future risks, but that's just me.
Different strokes...

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calvin+hobbes
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Re: Why are you NOT buying rental properties?

Post by calvin+hobbes » Sat May 23, 2020 6:34 am

Noobvestor wrote:
Sat May 23, 2020 5:49 am
WJW wrote:
Sat May 23, 2020 5:30 am
Noobvestor wrote:
Sat May 23, 2020 5:14 am
WJW wrote:
Sat May 23, 2020 5:05 am
I've had 0 issues with tenants paying rent the last 3 months...
Same! Because I don't own any rental properties 8-)

For real, though, I'd be nervous right now if I were a landlord - there's a lot of uncertainty still unfolding. If I owned a rental property, I would be looking to sell it now and avoid an uncertain next few weeks, months, years ... but to each their own. Good luck out there.
I have no mortgage on my investment, I vet my tenants well and never had any problems with it. I would sell it if there were a place I could park the proceeds and earn a better return but there isn't so I keep on keeping on.
If it works for you, power to you. I would be less focused on past (lack of) problems and present returns than future risks, but that's just me.
I see your point but aren’t the alternative investments chock full of perceived future risk as well? Unless you consider CDs a reasonable alternative.

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Noobvestor
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Re: Why are you NOT buying rental properties?

Post by Noobvestor » Sat May 23, 2020 6:49 am

calvin+hobbes wrote:
Sat May 23, 2020 6:34 am
Noobvestor wrote:
Sat May 23, 2020 5:49 am
WJW wrote:
Sat May 23, 2020 5:30 am
Noobvestor wrote:
Sat May 23, 2020 5:14 am
WJW wrote:
Sat May 23, 2020 5:05 am
I've had 0 issues with tenants paying rent the last 3 months...
Same! Because I don't own any rental properties 8-)

For real, though, I'd be nervous right now if I were a landlord - there's a lot of uncertainty still unfolding. If I owned a rental property, I would be looking to sell it now and avoid an uncertain next few weeks, months, years ... but to each their own. Good luck out there.
I have no mortgage on my investment, I vet my tenants well and never had any problems with it. I would sell it if there were a place I could park the proceeds and earn a better return but there isn't so I keep on keeping on.
If it works for you, power to you. I would be less focused on past (lack of) problems and present returns than future risks, but that's just me.
I see your point but aren’t the alternative investments chock full of perceived future risk as well? Unless you consider CDs a reasonable alternative.
I've always been skeptical of real estate investing on the individual scale (e.g. own a few properties, rent 'em out). Too much concentration risk - relies on local markets, subject to regional or building-specific disasters, tenants, codes, and unexpected expenses. And that was before this crisis. Now, who knows? There are some saying real estate in the Bay (where I live) will actually get pricier on the rental side as people get foreclosed on and have to rent. Maybe in other places it'll crash- e.g. areas that rely on a company that goes under, or tourism, etc....

I'm not saying anyone else should subscribe to my skepticism, but as for alternatives: CDs don't make sense to me. Real estate is very high-risk, high-reward stuff generally, so if I had a rental and was selling it, I'd just roll the proceeds into my somewhat stock-heavy portfolio. I figure a diversified portfolio of stocks and bonds is still a lot less risky than a set of houses in [insert location here] - see also: idiosyncratic risk. If someone really wanted something more 'parallel' to sold real estate, REITs are probably the closest, but those are already in the index, so whatever. Mainly, I'm just thinking about how a friend tried to get me into rental RE years ago, and how I'm glad I'm not in that business right now.

I do sincerely hope it works out for all the folks who are facing this ongoing and upcoming uncertainty though - wish you all the best!
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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