All Forum Posts by: Ryan Wamsat

@Minuit Spence I agree with Kevin.  You are going to need access to funding in this game.  This is true whether you have $1,500, $15,000, or $150,000 saved up.  Having a good credit score will open up doors to lower interest rates.  So, that would be the best place to start.

If you're adamant about investing now, I suggest listening to the early BP podcasts.  I don't recall the podcast number, but one of them indicated what you can do if you only have $1,000.

I wish you luck,

Ryan

@Sam Shah The down payment and the repairs are only tangentially related to each other. If you pay less than 20% down, you'll end up paying private mortgage insurance (PMI), which is generally 1% of of your mortgage amount, monthly. That's $170 extra you'll be paying monthly, if my math is correct.

PMI has nothing to do with vacancies, repairs, or capital expenditures. You have to plan for those as well. If you're suggesting that you personally put aside $139 per month ($50k / 30 / 12) to pay for those expenditures, that's your call. However, I don't think it'll be enough over the course of 30 years. That's just my opinion. On a similar property, I put aside $415 per month to cover additional expenses.

@Sam Shah Sorry, I'm lost on the math here.  Your income is $1700 and your expenses are $1800.  Your monthly cash flow should then be -$100.  Also, I'm going to go out on a limb here and say that $1800 is NOT all of your expenses.  Given the numbers, I'm guessing that you're only including mortgage costs, insurance, and taxes.  If so, I encourage you to think about this as a business and realize that you WILL have expenses beyond that.  You should account for vacancies, repairs, capital expenditures (roof, AC, etc), and (optionally) property management.

Please refer to the 50% rule.  Paraphrased, it states that over time 50% of your money will go into additional expenses.  At minimum, you should add 30% above your monthly payment.  So, I'm guessing the monthly rent should be $2,400 to break even.  And, that's with no cash flow into your wallet.

I fell victim to your logic as well, and had done so for over 10 years until I had to pay for an HVAC replacement ($7,500, which was cheap) and started wondering where those funds came from.  That's when I realized my mistake and have been learning and trying to rectify the situation.

@Lance Anderson I've been using Cozy now for three years.  I inform my tenants that they are required to pay online, via Cozy, which is free for ACH payments.  However, they do have the option of using a CC to pay, but at a 2.75% fee.  For $1,000 rent that's an additional $27.50 they'd be charged, and I make them aware of it.  It's an insane amount.  When I call their attention to that, they refrain from using that as an option.  I've had zero problems.

I'm in California, so I'm not sure how much this will help you.

I had to evict a tenant, and the judge awarded compensation to me.  Like you, the tenant didn't show for the trial and I didn't have a forwarding address after she did move.  My lawyer informed me that I can use the writ (I believe that's what it's called) to file a lien in each county where the ex-tenant may reside.  Each county charges a $50 recording fee, and the lien remains in effect for 5 years.  However, it'll only payout if the tenant purchases property and then tries to sell it within that timeframe.  With my tenant, the likelihood of that happening is near zero.  So, I didn't even bother.

Later, I found out that you call sell the judgement to a collection agency for pennies on the dollar.  I've never tried that, so I don't know how it's done.

Good luck to you,

Ryan

@Lorin K.

Oddly enough, I just wrote a short paper on this topic.  I reviewed data dating back to 1960.  If you review the purchase price of a house vs the rental on that house, you'll find that (more-or-less) the rental price has been pegged to the purchase price of the house.  To say this another way, landlords have been perfectly reasonable in setting the prices of their units.  In recent years, there was a significant disparity due to the decreased home prices.  That said, you could see a flatline in rental prices, after the crash, which would have eventually closed that gap.  Unfortunately, the housing prices started increasing significantly again in 2010 which wasn't enough time for rental prices to adjust.

Rent Control is not the answer.  Determining the underlying cause of insane housing appreciation (which in large part is the lack of supply) and addressing that issue is the right answer.  The problem is that, from a political perspective, it's just not as sexy as rent control.  Nor does it resonate with as many people who haven't stopped to think about these issues.

Ryan

Everyone, @Chris Wiser

This has been one of the most enlightening posts I've read.  Thank you for sharing!

@Kevin Moules - Works for me too.  Did you have a place in mind?

@Bobby Christoulakis, @Ned J.,

I'm game for a meetup to discuss rentals, future investments, etc.  And, I just so happen to be partial to sodas.

Available almost any day after 5:30pm.

Ryan

@Ryan Wood, have you considered house-hacking as a "best of both worlds" scenario?  As a single person, it would seem to be an ideal fit for you.  Find a duplex/triplex in Roseville, live in one unit and rent out the remaining.  This has a couple of different benefits: 

1) You'd get a discount on the loan, as it would be owner occupied.  

2) Your tenants would pay a large majority of your loan while you (hopefully) build equity.  

3) When you do move from there, you'd have another unit to rent out.

4) You'd get to live where you feel is best for you.

Good luck to you!

Ryan