Thinking of Quiting

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

2y

Quote from @Bob S.:

It sounds like your properties may be in one of those markets where the chain of title shows properties changing hands every 2 years because the rents just aren’t high enough to keep up with maintenance, repairs and capital expenses. We also had that issue with several properties that had a lot of cash flow in the spreadsheet but not as much in reality, and have optimized our portfolio now to focus only on locations with high rent and value appreciation. You might consider doing something similar, as it’s a much easier and more remunerative career in good locations. Or maybe real estate just isn’t for you! That’s fine too.

100% incorrect. It's all about buying right, reno right and renting right. I have props for years and years, with 20% net caps, or better.

I agree it’s about buying right and operating right but the one thing you can’t change is location. We both know agents in these markets sell the same properties every 2 years, often from one failed out of state investor to the next. Meanwhile properties in the best locations rarely change hands and sell at 3-4 caps when they do. Properties are priced for risk and you get what you pay for. Most new investors have a lot more cap ex risk exposure than they realize. Budgeting 5% of $1,000/mo for cap ex ain’t gonna cut it which is why these properties run negative even if they’re supposed to spin off $100/mo or whatever. They’re paper tigers. But I know you’ve done 600,000 deals like this last week all at 25% net caps. Not everyone is a total rock star like you ;) All the best bud.

4 Reply

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

2y

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

It sounds like your properties may be in one of those markets where the chain of title shows properties changing hands every 2 years because the rents just aren’t high enough to keep up with maintenance, repairs and capital expenses. We also had that issue with several properties that had a lot of cash flow in the spreadsheet but not as much in reality, and have optimized our portfolio now to focus only on locations with high rent and value appreciation. You might consider doing something similar, as it’s a much easier and more remunerative career in good locations. Or maybe real estate just isn’t for you! That’s fine too.

100% incorrect. It's all about buying right, reno right and renting right. I have props for years and years, with 20% net caps, or better.

I agree it’s about buying right and operating right but the one thing you can’t change is location. We both know agents in these markets sell the same properties every 2 years, often from one failed out of state investor to the next. Meanwhile properties in the best locations rarely change hands and sell at 3-4 caps when they do. Properties are priced for risk and you get what you pay for. Most new investors have a lot more cap ex risk exposure than they realize. Budgeting 5% of $1,000/mo for cap ex ain’t gonna cut it which is why these properties run negative even if they’re supposed to spin off $100/mo or whatever. They’re paper tigers. But I know you’ve done 600,000 deals like this last week all at 25% net caps. Not everyone is a total rock star like you ;) All the best bud.

This is why I NEVER use agents. Unfortunately, they tell these OOS buyers all is good, when it's not. Just last week, I was chatting with an investor on BP. He was about to pay 130k for a duplex that needed 30k in work, TERRIBLE, ( but looked good on paper) I told him. But the realtor did not give a hoot. All my deals are off market, no realtor involved. We Install new everything so minor issues moving forward. Yes, many OOS investors look at it on paper, 1000% AGREE with you. This is why I post 100x never do biz OOS without a team.

Keep crushing it bro, all the best

0 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

Quote from @Mohsin Mazhar:

Hi everyone,

Looking for some advise.

I am thinking of selling my 2 rental properties and quit real estate investing (at least in current format). Due to stress of ownership.

I have 2 properties managed by a property manager. The PM is genuinely a good guy, responsive, good at resolving tenant issues. Provides good support, doesn't usually bother me unless it comes to expenses large expenses or rent adjustment.

