All Forum Posts by: Karen M.

In your situation, 45 minutes sounds better than an hour.  :)   Figure out your miles and approx. gas costs for the round trip, and consider how your commute expenses might eat into your numbers. :)   Gas isn't free. 

That said, I don't know how much running around people do with their properties once they are up and running as rentals.  Of course the startup phase will involve a bunch of trips to the property, but that's normal.

Have fun! 

Hi Josh, on one of the podcasts, Brandon said that he would not look at anything that delivers under 1%. As a beginner (and someone who has not purchased property yet), I appreciate that guidance. I don't want to own real estate for fun, it is a big transaction and the goal is to improve your chances of achieving your goals. (For me the returns need to be as good or better than I can do in the stock / options market.)

I am a beginner and currently starting to think through what I really want to do for a first purchase. I am leaning toward finding a low-price (but decent) local property in an acceptable neighborhood and getting some learning done without a huge financial commitment, and as a trial balloon to see if I am going to be any good at real estate / land lording and if it suits me. Baby steps.

I am really considering a budget for getting started. A modest budget, with an emergency fund on the side. And then I have to shop based on that budget and not on the properties that I am the most attracted to, but honestly can't afford (yet). And the nice ones aren't yielding quite enough. I don't have so much money that I can just park it without expecting it to grow.

In the last months, I have become a regular Dave Ramsey listener / fan (he's a personal finance guy that helps people who are mostly in debt, but also at all stages of financial planning). He's very conservative, against all debt and recommends buying rentals in all cash, after you are 100% debt free, including your own mortgage. I will probably begin while I still have a personal mortgage, and I will probably use a lender, but…. I appreciate the advice to be cautious about not digging yourself into a deep hole. I think it's good advice to buy what you can afford and not over stretch. A property is going to have to pay for itself and it has to produce a good investment / good return.

Make sure you are being a smart buyer. Keep looking, keep learning, keep networking, have fun!

P.S. when you are saying owner--occupied, you mean you want to live in your multi-family? That is great. There have been a lot of positive comments about doing it that way. I think you have more leeway with your calculations if you are living there, and if you can live for free…. or really cheap, I would con sider that a "win". What are your goals? Make them clear for your purchase and talk to other people who have done what you want to do. :)

Dan, have you ever had a bed bugs issue in your rentals? How was the class? I was on the web site yesterday looking for a basic land lording class but did not see anything scheduled yet.

Karen

Get the drug dealing out of your property, don't even think of letting this pass or consider putting new tenants into an unsafe residence.

http://online.wsj.com/news/articles/SB10001424052702303843104579171791879768178?mod=WSJ_hpsMIDDLENexttoWhatsNewsSecond

Vanessa Finch and her family in front of their newly built rental house in Jacksonville, Fla. Daron Dean for The Wall Street Journal

Last year 5.8% of the 535,000 single-family homes started were being built as rentals, up from 4.8% in 2011 and the highest share since at least 1974, according to an analysis of census data by the National Association of Homebuilders. From 1974 to the home-price peak in 2006, only about 2% of single-family homes were built for rentals.

Vanessa Finch sees her new rental as a waypoint. Ms. Finch, a 37-year-old human-resources manager, recently moved into a newly built rental home in Jacksonville, Fla. Ms. Finch and her husband, who have four children, wanted to get to know the area before they buy. Their two-story, four-bedroom rental costs $1,400 a month, but unlike most rentals, it has new paint and fresh landscaping.

"A lot of the neighbors came by because they were interested," she says. "They were really surprised that there were brand-spanking new houses for rent. They had never heard of such a thing."

For investors, the interest in new homes reflects their belief that the rental market will continue to see strong demand and rising rents. While there is little data for the level of single-family home rents, apartment rents have shot up 11.3% since 2009, according toReis Inc. REIS -3.39% Overall, about 15 million of the nation's single-family homes were rentals last year, up from 10.8 million in 2005, according to Zelman & Associates, a research firm.

Meanwhile, foreclosures and other distressed sales accounted for less than 15% of all home sales in September, down from 21% a year earlier and 33% at the peak of the housing bust in early 2009, according to CoreLogic, CLGX +0.24% a data firm.

