Bad to keep just one rental?

8 Replies

I currently own one rental. I buy through turnkey providers, so I am looking at properties listed above market price. Prices have risen so now the cash-flow with these properties aren't that great anymore (if there are any).  I want to scale so that if this property goes down, I can have the others pick up the slack. At the same time, I don't want to be picking up properties that don't cash flow.

My rental is a very old home (built in 1910), and I am expecting to see problems. I have funds ready to invest, but am considering putting them in REITs or syndications instead. Should I be looking to offload this rental I own, or continue to hold on?

BTW, I get financing on my properties, which is why it's hard for me to find cash-flowing rentals.

that depends on your goals. does the property cash flow an acceptable amount for you? has the property appreciate significantly since you bought it setting you up for a nice profit if you sell. I would imagine buying turnkey properties in CA would be tough to find good cash flow. have you considered buying non turn hey properties? you would likely find more cash flow that way, but would also require more involvement on your part.

@Jonathan Oh Where are looking at buying turnkey properties.  It is getting harder to buy in good areas from reliable & trustworthy providers truly cash flowing turnkey properties, but still possible.  You just have to just work a little harder to find these deals and accept lower returns than even 2 years ago.

There is nothing wrong with the idea if having a single rental as long as it cash flows including a cap ex budget but if you aren't certian or at least reasonably convinced that will continue you should either sell or set aside a chunk of cashflow to cover unexpected expenses.  Also there definitely still are investments that can be made that cash flow but they are harder to find. One of two things (or both) will happen next rents will go up and correct market returns or prices will go down to correct market rates.  Particularly with rising interest rates.  

If you know a good syndication I'd say it could be a good plan if you truly want to stay hands off. On the other hand it is possible to buy and hire management companies with out going turn key route.  Remember that the turn key guys need to eat to so they lower your margin by acting as a middle man. 

Where are you looking and not finding cash flow properties? I work with turnkeys excessively and there's lots of cash flow to be had on them, even with where we are in the market.

@Jonathan Oh If you want to expand, expand. Otherwise, ditch it. Most of the time one random rental in flyover country is misery. It kicks off $100-$200 per month but you eat that up of you ever go visit it. And when the inevitable cap-ex item hits (maybe not for 5+ years) you’re upside down. Still, if you’re in that market and like your PM I would imagine they would manage another property for you (even if it wasn’t through a TK) but maybe I’m wrong. Either way I suppose my message is “don’t stick it out with one”.

Originally posted by @Jonathan Oh :

I currently own one rental. I buy through turnkey providers, so I am looking at properties listed above market price. Prices have risen so now the cash-flow with these properties aren't that great anymore (if there are any).  I want to scale so that if this property goes down, I can have the others pick up the slack. At the same time, I don't want to be picking up properties that don't cash flow.

My rental is a very old home (built in 1910), and I am expecting to see problems. I have funds ready to invest, but am considering putting them in REITs or syndications instead. Should I be looking to offload this rental I own, or continue to hold on?

BTW, I get financing on my properties, which is why it's hard for me to find cash-flowing rentals.

 You should note that a quick sale of a financed property is going to cost you. You have the majority of your interest packed into the 1st 7 years of your mortgage along with about 3% of the purchase price in purchasing costs & another 10% in selling costs. That's a lot to recoup. If the home isn't costing you my suggestion would be to ride it while you hit that principle pay down.

If your current property kicks off decent cash flow, and is in an area that you expect will realize hpa over time, then keep it.  If you do decide to sell, keep in mind that buyers will likely adjust their price to account for the age of the house and any issues that come up during inspection due to that age.  And if current deals in the market do not cash flow well, AVOID THEM.  There are many ways to hedge against your current investment losing value, and having some cash saved up is one of the best.

@Jonathan Oh in 2016 I had gotten up to 10 of these turnkey rentals and currently seeing how the numbers don’t really make sense.

More importantly it’s not scaleable. I went to larger deals but you have to start somewhere.

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