The reason I am thinking of getting out of being a real estate investor is due to the stress and constant little expenses that are adding up. Recently there was a major plumbing problem at 1 of the single family homes and the tenants were not able to use the bathroom. Unfortunately the issue was so sever that it required for the tenants to move our for the repairs to be completed. I as the owner needed to approve for this to happen so the PM reached out to me for approval. I was genuinely stress out by this. Feeling bad for the renters who are unable to use the bathroom, fearing possible litigation (even if there is no reason to be sued, just an irrational fear)

The other issue is recurrent expenses although I have allocated 20% of rental income for both properties for repairs and maintenance. I have easily spent over that for both properties. Plumbers are crazy expensive, increasing city taxes, thinking if another issue is going to come up and I wont be getting the full rent to cover the mortgage. Using my personal finance to pay for repairs and numerous other small things that in isolation are not a big deal but they just keep adding up and create anxiety for me.

I am thinking being a real estate investor (for single family homes) is not right for me. I am debating if I should sell my 2 houses and just move the move into syndications or stock market. I am looking at my vanguard account and my portfolio is up 30% YTD with zero stress. RE for me is not my primary source of income I have regular job that pays well.

What are your guys thoughts. Is this something you have experienced as well, how did you deal with it? Does it get better or worse? How do you deal with the stress of ownership.

I would suggest selling them.

You're just not fit for this. Physical investing is a whole different ballgame, you lack the tolerance and understanding of what investing entails. The best course of action for someone like you is to not be a landlord and just buy govt debt and some equities.

2 Reply

Steve K.

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

2y

Quote from @Bob S.:

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

It sounds like your properties may be in one of those markets where the chain of title shows properties changing hands every 2 years because the rents just aren’t high enough to keep up with maintenance, repairs and capital expenses. We also had that issue with several properties that had a lot of cash flow in the spreadsheet but not as much in reality, and have optimized our portfolio now to focus only on locations with high rent and value appreciation. You might consider doing something similar, as it’s a much easier and more remunerative career in good locations. Or maybe real estate just isn’t for you! That’s fine too.

100% incorrect. It's all about buying right, reno right and renting right. I have props for years and years, with 20% net caps, or better.

I agree it’s about buying right and operating right but the one thing you can’t change is location. We both know agents in these markets sell the same properties every 2 years, often from one failed out of state investor to the next. Meanwhile properties in the best locations rarely change hands and sell at 3-4 caps when they do. Properties are priced for risk and you get what you pay for. Most new investors have a lot more cap ex risk exposure than they realize. Budgeting 5% of $1,000/mo for cap ex ain’t gonna cut it which is why these properties run negative even if they’re supposed to spin off $100/mo or whatever. They’re paper tigers. But I know you’ve done 600,000 deals like this last week all at 25% net caps. Not everyone is a total rock star like you ;) All the best bud.

This is why I NEVER use agents. Unfortunately, they tell these OOS buyers all is good, when it's not. Just last week, I was chatting with an investor on BP. He was about to pay 130k for a duplex that needed 30k in work, TERRIBLE, ( but looked good on paper) I told him. But the realtor did not give a hoot. All my deals are off market, no realtor involved. We Install new everything so minor issues moving forward. Yes, many OOS investors look at it on paper, 1000% AGREE with you. This is why I post 100x never do biz OOS without a team.

Keep crushing it bro, all the best

As an agent I’m going to respectfully disagree that this is about whether the OP used an agent as opposed to a consultant like yourself. A GOOD agent (or a good consultant/mentor I suppose but much less common) is the MVP of the team. But I’m glad you’re having success without an agent on your team. You don’t need one because you’re a consultant with literally thousands of deals under your belt and you know everyone and every house in your market so you’re the MVP on your team obviously. Not everyone starting out has that level of expertise (nor does every agent, but the good ones do). The problem here is that the rent isn’t high enough to cover expenses. It takes a lot of money to operate a rental as things break and wear out, tenant issues, unexpected crap that comes out of nowhere… in my experience it takes $300-500/month minimum in capex budget alone and a lot of people only budget $100 or less because they’re using a spreadsheet that recommends a percentage of 5-10% of rent and the rent is too low for that number to be high enough. Add in the additional expense and risk of remote ownership and it makes sense why markets that attract a lot of out of state investors have revolving doors.

