All Forum Posts by: John Morgan

@Milena Simsic I give my tenants many options and charge a little more than the going rent rate. They appreciate it and it’s not a big deal for me. They pay in cash, checks, money order and PayPal. By being flexible, I’ve found my tenants are loyal and seem to be lifers staying in my properties.

@Aaron J. I would ramp up your retirement accounts in the market first Max out both your Roth IRAs. you can always take out what you put in without any tax penalties. That’s what I did. And when a few stocks did really well after several years, I took some $ out and bought my first investment property.

@James Allen I just paid $1,200 for labor to paint the inside of my 1,000 sq ft rental. I thought it was high until I just read your post. My tenant is the one who did it, so I was happy to help him out a little. Good luck with yours.

@Basit Siddiqi

I do my taxes myself through turbo tax. I’ll look for a publication that explains the difference, because this year was a doozy for my rentals. Thanks!

@Basit Siddiqi

Where can I find a list of improvements vs repairs? I mainly did necessary repairs like foundations and air conditioners. But I did rehab a couple bathrooms and put in new windows on a property, which I would assume would fall under improvements. I believe improvements are deducted over 5 years?

If I own rental properties and some houses show profit, but the others lose money due to repairs etc., do they all balance out? Will I be taxed on the sum of all my properties? I own 6 rentals and had to dump a ton of $ into four of them this year causing a loss for the year on all four of those. However, two rentals did good and made profit. Overall, I probably broke even when all of them are added up with their losses and profits combIned together. I just didn’t know if I could use losses on some of them to offset the profits on others. It was a bad year for me! Murphy’s law hit me like crazy the last 4 months.

@Greg Gaudet

$500-600/month is great! Well done. I’m thinking of aiming toward the section 8 crowd on my future properties. I haven’t heard too many bad things about sec 8 tenants. 

@Greg Gaudet

I bought my first property (a two bedroom cabin in Branson, Missour that we use occasionally) almost 4 years ago for 130k. It's a nightly rental that nets me about $1,500/month. Paid cash for it. Took out a HELOC, cashed out some profitable stocks in my Roth IRA and dumped most of my savings. Paid it off in about a year aggressively. Then bought another smaller cabin in focisure for 60k. Same thing. Paid cash for it by taking out another HELOC, and borrowed from my 401k. Sold it 18 months later for a 35k profit. Did a 1031 exchange with the 95k and bought my first normal single family home close to where I live in the Dallas area for 225k. That house has a positive cash flow of $450/month with a 15 year loan. Then bought 3 more single family 3 or 4 bedroom homes in my area for about 125k/each with 20% down and 15 year loans. And just bought my 6th property for 48k with a 5 year 401k loan. Had to put 40k into remodeling it. But it rents for $1,400/month with a section 8 tenant.

I definitely would have done some things differently! But I’ve learned from my mistakes and happy with the cash flow. I’ve got way too much equity in a few of them. But maybe dealing with only 6 properties with a lot of equity is better than 20 with small down payments and not much equity is better for me.  I manage 4 out of 6 of them myself. I feel that managing 4 of them isn’t a big deal at all. And always looking to buy more in the future, when I pay off my five year 401k loan. Or find an investor who will help finance a flip for me. 

Originally posted by @Greg Gaudet:

Originally posted by @John Morgan:

I started 3 years ago at age 44. Have slowly acquired 6 single family rental homes. Cash flowing $3,500/month off them. Not getting rich off it, but over time I hope to nab a few more. My goal is to cash flow 10k/month before I retire to help supplement retirement. I think it’ll be doable if I keep at it slowly. This is a fun journey so far!

I wouldn’t call that slow! 

John can you tell us more about the type of properties you buy? It sounds like you’re averaging 550-600/month per door? What’s your strategy? Are you buying below market value, are you investing in D class neighborhoods and just doing the added work in exchange for the added profit? 

I’ll share my own deal structure in exchange:

Personally I buy D class condos here on Maui and rent them to section 8 tenants and make a similar return to yours. Market values about 125k so I like to get them for 90-100k, rent for about $1,650, and produce about 500-600/month I’m cash flow (although that number is going down as prices have gone up) 

Great work John! I hope to follow closely behind you! I’ll be stoked to have $3500/month in 1-2 years from now! 

I started 3 years ago at age 44. Have slowly acquired 6 single family rental homes. Cash flowing $3,500/month off them. Not getting rich off it, but over time I hope to nab a few more. My goal is to cash flow 10k/month before I retire to help supplement retirement. I think it’ll be doable if I keep at it slowly. This is a fun journey so far!