Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
So first let me say, my wife and I got into real estate investing about a year ago. I am going to put below the RE deals that we have made, thus far.
1. Duplex- Paid 16k-Worth 35k- Generating $1,280/month in rent
2. SFH- Paid 27k-Worth 75k- Generating $925/month in rent
3. SFH- Paid 36k-worth 90k- Generating $1250/month in rent
4. SFH- Paid 40k- Worth 85k- Will generate $850/month in rent
5. SFH- Paid 24k- Worth 35K-Will generate $950/month in rent
6. SFH- Paid 24k- Worth 65k-Will generate $750/month in rent
7. 4.6 acres of Land + utilities - Paid 11k- Worth 40k-Will sell for 22-32k
8. SFH- Paid 22k-Worth 52k- Will generate $750/month in rent
NOW, granted, these numbers don't include our utilities costs/mortgage costs, etc.
(However, we are in less than 100k in debt total, around 71k to be exact right now.)
With us growing, we get nervous every now and again that we are doing the right thing. Sure, we've gained tons in equity, but then you get nervous wondering, "well what if i couldn't sell it?"
Do you ever get nervous about sinking so much money into real estate? Do you think that it's 100% worth it? Feeling victorious but a little fearful, is it jusitified? Is it normal to ever feel apprehensive at times, hoping and praying that you're doing the right thing?
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
Doing anything new gives us a little pause usually. Or at least it should. Like @John Chapman points out, we often don't realize unforeseen problems or mistakes for a long time. Just try and learn from setbacks as quickly as possible. Do a CSI on them and adapt quickly. Learn something new everyday.
Landlording is a very long-term strategy for the patient. Anybody who 'bumps' after less than an hour of no responses may not possess such patience.
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
ALSO, for the RE deals that have "will generate", these are under construction and not move-in ready, but the rent amounts are conservative and realistic for the area.
Investor · Berkeley Springs, WV · Member since 2016 · 35 posts · 11 votes
10y
I'm a newbie at REI but I would safely say the moment you aren't nervous would be a good time to walk away from the table. Being nervous makes us hyper vigilant. Not being nervous can soon turn to complacency and we both know what complacency causes. As long the nervousness doesn't prevent you from moving on good deals I think it's a good thing.
I do have a question if you don't mind. How are you financing so many deals in such a short time. I bought two in march and have missed multiple deals waiting for the seasoning period to refi the ones I bought etc.
Architect · Papillion, NE · Member since 2015 · 1k+ posts · 840 votes
10y
So you are having buyers remorse? This comes down to your business goals and model. When you look at all the numbers are you profitable and is this a number you like or does it need to increase? Write down your goals as they should be measurable. Good Luck.
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
10y
Yes, I think that it's very normal to be nervous. You have purchased a lot of buy and hold real estate in the last year, and you've only been landlording a year. You are a newbie, and that's okay. The big thing about buy and and hold is that, I find, the mistakes you make aren't always readily apparent and can take years to manifest. For example, if you are using a crummy flooring that last only a couple of years, you can make that mistake quite a few times before you catch on, and stop doing it. By then, you'll have compounded the problem. Or if you're buying in areas that just don't make sense for the long term (e.g. depreciating areas), you can load up on a bunch of crap.
I am still paying on mistakes from year 8-9 years ago, though the number of unremedied mistakes is dwindling as the years go on. My personal opinion is that cap ex is significantly underestimated by most investors, and that it can be avoided for a while (maybe 5 years) but after that you are looking at putting some coin back into the properties. If you've got enough properties, it can be quite a significant bill.
My one caveat to all of this is that I wish I had bought more property faster once I had it down. I feel I was too cautious and, in the end, it cost me.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
Doing anything new gives us a little pause usually. Or at least it should. Like @John Chapman points out, we often don't realize unforeseen problems or mistakes for a long time. Just try and learn from setbacks as quickly as possible. Do a CSI on them and adapt quickly. Learn something new everyday.
Landlording is a very long-term strategy for the patient. Anybody who 'bumps' after less than an hour of no responses may not possess such patience.
Investor · IN · Member since 2012 · 263 posts · 168 votes
10y
@Joshua D.- Reminds me of my former youth years ago.... Kept telling the wife "Are we making the right decisions????". Fast Forward 15 years later. Yep, was the right decisions. Basically retired... And yes, we still ask "Are we making the right decisions??". Keep buying! You won't regret it!
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
A good investor is always challenging themselves, their decisions and how or why they were made!
(pst: suggest next time adding the NOI for each property. If you don't have that - - maybe that's the hidden underlying issue to your question and autosuggests you already know you should have these numbers).
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
10y
@Joshua D. if your assets line up like you posted you are doing dam good. I have rates no where near that level. I am often only a little above break even on properties for about the first 5 to 10 years. After 5 to 10 years I have paid down equity and rents and values have gone up. both your equity and cash flow look really good. If are still pretty worried keep your cash reserves up, it helps.
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
Thank you so much to everyone for your insightful and knowledge! You have given us much to think about. @Jim C. Your answer made us both feel MUCH better, reminds me exactly of my wife and I. We are definitely taking your advice. Makes me relieved to know that you and your wife have been successful, sounds like you've worked your way to exactly where we want to be in 15 years! @Jerry W.Thank you so much, we are definitely going to start reserving cash reserves more readily. I think you are 100% right, and thank you, we are in a market where sellers are quite motivated because our area has extremes of those who are stable and completely UN-motivated and who are willing to sit on their property, and those who wait until the very last minute of a desperate situation and sell quickly. But that also might be every area, hard to say. @JBeard You are so correct, we don't have any idea, at the moment, about what the NOI on our properties are. BUT now that you've suggested it, we most certainly will start to get on that.