1 Reply

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

2y

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

It sounds like your properties may be in one of those markets where the chain of title shows properties changing hands every 2 years because the rents just aren’t high enough to keep up with maintenance, repairs and capital expenses. We also had that issue with several properties that had a lot of cash flow in the spreadsheet but not as much in reality, and have optimized our portfolio now to focus only on locations with high rent and value appreciation. You might consider doing something similar, as it’s a much easier and more remunerative career in good locations. Or maybe real estate just isn’t for you! That’s fine too.

100% incorrect. It's all about buying right, reno right and renting right. I have props for years and years, with 20% net caps, or better.

I agree it’s about buying right and operating right but the one thing you can’t change is location. We both know agents in these markets sell the same properties every 2 years, often from one failed out of state investor to the next. Meanwhile properties in the best locations rarely change hands and sell at 3-4 caps when they do. Properties are priced for risk and you get what you pay for. Most new investors have a lot more cap ex risk exposure than they realize. Budgeting 5% of $1,000/mo for cap ex ain’t gonna cut it which is why these properties run negative even if they’re supposed to spin off $100/mo or whatever. They’re paper tigers. But I know you’ve done 600,000 deals like this last week all at 25% net caps. Not everyone is a total rock star like you ;) All the best bud.

This is why I NEVER use agents. Unfortunately, they tell these OOS buyers all is good, when it's not. Just last week, I was chatting with an investor on BP. He was about to pay 130k for a duplex that needed 30k in work, TERRIBLE, ( but looked good on paper) I told him. But the realtor did not give a hoot. All my deals are off market, no realtor involved. We Install new everything so minor issues moving forward. Yes, many OOS investors look at it on paper, 1000% AGREE with you. This is why I post 100x never do biz OOS without a team.

Keep crushing it bro, all the best

As an agent I’m going to respectfully disagree that this is about whether the OP used an agent as opposed to a consultant like yourself. A GOOD agent (or a good consultant/mentor I suppose but much less common) is the MVP of the team. But I’m glad you’re having success without an agent on your team. You don’t need one because you’re a consultant with literally thousands of deals under your belt and you know everyone and every house in your market so you’re the MVP on your team obviously. Not everyone starting out has that level of expertise (nor does every agent, but the good ones do). The problem here is that the rent isn’t high enough to cover expenses. It takes a lot of money to operate a rental as things break and wear out, tenant issues, unexpected crap that comes out of nowhere… in my experience it takes $300-500/month minimum in capex budget alone and a lot of people only budget $100 or less because they’re using a spreadsheet that recommends a percentage of 5-10% of rent and the rent is too low for that number to be high enough. Add in the additional expense and risk of remote ownership and it makes sense why markets that attract a lot of out of state investors have revolving doors.

If you have 5kish a year in repairs for a SF it was not renovated properly. If you install a roof, furnace, HW tank, windows (as needed) and all cosmetic, LVP, vanities, countertops ect, where will 500 a month come from? I know investors that have props for 6, 8 10 years.

All the best

BTW, YES there are GREAT realtors out there. I just do not have any need for them.

0 Reply

Steve K.

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

2y

Quote from @Bob S.:

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

It sounds like your properties may be in one of those markets where the chain of title shows properties changing hands every 2 years because the rents just aren’t high enough to keep up with maintenance, repairs and capital expenses. We also had that issue with several properties that had a lot of cash flow in the spreadsheet but not as much in reality, and have optimized our portfolio now to focus only on locations with high rent and value appreciation. You might consider doing something similar, as it’s a much easier and more remunerative career in good locations. Or maybe real estate just isn’t for you! That’s fine too.

100% incorrect. It's all about buying right, reno right and renting right. I have props for years and years, with 20% net caps, or better.

