Hey all, I'm working on my next book (top-secret... look for it this summer!) and I want to do some real life illustrations using members of the BP community, rather than just focusing on my stuff. So in the coming months I'll be asking for a lot of volunteers who want to share a quick story.
I'm looking for someone who bought a rental property and, after ALL the expenses, you'll pretty much be breaking even on cash flow year over year - BUT the mortgage is being paid down every month so at least you are building wealth by having your tenant pay down the mortgage.
Is this you?
If so, let me know here your story and I'll pick one person to write about!
(You'll need to be willing to give your full name and, when the time comes, supply a small photo of you (probably just your profile picture)
@Brandon Turner well... It's kind of me? I became an accidental landlord in 2007 when I moved away and couldn't sell my townhouse. In the current market, it's worth less than what I owe, so I still can't sell it (but I hear the Virginia - Hampton Roads market is on the uptick...)! The mortgage is around 840/month. It's rented for 1000, but after property management fees and HOA fees, I lose 7 dollars a month on it. Does that count? Hahaha.
@Brandon Turner It's kind of me too. My wife and I purchased a townhome, lived in it for two years and decided to keep it and rent it rather than sell it. We are self-managing, so after mortgage, taxes and insurance, we make $180/mo. Accounting for property management and maintenance expenses would put us in the red every month.
Not to be a smart alec here. But just thinking that your book might sell a little more if you include examples of money making investments instead of break even ones.
I'm not sure how many people are going to be interested in a book entitled:
HOW TO BECOME A LANDLORD AND "BREAK EVEN".
That just doesn't sell the sizzle........
btw: I am only kidding and I'm sure there is something to it, but how could I resist that one? :-)
I guess I can add my one break even property just so the BPers don't beat me up .
My first rental is actually a new construction spec home that my brother in law took over a year to complete. By the time he did, the market had just started the crash (we missed it by about 3 to 4 months). Couldn't sell and the house became my rental.
Whats worse is that this is in a super small town (less than 1k) that I would never want a rental in otherwise. Its a bear to rent.
Interestingly enough, the thing did ok for about the first 5 years - because the county never reassessed the property and it was being taxed as a vacant lot. So for the first 5 years, I was paying $300 a year for property taxes.
Last year, the taxes went up to 3,400 and the free lunch ended though.
I owe 127k down from 144k on a house that today is worth about 135k.
Rent is 1175/month and my mortgage is $880, taxes and insurance 325/month.
So I'm losing $30 a month plus whatever repairs and vacancies come to.......
But here's the other interesting part of the story. This rental is what drove me to invest in real estate.
Those first few months that the house was vacant and I was trying to rent it, I was essentially paying two mortgages. I knew I couldn't afford to do that every time this thing went vacant and figured I had no choice but to add more properties. I believed the additional rental income from more properties would help me pay for this one when it went vacant.
32 houses later and I'm still not sure when I'll be able to get rid of this house. But it is a great reminder on how you can choose to let something like this become a major setback or how you can use it to fuel a solution that ends up pulling you further up than even the optimist in me ever believed.
i.e. I had decided ny "dream goal" was to be able to get to 10 houses. And I literally thought that was fantasyland thinking at that number......
@Brandon Turner I saw this in my "keyword alerts" under new construction, rentals, etc. I thought oh great, someones posting the same message under multiple subject lines I gotta go move these to marketplace, and message the poster, only to realize it was YOU.
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