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rental real estate--questions for those who have done it before

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  • rental real estate--questions for those who have done it before

    I am looking to buy a turnkey property to rent out in my area. I currently have a mortgage on my residence and max out my tax-protected space. I intend to select the tenant and manage things overall, but hire out the repairs and possibly the accounting/taxes depending on how complicated they are (I currently self-prepare my taxes using TurboTax).

    For those who have done this before (bought a turnkey property to rent out in the same area that you live):

    1. Would you do it again? What would you do differently if you were starting out again?
    2. How did you select the property--real estate agent, Zillow? What were the key things you were looking for in the property?
    3. What was your initial loan to value ratio on the mortgage?
    4. What books/websites/resources did you find most helpful in educating yourself on this process?

    Thank you.

  • #2
    I don't invest in individual proprieties. But sexual taking members do.

    1. I think it's a lot of work. Definitely become get familiar with local tenant-landlord laws. >20 years later of being a landlord, some are still finding out about long existing laws. Landlord registration, state & town inspections (fire, tax). Even things like how much security deposit is allowed & what it can & can't be used for, days within to return to the tenant.

    2. Usually real estate sites, Zillow. Agents are usually working for everyone else in the planet, not just you.

    3. Usually they've done 80/20.

    4. I''ve only heard about biggerpockets.com. They've never used a book or anything else.
    $1 saved = >$1 earned. ✓

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    • #3
      Originally posted by Cubicle View Post
      I don't invest in individual proprieties. But sexual taking members do.
      Brothels?

      Comment


      • #4
        This has been mentioned before.
        https://www.biggerpockets.com

        Comment


        • #5
          I read the Cory Fawcett book an managing rental property and started reading the bigger pockets book on investing in rental property (by Brandon Turner). They were very Rah Rah books yet convinced me NOT to do it.

          I haven't read the John T Reed books but they're also probably a good option, since he seems to be one of the few authors who is balanced and not totally on the Rah Rah train.

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          • #6
            coachcarson.com is a good place to start.

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            • #7
              Originally posted by Nysoz View Post
              Brothels?
              Hahaha. I'm not sure claiming "typo" would be believable.

              "several"
              $1 saved = >$1 earned. ✓

              Comment


              • #8
                We have started with rental properties very recently. The good news is that there is a ton of information out there to absorb.

                Be prepared to put a lot of time in up front to make a wise purchase.

                Buying turnkey can work, but the numbers are a lot slimmer. Buying something that needs work and has been poorly managed is your best option to actually make money, but it is harder. I'm personally VERY weary of the turnkey companies, and suspect that everything is priced to maximize THEIR profit at the expense of yours.

                You'll need to make a decision about how important cashflow is to you. You'll get the best cashflow renting in the bottom end of the market, but you may get very little appreciation. At the very top of the market, you may get negative cashflow, but you'll be looking for appreciation (which is always speculative).

                Leverage is similar. The more you put down, the better your cashflow will be, but the worse your cash on cash return will be. If you over leverage yourself, you run the risk of overleveraging and losing everything in a downturn.

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                • #9
                  I agree with others that biggerpockets is a good resource. If you like paper books "The ABCs of Real Estate Investing" by Ken Mc Elroy is good. I have always used a local real estate agent to find properties. Be sure to find one that has experience with investors and hopefully one that also owns rentals. Leverage is a double edged sword. I don't go over 75% LTV and most banks don't like to lend more than that.

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                  • #10
                    I have owned and have been managing rental properties for several decades. I do recommend it if you do your homework and are willing to take on the additional work for the returns. There are many paths to finding/buying properties. Your best bet is an agent that works the commercial/rental market. For books, I agree John Reed but you will find him to be no frills. I usually also recommend Stephen Fishman's NOLO book: Every Landlord's Tax Deduction Guide. Loans are negotiable. While 80-20 is probably the most likely, I also assumed loans under foreclosures along the way as well. If you get over four properties, you may need to shift to commercial mortgages.

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                    • #11
                      I dislike the turn key route. You are buying a piece of real estate that has already had all of the juice squeezed out. It is usually in a bad or marginal area and they are selling you the idea of a hands-off investment, which ends up being hands-on as time goes on.

                      Either be active and buy a house/duplex with some upside potential in a good area or be passive and invest in a syndication, NNN lease property, or do a hard money loan.

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