I agree it’s about buying right and operating right but the one thing you can’t change is location. We both know agents in these markets sell the same properties every 2 years, often from one failed out of state investor to the next. Meanwhile properties in the best locations rarely change hands and sell at 3-4 caps when they do. Properties are priced for risk and you get what you pay for. Most new investors have a lot more cap ex risk exposure than they realize. Budgeting 5% of $1,000/mo for cap ex ain’t gonna cut it which is why these properties run negative even if they’re supposed to spin off $100/mo or whatever. They’re paper tigers. But I know you’ve done 600,000 deals like this last week all at 25% net caps. Not everyone is a total rock star like you ;) All the best bud.

This is why I NEVER use agents. Unfortunately, they tell these OOS buyers all is good, when it's not. Just last week, I was chatting with an investor on BP. He was about to pay 130k for a duplex that needed 30k in work, TERRIBLE, ( but looked good on paper) I told him. But the realtor did not give a hoot. All my deals are off market, no realtor involved. We Install new everything so minor issues moving forward. Yes, many OOS investors look at it on paper, 1000% AGREE with you. This is why I post 100x never do biz OOS without a team.

Keep crushing it bro, all the best

As an agent I’m going to respectfully disagree that this is about whether the OP used an agent as opposed to a consultant like yourself. A GOOD agent (or a good consultant/mentor I suppose but much less common) is the MVP of the team. But I’m glad you’re having success without an agent on your team. You don’t need one because you’re a consultant with literally thousands of deals under your belt and you know everyone and every house in your market so you’re the MVP on your team obviously. Not everyone starting out has that level of expertise (nor does every agent, but the good ones do). The problem here is that the rent isn’t high enough to cover expenses. It takes a lot of money to operate a rental as things break and wear out, tenant issues, unexpected crap that comes out of nowhere… in my experience it takes $300-500/month minimum in capex budget alone and a lot of people only budget $100 or less because they’re using a spreadsheet that recommends a percentage of 5-10% of rent and the rent is too low for that number to be high enough. Add in the additional expense and risk of remote ownership and it makes sense why markets that attract a lot of out of state investors have revolving doors.

If you have 5kish a year in repairs for a SF it was not renovated properly. If you install a roof, furnace, HW tank, windows (as needed) and all cosmetic, LVP, vanities, countertops ect, where will 500 a month come from? I know investors that have props for 6, 8 10 years.

All the best

BTW, YES there are GREAT realtors out there. I just do not have any need for them.

Tree work, sewer line replacement/ repair, driveway repair, electrical main service replacement, HVAC, plumbing (galvanized/ polybutylene/ lead pipes failing/ water damage/ mold), garbage disposals, appliances are only made to last 3-5 years anymore, even handy people want $65/hr now, etc. Not too mention tenant damage, vacancy loss, eviction costs… these are just a few things that come to mind that I’ve had with my small portfolio over the past 15 years or so. Just ask anyone who has been at it for a few years, or follow these forums and read all the threads like this one where an OOS investor in a “cheap” market realizes they’re losing money instead of reaching financial freedom through cash flow. I’ll never own an LTR with rent less than ~$2,500/mo again, the margins are just too tight below that for me and I live near my properties and can do pretty much anything that needs doing if needed. This goes for new construction and newly renovated properties as well, some of the biggest problems I’ve seen are with new construction and most renovations are just “lipstick on a pig”. Every property I’ve owned has had cap ex running $300-500/ mo. on average. This thread is the norm, not an anomaly which is why if you look at the chain of title in these cheap markets you see properties change hands every 2-3 years. I’m helping a client right now who recently sold their property in Cleveland because of water in the basement that would have cost $30k to fix, wiping out like 100 years of projected cash flow for them. Somebody bought it though, probably another out of state investor and they’ll probably sell it to a different one in 2 years. It’s just an easier business when rent is high enough to cover expenses IME.