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
@Steve Vaughan Hey Steve! Thank you for your insightful response. Can you explain what CSI is? I'm not aware of that term but would be very appreciative.
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
@John Chapman Thank you so much John! We have made the mistake of putting carpet in a few properties (YIKES) and will never make that mistake again. What flooring do you most suggest? Is laminate what you use, or something else? What you said about buying faster we can identify with. Often, it seems we have many deals on the table and are afraid a bit to move on them because we want to make sure that we are doing everything "right," and I feel we, too, can definitely be overly cautious about making a move. It sometimes feels like we are taking calculated risks but just jumping and that's a scary feeling! At the prices we are buying and in the areas, I don't think we can lose, but still feels like a risk regardless!
There's probably a better way to frame it than "scared and nervous", I think.
Clearly, you ARE experienced.
Your successes should teach you what you are doing right - lather, rinse, repeat.
Your challenges should teach you what you need to learn more about. Take action, assess your results, determine what changes are needed, change your approach and take action again. I call that "The Success Cycle".
Be cautious and diligent - absolutely.
At this point, though, instead of being "scared and nervous" you should be feeling "confident and diligent".
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
@David Dachtera Thank you so much! You have definitely given me a confidence boost with your response. I think you are right. Our feelings are more on the "confident and diligent" side. We try our best to be as diligent and cautious as possible and pay close attention to numbers. You've given us much to contemplate with your 'success cycle' and that is so insightful! Thank you so much David!
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
10y
@Joshua D. that is a lot to have under your belt with only one year into the business. Everything you described sounds good from a number standpoint. I do agree with what @John Chapman said that some of your mistakes may not show up for some time. Being in the business a year, there is still a ton of learning and much of that happens through mistakes, so expect some of that.
Remember there is nothing wrong with taking pause to evaluate. You can take 3-6 months and let the cash build up in your bank account. With a larger cash buffer, it will remove some of the pressure. It will also give you and your wife time to plan your next move. Any time my wife and I feel pressure from the business, we just take a little break from expanding. We have also sold off properties we didn't like and then added new ones.
I guess my point is that it is natural to be a little scared and nervous, but sometimes that is also a sign you need to adjust what you are doing.
@Steve Vaughan Hey Steve! Thank you for your insightful response. Can you explain what CSI is? I'm not aware of that term but would be very appreciative.
Thank you!
CSI - TV show meaning Crime Scene Investigation. LOL Slang I use.
To do an autopsy on mistakes to find out what went wrong so you can correct going forward!
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
@Steve Vaughan LOL! There are so many different terms on here (REO, RE, ROI, NOI, ARV, etc.) that I figured that was another that I hadn't yet heard haha!
Investor · san antonio, TX · Member since 2016 · 133 posts · 43 votes
10y
how are you finding properties that cost so little but generate so much cash? I would pay you what you said that portfolio is worth with that math....yesterday.
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
@Steven Mitchell Thank you so much! Made our day and tells us that we are doing something right then!
We buy from many different avenues! We have realtor contacts who constantly alert us to new houses with the criteria that we look for. We keep constant eyes on the market and use realtor.com, zillow, trulia, CL, auction sites, etc. Tax sales, oftentimes, (judicial and upset, but prefer judicial.) PA is a tax deed state, which makes this great, but DO YOUR DUE DILIGENCE and research any judgments, liens or mortgages or you could get yourself into trouble. We always use an attorney for these. Even if its a 'free and clear' sale, it does NOT mean free and clear if the judgement hasn't been 'served.' Also, any government 'super liens' NEVER go away. Examples of this would be PA Dept. of Revenue, IRS, etc. @David Krulac is an expert on tax deed sales, (read his book, he's amazing!) and could educate you far better than I in this arena, we are newbies.
We've haggled down prices on properties by up to $50,000 before ! We are in a market where the local landlords/property managers treat it as a hobby, don't seem to know what they are doing and don't seem to much care, so we stand out in this arena. We treat it as a business, which is the ONLY way that you can do it and make it work. They have no systems, many don't even have leases!! So most don't get the amount of rent that they COULD be getting on their properties and have horrible tenants. Many people don't realize that you can up the rent and will, most of the time, get it if you do up the property nicely and sell the area/house. We bought a duplex where the original owner had one side that wasn't inhabitable, and the other was only renting for $450/month. We re-did the uninhabitable side and raised the rent to $550/month plus utilites, earning us $630/month on that side. We re-did the other side for less than $4000 including labor and now rent out that side for $550/month, as well. That extra $200/month on that duplex really goes a long way!
We use the @Brandon Turner analogy of BRRR, buy, renovate, rent, repeat. It's what we like so far and what has been *knock on wood* working so far for us and our goals.
Rental Property Investor · Pittsburgh, PA · Member since 2015 · 712 posts · 173 votes
10y
@johnspiltrock Thank you so much John! That makes total sense. Yes, we are thinking that we are going to take some time to evaluate, make sure that our systems are where they need to be and numbers, and build up a cash buffer. You are totally right. We have periods of time that we like to call 'savings sprees' where we try to hang onto as much cash as possible, definitely makes you feel less nervous. You are so right! Thank you, and kudos! We love seeing other husband/wife teams!
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
10y
I think it's normal to be nervous and worried. Turn that energy into knowledge of risks and issues, and a mitigation plan. Have a plan AHEAD OF TIME. Diversify from real estate as well. I'm at the point with nearly two million in RE, I'm diversifying into stocks and bonds. Don't put all your eggs in one basket.