Posted by David Alexander on August 20, 1999 at 11:14:21:
I concede. where do I sign up, 60% return on cash, no headaches(My problem with rentals, but very limited experience) and 15% appreciation, works for me. Just be open to other things if the economy changes.
Accept only the Best
David Alexander
Is being a landlord that bad? - Posted by Bruce(Mich.)
Posted by Bruce(Mich.) on August 14, 1999 at 21:41:35:
I was looking at news group 1 the other night and came across another RE guru that totally knocked the idea of buying properties to hold onto and rent out. He said the pros don’t tell you all the hassles of running your properties and dealing with tenants and suggested the best way is to buy and flip the properties. I can’t help but think that if you have a tight lease and make sure the renters understand what the terms and limits are of the lease and your own tolerances are, then if you run into major problems I don’t think you’ll have anyone to blame but yourself. Holding onto properties to rent out for the long term is time consuming and it does take work, but I can’t believe it’s that bad. The C.S. course goes over this and has a lot of good points to use and follow. Anyone else have any opinions? Thanks for the input.
Re: Is being a landlord that bad? - Posted by Mark (SDCA)
Posted by Mark (SDCA) on August 18, 1999 at 10:52:51:
No, it isn’t that bad. Screening is the key. I hope everyone follows that gurus advice. I have been a buy and holder for 7+ years now and have no intention of stopping.
Cash flow + tax advantages + mortgage paydown = $
Mark
Is that the question? - Posted by Bud Branstetter
Posted by Bud Branstetter on August 16, 1999 at 12:25:31:
Or is your question, is it the fastest way to make money? I’ve had low end properties and high end renters and had good ones and bad ones on both ends.Any landlord can give you war stories. Most residential investments on a rental basis show a return on cash invested of 15 to 20% at most. This is with all those roofs, vacancies and management figured in. Now compare that to the return that a rehabber or creative flip can bring. Not really a comparison. It is a kin to bonds vs stocks. Most starting investors need the cash to grow vs the cash flow for guaranteed income.
My own opinion is that I would rather invest my cash in a rehab and if I wanted cash flow hold the mortgage. Much better returns than 20% and no landlording. Structured properly that mortgage can be liquid if I change my mind and want cash. Most places the rents are more than the 1% figure and if they were I would shorthen the term to get a payment equivalent to what people are willing to pay. For a young investor with excess cash, higher end houses with little manangement or multifamily with others manageing is a personal preference.
When the joy of hearing that note seller this morning saying that he would take my offer comes more often than joy from collecting a rent or payment, then I still want cash to do deals.
A different angle - Posted by David Alexander
Posted by David Alexander on August 15, 1999 at 23:22:17:
Here is a different angle. Buy and create paper, that gives you the cash flow and removes the landlording headaches. Although paper is a depreciating asset, if you reinvest the proceeds, as you should be doing anyway you will end up in that upward spiral of more cash flow than you can count.
I have two rental properties right now that I bought only to sell. My cash flow will be greater if I keep them as rentals, but I also have to do(rather pay for) repairs if something goes wrong. An airconditioner, carpet or new roof will kill your cash flow and you never recoup that cash even with appreciation because it counts straight against the bottom line.
As Property worth 50k renting for 600 with a 400/month payment outgoing. You spend 5k for a roof etc. you’ll never see that cash again, except for expensing it out to the tax man. Even when the properties worth 100k, you still have lost 5k in my way of thinking.
Same scenario with paper, you have to foreclose or evict(contract for deed), they mess the property up, which rarely happens(usually improve it) you put new carpet or roof and recapture your money on a down payment. You can learn to avoid taxes plenty of other ways without the hassle of Landlording.
In one of my properties now I am trying to evict a tenant and it is a whole lot harder than any property I have paper on, because the people that put money down as Owners have something at stake and a different mentality. This lady knows the system and is playing it, I even offered to Owner Finance it to her to solve the problem, she won’t return my calls. She likes living for free. I bought the property with the problem in place, but will quickly as possible remove it and resell the house. But, right now my position is No tenants.
David Alexander
Re: Is being a landlord that bad? - Posted by Rob FL
Posted by Rob FL on August 15, 1999 at 20:24:00:
Landlording and flipping are two completely different businesses. Flipping properties put cash in your pocket now and landlording is sort of getting wealthy for the long term. I have done both and enjoy both. In flipping properties, you must continue to do so month after month or else you may run out of money.
In being a long-term business, most of the time if you are dealing in smaller 1 to 4 family properties your cash flow will be lower in the beginning but as time goes along your rents should probably increase. Both flipping and landlording have pros and cons, but I think landlording is a great business to be in.
A great resource also is Jeffrey Taylor’s material. I subscribe to his monthly newsletter. You might be able to find it on this website or check out his at www.mrlandlord.com.
Re: Is being a landlord that bad? - Posted by Pat
Posted by Pat on August 15, 1999 at 10:51:37:
Hi
It will be great in next 10-15 yrs you can look back and take all your rents as cash incomeand not have to pay the bank Just repairs–& taxes-- We have got aprox. 14 prop. from landlords that don’t want to own them any more-- mostly the reason was they didn’t have the skills to run a business like landlording takes-
you have to be a people person 1st. ( some sales will help)
Re: Is being a landlord that bad? - Posted by Laure
Posted by Laure on August 15, 1999 at 10:41:03:
Generally, I have found that a lot of the folks on Group 1 are not into Landlording. I have been a Landlord for 12 years and love it ! I like the double whammy with little effort. That is to say, The Tenant pays down your mortgage over time, then you get the double whammy which is appreciation of property over time. The beauty is that if you have decent homes, you get decent Tenants. You determine the kind of Landlord experience you will have by your choice of property to rent. Good houses= better Tenants AND higher rents and rents paid on time. Crummy houses/ bad neighborhoods = PROBLEMS, Late rent, kicked in doors, broken windows etc.! I currently have 21 single family homes I rent, and I can’t think of a better way of life. I also rehab properties for resale. And that is constant work and pressure. I just love the creative process of remodeling and the money is darn good. I also like to be in control of situations in my life, and a lot of techniques used in creative real estate leave too much of my life in the control of others, which frustrates me. Therefore, I LOVE BEING A LANDLORD. Where I make the rules, and I have control.