3 Reply

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

2y

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

Quote from @Bob S.:

Quote from @Steve K.:

It sounds like your properties may be in one of those markets where the chain of title shows properties changing hands every 2 years because the rents just aren’t high enough to keep up with maintenance, repairs and capital expenses. We also had that issue with several properties that had a lot of cash flow in the spreadsheet but not as much in reality, and have optimized our portfolio now to focus only on locations with high rent and value appreciation. You might consider doing something similar, as it’s a much easier and more remunerative career in good locations. Or maybe real estate just isn’t for you! That’s fine too.

100% incorrect. It's all about buying right, reno right and renting right. I have props for years and years, with 20% net caps, or better.

I agree it’s about buying right and operating right but the one thing you can’t change is location. We both know agents in these markets sell the same properties every 2 years, often from one failed out of state investor to the next. Meanwhile properties in the best locations rarely change hands and sell at 3-4 caps when they do. Properties are priced for risk and you get what you pay for. Most new investors have a lot more cap ex risk exposure than they realize. Budgeting 5% of $1,000/mo for cap ex ain’t gonna cut it which is why these properties run negative even if they’re supposed to spin off $100/mo or whatever. They’re paper tigers. But I know you’ve done 600,000 deals like this last week all at 25% net caps. Not everyone is a total rock star like you ;) All the best bud.

This is why I NEVER use agents. Unfortunately, they tell these OOS buyers all is good, when it's not. Just last week, I was chatting with an investor on BP. He was about to pay 130k for a duplex that needed 30k in work, TERRIBLE, ( but looked good on paper) I told him. But the realtor did not give a hoot. All my deals are off market, no realtor involved. We Install new everything so minor issues moving forward. Yes, many OOS investors look at it on paper, 1000% AGREE with you. This is why I post 100x never do biz OOS without a team.

Keep crushing it bro, all the best

As an agent I’m going to respectfully disagree that this is about whether the OP used an agent as opposed to a consultant like yourself. A GOOD agent (or a good consultant/mentor I suppose but much less common) is the MVP of the team. But I’m glad you’re having success without an agent on your team. You don’t need one because you’re a consultant with literally thousands of deals under your belt and you know everyone and every house in your market so you’re the MVP on your team obviously. Not everyone starting out has that level of expertise (nor does every agent, but the good ones do). The problem here is that the rent isn’t high enough to cover expenses. It takes a lot of money to operate a rental as things break and wear out, tenant issues, unexpected crap that comes out of nowhere… in my experience it takes $300-500/month minimum in capex budget alone and a lot of people only budget $100 or less because they’re using a spreadsheet that recommends a percentage of 5-10% of rent and the rent is too low for that number to be high enough. Add in the additional expense and risk of remote ownership and it makes sense why markets that attract a lot of out of state investors have revolving doors.

If you have 5kish a year in repairs for a SF it was not renovated properly. If you install a roof, furnace, HW tank, windows (as needed) and all cosmetic, LVP, vanities, countertops ect, where will 500 a month come from? I know investors that have props for 6, 8 10 years.

All the best

BTW, YES there are GREAT realtors out there. I just do not have any need for them.

Tree work, sewer line replacement/ repair, driveway repair, electrical main service replacement, HVAC, plumbing (galvanized/ polybutylene/ lead pipes failing/ water damage/ mold), garbage disposals, appliances are only made to last 3-5 years anymore, even handy people want $65/hr now, etc. Not too mention tenant damage, vacancy loss, eviction costs… these are just a few things that come to mind that I’ve had with my small portfolio over the past 15 years or so. Just ask anyone who has been at it for a few years, or follow these forums and read all the threads like this one where an OOS investor in a “cheap” market realizes they’re losing money instead of reaching financial freedom through cash flow. I’ll never own an LTR with rent less than ~$2,500/mo again, the margins are just too tight below that for me and I live near my properties and can do pretty much anything that needs doing if needed. This goes for new construction and newly renovated properties as well, some of the biggest problems I’ve seen are with new construction and most renovations are just “lipstick on a pig”. Every property I’ve owned has had cap ex running $300-500/ mo. on average. This thread is the norm, not an anomaly which is why if you look at the chain of title in these cheap markets you see properties change hands every 2-3 years. I’m helping a client right now who recently sold their property in Cleveland because of water in the basement that would have cost $30k to fix, wiping out like 100 years of projected cash flow for them. Somebody bought it though, probably another out of state investor and they’ll probably sell it to a different one in 2 years. It’s just an easier business when rent is high enough to cover expenses IME.

