Real Estate Income

We will need income , now & latter so we are looking into duplex's, tri-plex, etc. for a income going forward. We would be 80% cash buyers but still would take a small amount of mortgage that would be paid off in 2-3 years.

We own a home & condo , no debt. We have never had rentals so we would start with a property mngr.

Is this a pipe dream or something that can be done......If it can be done what are my concerns & nightmares going forward.

thanks for your time,
normana61

Edited: 06/26/2010 at 11:56AM

Michael Rossi

Real Estate Investor · Ohio

4587 posts
14256 Influence
14 Awards

Icon_minipost Mar 06 '10, 05:02 AM

I suggest reading a BUNCH of the posts in the rental forum. You'll get a good idea of the nightmares you could be in for. If you do everything right, you can generate an income of $100 per unit per month. Having a paid property manager makes that MUCH more difficult.

Good Luck,

Mike

Edited: 06/26/2010 at 11:56AM

Uwe S.

Real Estate Investor · Chemnitz, Saxonia

1146 posts
12186 Influence
12 Awards

Icon_minipost Mar 06 '10, 05:11 AM

Norman,
welcome to BP!!

If you live in these du-or triplex then you need no property manager. Thats an "easy" job, only if you not living in town you need one.

-Uwe

Edited: 06/26/2010 at 11:56AM

Tyler McCracken

Private Money Lender · Charlotte, North Carolina

38 posts
254 Influence
1 Award

Icon_minipost Mar 06 '10, 05:25 AM

I'll assume by your stating that you own a home and condo that you've already have experience in directly managing one rental and/or using a Property Manager.

You really don't provide enough information for a good answer.... Post more detail and you'll get better answers....

That being said, I would recommend Leigh Robinson's book called "landlording".

I would also consider no more than 50% cash down... Leverage can be good. The real key is getting paid for your investment though... you need to factor in true conservative figures for all expenses to determine your true Cash on Cash Return. Otherwise, if it turns out to average some 4-7%... and it's meant to be truly passive -then perhaps another investment vehicle (like dividend paying stocks) is your answer.

Edited: 06/26/2010 at 11:56AM

P NW

· OR

1467 posts
12410 Influence
7 Awards

Icon_minipost Mar 06 '10, 07:37 AM

Yes, you can generate income with rentals.

The inexpensive rentals generate more $. The rentals in better areas get much better tenants and are much easier to manage.

There is nothing wrong with having fully paid for rentals. That way you get to keep more of the money in your pocket instead of giving it to the bank.

Edited: 06/26/2010 at 11:56AM

Norman Ashworth

· Lincoln, Rhode Island

8 posts
70 Influence

Icon_minipost Mar 06 '10, 08:07 AM

Original Poster

Hi P NW,

I am looking at both , in-expensive ones and ones in better areas. When pricing properties of these types do you consider ($ per sq. ft ) I know more goes into it than that, such as outside/inside condition, repairs, future repairs, etc. But they range from 21.00 per ft to 69.00 per ft. ( the 69.00 was built in 1996 )

I was not thinking that only 50% would be left. But maybe just wishful thinking or lack of knowledge to better put it on my part.

and wishful thinking does not put $$ in my pocket, that is why I am here asking questions.

As far as my house and condo, i own those outright and nevered leased or rented them, that is why I need a property mngr on board as well. If I go down this road.

Jury still out... still weighing all options

thanks for all responses, extremely helpful guys
normana61

Edited: 06/26/2010 at 11:56AM

Rich Schroeder

Real Estate Investor · Wisconsin

451 posts
2324 Influence
4 Awards

Icon_minipost Mar 10 '10, 09:04 PM

I recommend, in your situation, to pay cash for all properties if you can afford to do so. Also, look at the 50% rule threads, that's very important. I would also recommend buying Mike's book (one minute to rental property riches). It explains the business really well, but (more importantly) makes you sit down and really think about the rental business and if you feel you want to get in to it. It's not all sunshine and lollipops! Just the other day I had some lady screaming at me because I posted a 5 day notice on her door. You have to be able to deal with that crap on a regular basis.

-Rich

Edited: 06/26/2010 at 12:00PM

Rich Schroeder

Real Estate Investor · Wisconsin

451 posts
2324 Influence
4 Awards

Icon_minipost Mar 10 '10, 09:06 PM

Also, in response to your question about pricing...using a price per square foot is fine when buying retail (who would do that right now?) and commercial properties...but for rentals the key is how much rent you can get for a property vs. how much skin you have in the game. Do a LOT of reading on here....it's all free and is invaluable.

Edited: 06/26/2010 at 12:00PM

Mark Updegraff

Multi-family Investor · Rochester, New York

721 posts
8447 Influence
13 Awards

Icon_minipost Mar 10 '10, 10:48 PM

Originally posted by Norman Ashworth

HI,

My wife and I will be locating to SW FL in the near future and was wondering about real estate income.

