All Forum Posts by: Jack B.

 Not sure your post makes any sense...How does the equity eat $1,200 a month off my rental income before any expenses? I don't think you understand how capitalization or cash on cash returns are calculated.

I posted the numbers. I'm not cash flow negative. I'm positive. To the tune of 6.8% after all expenses, relative to equity. Read the first sentence in my original post....

Here is what I said again:

"Making about 6.8% cash on cash from rents after expenses. It's a 145K house and although the market is going up, it's small gains compared to my leveraged 500-700K leveraged houses."

 I feel you. I'm young. Paid cash for my first house in my mid twenties. No hand outs, stood on my own two feet since I was 18, etc. Was blessed with intelligence to get into a high paying IT position. Half my tenants think they can walk over me because they are twice my age. It doesn't help that since I work in IT, I wear tennis shoes and jeans. I'm an old shoe, old hat kind of guy. Tenants constantly test my boundaries. 

Flakes, liars and idiots, not only tenants but contractors too. I really like it when some moron with a felony and a $9 an hour job wants to argue with me about their four pit bulls that they didn't mention despite me listing in twice at the beginning and end of the listing AND asking them via email if they meet each criteria, listing them in the email again.

What I'm thinking: I make almost 200K from my job alone, more from my investments. I can afford to buy a Lamborghini paid in cash, you drive a beater car and make $9 an hour and can only live in a house if you have room mates. Let's assume I'm the one with better judgement...

What I say: I have another appointment (as I walk them to the door) then close the door on them when they are out.

I had a tenant that got a pitbull and a pool despite a strict no pool and no dogs policy. Her sister and her kids also moved in, against the policy. While she paid rent early for the two years she lived there, I would not repeat the scenario. Why? I had my insurance policy cancelled due to the dog and the pool. Suffice it to say they left lot's of damage too. At the end of the day, people who have dogs like these are usually not good, clean, safe people. It seems like 9 out of 10 people who contact me have a pitbull or four and have some sob story and claim they are a service animal with a grin on their face. You should see some of these people, the biggest losers in society generally, and they just don't get it. That doesn't mean everyone of them is a bum, but most of these people are kids living with room mates working at Walmart or Dicks Burgers, and the vast majority of them turn out to be felons. Would never rent to the kind of person who has a dog like this....Raise the rent or give them notice to move out if they are MTM (my leases are MTM). 

Oh, and some lady in Tacoma WA lost a 2 million dollar judgement against her because her dogs bit a neighbor. Who do you think they will sue if the renters pitbull does that? You the rich landlord with a few million in real estate or the broke tenant barely living check to check? I've been sued, it's not fun. Don't open yourself up to more risk because of someones poor choice for a pet.

Making about 6.8% cash on cash from rents after expenses. It's a 145K house and although the market is going up, it's small gains compared to my leveraged 500-700K leveraged houses. 

I've kept it to date as a fall back position since it's paid off. If I lose my job, I can move back into it and live cheaply, even with no car (if it's that bad), since everything is within walking distance. It's on a somewhat active road that I didn't care for, but not a big problem when you factor in how cheap I could live there and how convenient it is otherwise. Plus the busy road seems to keep other problems at bay.

It is about an hour away from where I live now though, and dealing with flakes (sometimes all the appointments flake, try to have a few at a time so as not to make it a wasted trip) is time consuming. 

I've considered selling it and either 10-31 exchanging into another paid off property with some money on top (for a nice place, not on an active road). I could also just sell it and pocket the cash waiting to reinvest elsewhere. Or I could buy a nice house in Tampa Florida paid in full with the money. I plan on relocating there though have not made a recent recon visit yet. Can do though...

The house needed a new roof within 5 years per inspector when I bought it. I just celebrated 6 years the other day. The quality of tenants leaves a bit to be desired. Lot's of losers despite being in a gentrifying/not that bad of an area (lot's of new houses and condos going up).

What say ye? Looking for different perspectives here.

I use Excel. I have it setup to match what schedule E looks like (I do my own taxes, used to hire a CPA). Plus I have it setup to calculate my profit/loss. Quickbooks was too cumbersome for my needs. It's a simple program, but I don't need all the features and it's much faster to do it in my spreadsheet.

Mine was initially to build financial independence. I did that, but am still in the grind trying to build more wealth. 

With full time work, grad school and a rental business, I'm wearing out. Last night I thought, what would my ideal life look like? 

It was not buying more real estate and growing the business. It was mostly cashing out (not all though) and buying a homestead to live and farm on and take it easy. 

Gave me a new perspective. Sometimes it's not about buying 100+ units, so much as having enough passive income to go live the life you want to live, in your limited time on this planet....

 Largely for the appreciation I'm sure. I just calculated the cap rate on one of my half million dollar houses. Less than 3% but at least the value is going up like nobody's business still.

Have another lower end property that returns 8% but I've watched the return decline for the last few years as the prices outpace the rents due to high prices and high appreciation compounding faster than the 3% for a relatively low amount of rent (relative to the value of the house). I don't think cap rates are the thing to judge an investment on alone. Total ROI, IRR, etc. are also good calculations to run.

Judging by the pics I'm guessing you got the place at one heck of a discount and have a lot of upside. Just WOW though...

Had a guy with a bankruptcy and a $16/hr job (a bit low income...) who seemed polite and I gave him a chance for a tour. Fifteen minutes into what would have been the tour I had to repeatedly call and text him to get a hold of him. Finally answers the phone, sounds like he either just woke up or took a big hit of something. Hadn't even left for the appointment yet. Also needed the address again. I declined to show the property at that point. He started yelling at me with an expletive laden rant of threats, how I'm a POS because I won't give him a chance. 

I just hung up. He then sent me a series of texts that I'm sure contained the same, I didn't bother wasting my time reading them (though I kept them for evidence just in case he tried something stupid). I almost wanted to reply, 'You're absolutely right. I'm rich, have an MBA and a portfolio of SFH in the Seattle area, a six figure job, and that I am the problem. Not the guy with bad credit, has a low income job and can't keep an appointment with the guy who gave him a chance. Sure showed me tough guy..."

Suffice it to say, I make no exceptions for tenants with credit below 600 anymore. Low income and low credit score usually ='s crappy tenants.