Its NOT 30k to fix a water coming in the basement. I have done many where we dig around the entire house, and seal, 15k MAX. Yes I agree, a sew line can happen, I have replaced about 10 over the last 10 years. But it's not norm. I have had many props that required minimal. 1500 - 2k rent on all in purchase of 65-80k I will take all day. We just closed this morning. Roof, HW tank, Furnace, all under 3 years, all cosmetic, no issues with anything. There should not be anything major UNLESS the sewer line collapse. If so Its 7- 8k. But it's all about buying right. As the saying, "You make your money when you buy"

You 100% make great points. Again, it's about having the right team to take care of the repairs at a fair price.

All the best

0 Reply

Dave Skow

Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes

2y

@Mohsin Mazhar- thanks and sorry for the situation ....If you can sell the properties without taking a loss on them - I would recommend selling ...the situations you describe will definitely continue over time ...in one shape or another . This is part of being a landlord and some properties are more porblematic than others

0 Reply

Ned J.Pro Member

Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes

2y

Being a LL is not for everyone and thats ok....if the juice aint worth the squeeze to you, then sell them and move on to something that is

For the "my Vangard is making 30% a year" comment.... you realize that isnt normal and wont last forever, right? They say the stock market AVERAGES 10% for a reason... a crash and burn eventually shows up and your "this is easy peezy" becomes a panic as your portfolio crashes. So dont think that is stress free either. Just like being a LL, when all is going great its pretty stress free

Syndications..... ask some of the guys on the posts about their syndications halting payout and making capital calls or ghosting the LP's..... NOT stress free either.

I dont think any investment is going to be stress free... its just a matter of how, why and how long. It sup to YOU how much and what type of stress you want to deal with

1 Reply

Todd Dexheimer

Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes

2y

It sounds like you just need to pivot to a more passive role. There are a lot of passive options. Invest in a syndication, invest in a fund, buy a NNN lease property or be a hard money lender.

1 Reply

Becca F.

Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes

2y

I think I bought two of those types of properties in 2023 in Indianapolis sadly. My thoughts are those types of properties are better for local investors who can check on the properties, know how to do some of their own repairs or are very experienced investors who know what they're doing. Cap ex of $300-$500 a month?!! I'm not a new investor and acquired my other properties pre-2013 pretty easily. I didn't intend to scale but jumped on the recent "financially free" bandwagon and trying to acquire more doors.

I'm wondering if OP lives in Cleveland or is OOS. So far OP hasn't replied back to the numerous comments.

2 Reply

Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

2y

@Mohsin Mazhar look into class A-/B 3/4 units these tend to have sufficient cashflow so you make money even after expenses. My 4 unit now nets $3500 a year so its a large enough margin that even if needs repair I come out well ahead. When you have 4 units in one building each year you bump rents up $100 the building now brings in $4800 net higher this adds up fast over time and with single families the ratios are very different.

Stocks can be nice and I keep some money in VTI but it is very slow gains compared to my real estate holdings, you are right in how stress free it is. I would be VERY careful of syndications you can read all the horror stories currently on BP of investors in once reputable companies now seeing complete losses of their invested capital.

I also recommend an umbrella policy. I have 2 million umbrella on all my properties and it makes me sleep well at night.

0 Reply

Thinking of Quiting

Thinking of Quiting

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