The "be all" investment properties thread

[barronj]

This is my ultimate goal. I would like by the time I am thirty have a few rental properties. I almost pulled the trigger on one a few weeks ago but that money is much more rewarding right now in the stock market.

There are quite a few no-brainers in the market right now. Today, I closed on a 2007 built 3/2 for $77K, comp sales are in the $135-$140K range, rents around $1250/mo.

In the late spring of this year, I bought a 4/2 for $49,000 that took $8000 to get it completely rehabbed, and it rents for $1075 easy.

Cash buyers are absolutely loving this.

[Chas_svo]

I've only had one, but a good friend of mine has nearly 30 in Weatherford, and retired from his real job at 42. Several additional comments. If your gut feels anything wrong or their story doesn't seem 100%, wait for the next renter. Never rent to 2 or more males. No smokers, no indoor pets (and have the lease/rental end abruptly and them pay pet deposit if the outdoor pet ever comes indoors), only buy/renovate 3/2 for rentals. Put cheaper tile everywhere you can, and buy in bulk when home depot and Lowes close out common color tile. Learn to tile. Usually raise the rent 50-100 per year, unless you have other rentals sitting empty. Find a successful landlord somewhere near you, and stay in communication. If you have time, and are handy, go to the courthouse when they are selling foreclosures. There are some good deals. Once you have a few, you may be able to find an investor, which will help. Learn to estimate realistically on how much the renovations will cost. Start by doubling what you think, in both time and money.

Good luck,

Charles

[8mpg]

What price range are the houses you guys renting? I have always wanted to do something like this. A guy at work helps out his dad that owns 9 quadplexes and they seem to do well with that.

Also...on the tax side...do you get hammered as additional income?

[barronj]

In the poorer part of E. Austin, I manage 7 3/2 houses that rent for $975, 4 4/2's that rent for $1075.

[Treasure Chest]

What price range are the houses you guys renting? I have always wanted to do something like this. A guy at work helps out his dad that owns 9 quadplexes and they seem to do well with that.

Also...on the tax side...do you get hammered as additional income?

The ex's house is a 3/2/2CP In an established area on Longview. He rents it out for $1050-1200 based on circumstances.

I would suggest talking to a real estate atty or a good accountant on what the allowables are on things like trip charges and your own time for labor on repairs, in addition to receipts for everything from advertising to repairs, purchases, and depreciations. I used to be fairly fluent in the tax laws on rentals when I was doing our tax returns, but I haven't had to think about it in three years, so I'm not sure what all can be claimed, depreciated, and amortized anymore.

[Diabolic]

Your property must be nicer and in a nicer area then mine. I don't think I've ever had anyone apply that had over a 649, and consider it pretty lucky when they have over a 600. Everyone I seem to run has crappy credit and a "story".

rentals when paid off make 30% return on investment every year.

[03mustangdude]

There are quite a few no-brainers in the market right now. Today, I closed on a 2007 built 3/2 for $77K, comp sales are in the $135-$140K range, rents around $1250/mo.

In the late spring of this year, I bought a 4/2 for $49,000 that took $8000 to get it completely rehabbed, and it rents for $1075 easy.

Cash buyers are absolutely loving this.

do you buy courthouse forclosures?

[Real Estate Nate]

That's pretty much been my experience with section 8 and helping my landlord clients. You would be surprised what a section 8 inspector would consider normal wear and tear.

I manage a few properties for my investor clients, and 4 of them have section 8 tenants. I've also taken on other section 8 clients to lease other houses to.

Section 8 properties will be occupied by a single female with multiple children, usually. You have to ask yourself if you want a boat load of rugrats spilling koolaid & melting crayons on your carpet.

Dealing with the section 8 inspectors is a headache. They never return phone calls or emails, and you don't find out if you've passed the inspection unless you go to the property & read their report. Zero communication skills.

Section 8 usually pays as 70% of the rent amount, but can pay more, or less, depending on the tenant's # of dependants, and how much they make at their job.



They will also almost never be able to start the rent mid-month, as Sec 8 pays on the first of the month, does not pay deposits, and will not pay for overlapping rents. All of your Section 8 leases will start on the 1st.

You will not get your money from Section 8 the day the person moves in. You will get a "signature notice" in the mail, letting you know that you can go to the section 8 office (this will be your second trip there) & sign their agreements, and provide them a copy of the lease. The rental amount (as stated on the lease) has to be the same or less than the voucher is for; it cannot be for more than, and you get the tenant to pay the rest*. Section 8 determines what fair rents are, and doesn't want their people paying the landlord over & above what has been agreed to. You will get your check from the housing authority (section 8) sometime within 30-45 days after the person has moved in. You will have collected the tenant's cash portion of the rent.

I've had ONE section 8 who was able to come up with a full month's rent for deposit. If you have a sign in your yard, you will get 30 calls that will go nowhere after you tell them you want a full month's rent deposit, which is the only way to go.

I've not been managing the section 8 properties for long enough to know what condition they'll be returned in, but I'm betting that the deposit will not cover the damages, and you can't get blood from a turnip. I'm not expecting a bunch of outright damage, but all the walls will be dirty & require paint, and any carpet will be tossed.