The new homes-turned-rentals can be found both in new subdivisions or built on lots in long-standing communities.

Colony Capital LLC's Colony American Homes unit has about 1,000 newly built homes out of a total portfolio of 15,000 rentals. The company purchases them from home builders and is able to customize the building along the way.

"We can say we want a three-bedroom home with 2,000 square feet with these kinds of finishings and they're in these communities where most of the families have lived there for a while," says Justin Chang, chief executive of Colony American Homes. "It's not like a whole subdivision of rental homes; the builder sells us 30 or 50 homes from the last build out."

For builders like Marc Jungers, institutional buyers offer a way to move homes in a hurry and keep cash coming in the door. He recently sold about 30 newly finished homes to Landsmith LP, a San Francisco real-estate investment firm that plans to rent them out to tenants. Mr. Jungers says the newly built rental homes, because they are sold in bulk, are discounted between 8% and 10% of what an owner-occupant buyer would pay. "It gives us certainty of closing and helps us backfill a community," he says.

Building new rental homes undercuts part of the thesis of investing in single-family rental homes. Investors were attracted to this market largely because they could buy houses for less than the "replacement cost" or how much it would cost to build a new home.

But investors say they can still make profits. They point out that new homes typically come with builder warranties and cost less to maintain, at least in the initial years of ownership.

Also, the cost of building a new home is relatively low these days if lots were purchased on the cheap. Take the case of Alex Sifakis, a 30-year-old entrepreneur who began his real-estate career in 2006 when he graduated from college and started buying and flipping properties.

Mr. Sifakis started buying empty lots at a discount during the downturn, and in the meantime he got a contractor's license so he could expand into development and build rental housing from the ground up. Mr. Sifakis's Jacksonville-based company, JWB Real Estate Capital, built 68 new rental homes last year, he says, and is on track to start somewhere between 70 and 90 new rentals this year.

The homes are spread throughout the Jacksonville area, mostly as developments in older neighborhoods and subdivisions. JWB can rent them and still make money partly because land typically accounts for about 40% of the cost of building a home.

Landsmith bought about 1,800 existing single-family homes over the past two years but has recently turned to buying new homes. The company has developed or bought about 600 new single-family rentals in Houston, Indianapolis and Charlotte, N.C.

"So you could buy a house from 1990 and get a 12% return. Now you can buy a brand-new house and get a 10% net return, so the spread isn't that dramatic given the uptick in quality you're getting," says Chang Kim, a vice president at Landsmith. "We're in a unique period where brand-new houses can be built for a low enough cost that single family rentals can work."

Write to Conor Dougherty at [email protected]

Oh, and I went to the September meeting. I think I like the strategy sessions more than the main meetings (but the main meetings have food). Tough call. I try to go when I can. Bigger Pockets is here 24/7 and that is nice!

@Amy Oltendorf , the podcasts ROCK!!! You will love them!

I am honestly trying to get my financial life organized after having 3 kids and kind of ignoring it while I was in diaper-changing mode. I need to get loan pre-qualified, learn about rents and also about all the paperwork, such as tenant applications and leases, etc. I'm just starting out but hope to dig in and get a first rental going in the next 6 months or so.

Hi Amy, I'm just saying 'hi' since we met a few times at Milwaukee REIA meetings over the summer. I'm looking at purchasing our first rental homes too, more in the 'burbs. Nice to see you here on Bigger Pockets, it is a wonderful place!!

Hi Paul,

Glad you got things straightened out and that you and your tenant are both taken care of and the rent is settled.

It sounds like PayPal's rule is that to make a payment via Paypal, the payer needs to have a PayPal account. Perhaps this is a change from it's former terms and conditions.

But now you all know how it works, you and your payer need to maintain PayPal accounts to send and receive funds. Can you make that work, now that you know that it will take a few days for a tenant to set up their account?

Paypal has the right to run its business and to update it's way of doing things. Changes to a system that was working well for you can be frustrating, I understand.

Hope it works out for you in the future.

Karen

disclosure: Ebay shareholder

P.S. Don't lose money. ;)