I bought a rental property(single-family house) in Oregon for $350K cash and placed it on rent for $1850 per month. I pay $185/month in HOA and $9000/year in property taxes. I had to make a quick decision with buying this property, due to a life event change at that time(divorce, 1031 exchange etc.). However, now that the dust from my life transitions has settled a bit, I am wondering if it is better if I invest my $350K in multiple properties (or at least more than one) instead of putting it all in one. This will mean I may have to take on a loan, though. I am new at investing. What do you experts think?
P.S. I have a full-time job and cannot spend much time managing the properties, looking for a passive investment scenario
@Addy Cash I'd suspect the property you purchased and rented doesn't cash flow. The numbers are terrible, no offense. If you're aiming for rental properties most new investors handle PM, at least on a few properties. Everyone has to learn the ropes.
If you're looking for truly passive investments maybe consider turn key property? My market is full of them. $350K would go a lot farther in the mid west than where you're at now. I'd research the hell out of any market though and verify the numbers the company shows you. Cash-flow is tough to find and when you factor in PM fee's of 10% (more or less) things get really tight.
You can hire handy man to handle 90% of property issues and repairs. I'm an investor my self and do side work for OOS investors all the time. I charge per hour + materials, per project. Screening tenants can be done via Zoom, phone calls, and background checks. Something to consider.
Sounds to me like you should consider looking at real estate syndications.
I would bet $100 and say that your current house doesn't Cashflow positively. In this case you 100% need to sell it and find properties that ROI at least 10%. Otherwise, your money is being lazy
After doing some quick math on the property, I see that the property is cash flowing for you only because you bought it for cash. After maintenance, property management, insurance, and anything else you need to fit into the expense column, the cash flow on the property is very low. Would you say you get $600/mo after all that? Yes, you'll get other benefits such as depreciation and appreciation, but for something that is close to a 2 cap is pretty low. So yes, get rid of it if you can and hopefully the market is good enough to gain a bit off of it, although with a renter it will be difficult and someone else maybe seeing what you have done it won't be too enticing.
I'm not sure you could get a loan on it and cash out making the property worth it at that point because the returns are already so low on it. But, once you have the money back, consider how you're going to use it better and like someone else, you could put it into a syndication in a passive way and get value out of. You're free to setup a call with me to discuss how we're moving forward right now.
@Addy Cash Understanding if it is worth it, is always a personal question. Each of us will have varied opinions on what a good investment looks like as we all have varying interests, passions, purposes, etc. However most will involve Return on Investment or Cash on Cash Return.
This being the case, you are making 915 cashflow after taxes and hoa. Lets add in an additional $300 in random expenses such as water, trash, yardwork and perhaps some reserves set aside for a whatif scenario. That leaves 615 in cashflow. $615 * 12 months = $7380 per year in cashflow.
$7380 / $350,000 = .021 or a 2% return on your money (cash on cash return). So in essence, you can do a lot better from a return point of view.
I suggest, refinancing the property, pulling out some of that equity and investing into some passive investments as this aligns with your life I believe. It will also diversify the risk of investment as you are spreading that risk profile as you mentioned.
It will also increase your return on the existing property. The more equity you pull out, the higher the cash on cash return rises. Example : $7380 / 75,000(remainder still left in after refi) = 9.8% return. Of course your cashflow might also decrease as you would now have a mortgage. So there is a balance there as well.
There are additional benefits with other passive real estate investments, ie tax benefits, economies of scale, etc., as well which I won't cover here in full as well.
Feel free to DM and let me know if I can assist.
Wow! I am blown away by the wealth of information you all shared with me. This website is amazing! I didn’t know that I was missing out on such a great community. I have realized that I know too little in this area, I will spend some time educating myself. Thank you everyone for pointing me in the right direction!