We will need income , now & latter so we are looking into duplex's, tri-plex, etc. for a income going forward. We would be 80% cash buyers but still would take a small amount of mortgage that would be paid off in 2-3 years.

We own a home & condo , no debt. We have never had rentals so we would start with a property mngr.

Is this a pipe dream or something that can be done......If it can be done what are my concerns & nightmares going forward.

thanks for your time,
normana61

Hey Norman, i'm a young landlord / PM - I've read all the recommended books. My apprentice is moving to Port Richey as we speek. If you are in the same area he would be willing to help you get started. He can help locate deals, do market analysis etc I've also trained him on rehabs for rental & tenant screening. We're getting 30% cash on cash and have 0 vacancy...

Edited: 06/26/2010 at 12:00PM

Mark Updegraff, Wedge Redux LLC
E-Mail: mark@wedgeredux.com
Telephone: 585-314-9790
Website: http://www.WedgeRedux.com
Mark Updegraff

Norman Ashworth

· Lincoln, Rhode Island

8 posts
70 Influence

Icon_minipost Mar 10 '10, 11:41 PM

thanks for everyone's help.

normana61

Edited: 06/26/2010 at 12:00PM

Loc R.

Note Investor · Pasadena, California

635 posts
5979 Influence
11 Awards

Icon_minipost Mar 11 '10, 12:51 AM

Norman,

Another option for you to consider is instead of being a landlord...be a LOAN-lord (buy discounted mortgages).

Payors of rent are...well, renters.

Payors of notes are homeowners.

Edited: 06/26/2010 at 12:00PM

Loc R., Individual/Private Note Buyer
E-Mail: locatelli.rao@gmail.com
Website: http://www.lrprivatenotebuyer.com
I buy individual notes - all states, shapes & sizes.

Michael Rossi

Real Estate Investor · Ohio

4587 posts
14256 Influence
14 Awards

Icon_minipost Mar 11 '10, 01:02 AM

Payors of rent are...well, renters.

Payors of notes are homeowners.

Payers of rent are...well, renters.

Payers of notes are...well... often, renters too.

Edited: 06/26/2010 at 12:00PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

4293 posts
43789 Influence
15 Awards

Icon_minipost Mar 11 '10, 01:19 AM

One small correction. If you only have a 20% LTV, you should clear much more than $100 per month. A 20% loan is stupid. If you ever get in trouble, bank will foreclose on that one first. Buy free and clear and another one mortgaged to the max. Different entities for each due to liabilities. Hopefully your current home and duplex are well protected from potential liability and litigation... Good luck. I'm in SWFL. Lets' go to lunch when you get here. I have noyhing to sell you, no ulterior motivess, but I love to eat!! Rich

Edited: 06/26/2010 at 12:00PM

Josh Keys

Accountant · Sydey, NSW

106 posts
1015 Influence
5 Awards

Icon_minipost Mar 11 '10, 04:11 AM

Originally posted by Rich Weese

One small correction. If you only have a 20% LTV, you should clear much more than $100 per month. A 20% loan is stupid. If you ever get in trouble, bank will foreclose on that one first. Buy free and clear and another one mortgaged to the max. Different entities for each due to liabilities.

Thats great advice there. Hope you take it!

Edited: 06/26/2010 at 12:01PM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

4293 posts
43789 Influence
15 Awards

Icon_minipost Mar 11 '10, 06:15 AM

Thanks djjk1- Is that Sydney , Ausrailia? I was there in dec finishing a 28 day cruise. I've enjoyed your posts. Keep it up. Rich

Edited: 06/26/2010 at 12:01PM

Josh Keys

Accountant · Sydey, NSW

106 posts
1015 Influence
5 Awards

Icon_minipost Mar 11 '10, 08:53 AM

Thanks for the compliment Rich.

Sydney (yes, Australia) is a great place to finish off a cruise! While its a great place for a holiday and to live, its a terrible place and time to start investing in property. Our prices are extremely high. People I speak to laugh at the idea of 2% rule - more like the 0.2% rule for mthly income! Hence the reason im looking at the US.

If you come and visit again, let me know and we can go to lunch.

Cheers
Josh

Edited: 06/26/2010 at 12:01PM

Sanjiv Neal

Real Estate Investor · Indianapolis, Indiana

186 posts
801 Influence
3 Awards

Icon_minipost Mar 12 '10, 11:50 AM

not a pipe dream, you can do it, You're heading in the right direction, EXECUTE

Edited: 06/26/2010 at 12:02PM

Norman Ashworth

· Lincoln, Rhode Island

8 posts
70 Influence

Icon_minipost Mar 12 '10, 08:39 PM

OP back,

I am going ot look at two properties , side by side, fourplex's rented furnished at 750. a month, 36K income ( so the 50% rule would net me close to 18K )

they just dropped to 185K ea.

properties built in 77 so i am sure allot needs to be done to these....the main question is why is he / she selling ?

Edited: 06/26/2010 at 12:02PM