[Diabolic]

Buy an old house and rent it out to a person that is interested in purchasing a house but doesnt have the credit to do it. After the lease has expired, offer to sell them the house,(mark it up 15% over what you paid) for 8-10% down payment of your selling price. Finance it to them at 9%-12%(double what you financed the property for) for 20-25 year terms with a ballon payment at 5 years. This gives them the opportunity to fix their credit and purchase the house in 5 years. If they default the terms of your contract, then they become renters again, and you keep the down payment and the property. They move out, you move in another tennant, and offer the same deal. It's great because they are responsible for all the maintenance and upkeep of the property. You just collect the check every month plus you got the 8-10% cash up front. Most likely they will default and you will start over. Keep the house, 10% cash, and make 4-6% on your money. Winner!

This works best on an older $60-85K house.

[STANGGT40]

Buy an old house and rent it out to a person that is interested in purchasing a house but doesnt have the credit to do it. After the lease has expired, offer to sell them the house,(mark it up 15% over what you paid) for 8-10% down payment of your selling price. Finance it to them at 9%-12%(double what you financed the property for) for 20-25 year terms with a ballon payment at 5 years. This gives them the opportunity to fix their credit and purchase the house in 5 years. If they default the terms of your contract, then they become renters again, and you keep the down payment and the property. They move out, you move in another tennant, and offer the same deal. It's great because they are responsible for all the maintenance and upkeep of the property. You just collect the check every month plus you got the 8-10% cash up front. Most likely they will default and you will start over. Keep the house, 10% cash, and make 4-6% on your money. Winner!

This works best on an older $60-85K house.

you sound like me...i did basically that on one particular house four times. the only downside to it, is if they bring the purchase agreement to an eviction hearing, it turns into a foreclosure process, which is a lot more costly and time consuming. i've never had it come to that, though. (that was a warning from my attorney)

[SVT Lurch]

you sound like me...i did basically that on one particular house four times. the only downside to it, is if they bring the purchase agreement to an eviction hearing, it turns into a foreclosure process, which is a lot more costly and time consuming. i've never had it come to that, though. (that was a warning from my attorney)

I would think someone who would go for that sort of purchase agreement would not know to bring the agreement to the eviction hearing.

[STANGGT40]

I would think someone who would go for that sort of purchase agreement would not know to bring the agreement to the eviction hearing.

most people don't show up at an eviction hearing at all...i've only had one show up, and he brought pictures of busted up tile, cracked walls, etc...from another house! he said that he had tried getting me to fix all of these fake problems, with no proof of course...i laughed when i saw the pics. his brother was a residential handyman, and obviously got the pics from him. all of the finishes were completely different from my house. he waited it out until i got the writ of possession and showed up with the constable...then he left.

btw, the guy stole all of my shower heads, ceiling fans, light fixtures, etc. when we signed the lease, he was married with a kid and had reasonable credit. he apparently got into meth, his wife took the kid and left, and he turned into a complete degenerate.

[Frank]

Buy an old house and rent it out to a person that is interested in purchasing a house but doesnt have the credit to do it. After the lease has expired, offer to sell them the house,(mark it up 15% over what you paid) for 8-10% down payment of your selling price. Finance it to them at 9%-12%(double what you financed the property for) for 20-25 year terms with a ballon payment at 5 years. This gives them the opportunity to fix their credit and purchase the house in 5 years. If they default the terms of your contract, then they become renters again, and you keep the down payment and the property. They move out, you move in another tennant, and offer the same deal. It's great because they are responsible for all the maintenance and upkeep of the property. You just collect the check every month plus you got the 8-10% cash up front. Most likely they will default and you will start over. Keep the house, 10% cash, and make 4-6% on your money. Winner!

This works best on an older $60-85K house.

Sounds like the used car tote-the-note lot method. Not sure I want to take on that much risk though starting out. I have a full time job of 40-55 hrs a week as it is, but thanks for advice.

You've done this yourself?

[03mustangdude]

Buy an old house and rent it out to a person that is interested in purchasing a house but doesnt have the credit to do it. After the lease has expired, offer to sell them the house,(mark it up 15% over what you paid) for 8-10% down payment of your selling price. Finance it to them at 9%-12%(double what you financed the property for) for 20-25 year terms with a ballon payment at 5 years. This gives them the opportunity to fix their credit and purchase the house in 5 years. If they default the terms of your contract, then they become renters again, and you keep the down payment and the property. They move out, you move in another tennant, and offer the same deal. It's great because they are responsible for all the maintenance and upkeep of the property. You just collect the check every month plus you got the 8-10% cash up front. Most likely they will default and you will start over. Keep the house, 10% cash, and make 4-6% on your money. Winner!

This works best on an older $60-85K house.

thats actually a good idea the only problem would be if they get pissed and do what most forclosure people see wiring missing drywall busted stuff like that...

[barronj]

do you buy courthouse forclosures?

No. I sit behind a desk & monitor all foreclosures hitting the market (MLS) I get updates every morning @ 4am. I run the #'s on them, and when they're superstars, I present them to clients. I have contracts on them before I ever go see the property. Costs me nothing to get a house under contract, but as soon as I do, I go walk it to see how bad the deferred maintenance is, how the slab is. The courthouse is like a cattle call, and you have to drive the properties beforehand to see what's up. You're there bidding on 30 hoping to get 1. I would rather sit & email out contracts/offers & see how many come back taking my number.

There are many ways to buy distressed properties. I prefer the bank-owned properties, since it takes only 1/10th of my time each week, and I can pull comps with mouse clicks.