Stepping off soap box now…hehehe
Laure 
Re: Is being a landlord that bad? - Posted by Anthony
Posted by Anthony on August 15, 1999 at 08:29:56:
I can only talk from limited experience but so far I can not complain. Sure you are going to have property management but you know that going in. You will get out of it what you put into it and your tenants also. If you handle repairs quickly and treat tenants with respect then they will do the same. I know two other landlords who really go out of their way for their tenants and the tenants have done the same. I rent to possibly the worst type of tenant, college students. I treat them firm but have handled all problems quickly and I have had zero problems so far. I am lucky I am sure.
Re: Is being a landlord that bad? - Posted by J Sepp
Posted by J Sepp on August 14, 1999 at 21:45:03:
not that bad you plan for the worst and if it is better than you made out if not it is what you expected
Re: Is that the question? - Posted by Laure
Posted by Laure on August 17, 1999 at 07:32:55:
What is my return? Property bought 10 years ago for 2k down, 20,000 price. Now worth 89k FMV and it is free and clear. Repairs made out of cash flow. Payment was 250/mo and rent was 550 for most of the time. btw, I now get 750/ mo.
House bought in 92 for 60k. FMV now 125k. Loan balance is 31k. Rented to same Tenant for 6 years for 695.00 Payment was 450/mo. Oh, I put 12k down on that one and I currently get 1100/ mo.
House bought for 2k down in 1989. Purchase price 15k. Rented for 550. Payments were 150/mo. Just sold it for 69,900.
I can go on and on…but that appreciation is MOST WONDERFUL !
On the other hand, I bought a house for 34k, with 100% bank loan and rehabbed and sold it in 4 months for 69,900. I made about 8k after everything. Not bad, but it felt like a job.
Don’t get me wrong. I am currently active in rehabbing and selling as well as carrying paper on the sales and I like that too. But rentals have made me a millionaire while I slept. Other People’s Money…it’s a most wonderful thing.
Good investing
Laure
Re: A different angle - Posted by Mark (SDCA)
Posted by Mark (SDCA) on August 18, 1999 at 10:59:02:
Why are you having such a problem evicting?
Here is how I work.
Mark
Re: Is being a landlord that bad? - Posted by Bob A
Posted by Bob A on August 15, 1999 at 14:00:45:
I just started this year and am really enjoying it. I agree with everything you say about quality properties mean quality tenants. Also I do rehaps and its working out quite well.
Do you have another job? If not, how long did it take you to be 100% real estate. I have a $100,000/year job and hope to retire from it after 7 years.
Re: Is that the question? - Posted by Bud Branstetter
Posted by Bud Branstetter on August 17, 1999 at 12:48:23:
You are indeed fortunate that you have had high appreciation rates and were able to take advantage of leverage. If you know that is going to be the case in your area then long term lease options a a good way to go. Unfornuately, most parts of the country have seen 3% appreciation. There were many investors in the early eighties that bet on the appreciation. If they overleveraged most went under.
I personally would not have signed on a loan for 34 to put 27K more into a property to make 8K after it was over.
Re: Is that the question? - Posted by David Alexander
Posted by David Alexander on August 17, 1999 at 11:41:40:
Laure,
the first one is a 38% return and the second one is a 24% return. All I’m saying is you can do the same or better easily and carry paper as opposed to doing repairs, and you don’t feel like you have a job.
David Alexander
Re: A different angle - Posted by David Alexander
Posted by David Alexander on August 18, 1999 at 11:39:05:
Your absolutely right, less than 200 bucks or so, if you don’t put up the bond. What about the two or three missed mortgage payments that come straight out of your pocket and the end result, out of the eventual equity bottom line or capital gain. What about the hassle, aggravation. Just what I know with paper if the people default you get paid again to put someone new in there place from the down payment. It takes some of the sting out of it.
David Alexander
Re: Is being a landlord that bad? - Posted by Laure
Posted by Laure on August 15, 1999 at 19:03:48:
I own another business, but I am doing real estate full time. I personally enjoy rehabbing and have been doing quite a bit this year as well as upgrading my rentals with new kitchens, siding and windows. I must learn to slow down but I like it a lot. I haven’t been too “creative” with my deals though, cuz the stress makes me crazy. I am at the point where I am using a credit line at the bank, or my own money.
Laure
Re: Is that the question? - Posted by Laure
Posted by Laure on August 17, 1999 at 17:29:36:
I didn’t improve it for 27k. I had holding costs, and realtor fees too. And, I made a mistake, that particular house cost me 39,900.
Sorry…
But I do see your point and know that appreciation will not be what I have seen in the past. You do what you know, and that is what I do…what I know.
I have just taken back my first second mortgage and feel very insecure about it. Guess it’s just new and not what I’m used to.
Laure
Re: A different angle - Posted by Mark (SDCA)
Posted by Mark (SDCA) on August 19, 1999 at 10:07:38:
You are absolutely right about the missed mortgage payments. Turnover is a killer in buy and hold.
Mark
Re: Is that the question? - Posted by David Alexander
Posted by David Alexander on August 17, 1999 at 18:42:24:
Well, Laure, just how insecure do you feel about it, LOL. Email me some numbers and if your Insecurity meets my willingness to take on risk, well, hehe.
David Alexander