[quote=CA renter]The whole “I’m a landlord with negative cash flow ‘investor'” comes with bubble territory. My parents were RE brokers, landlords, and investors for decades. They would NEVER have purchased a property where rents didn’t cover all expenses and provide a profit on top of that. They never had a negative cash flow in any of their properties, and I know many other long-time landlords who are in the same boat (my current landlords, included).[/quote]
CA Renter, did your parents purchase the bulk of their rental portfolio prior to the passage of Prop. 13 (April 1978)? Until about 1983 or 1984, it was difficult to get a loan of more than 60% LTV on rental properties. In addition, the interest rates were high during that time period. Did your parents get low LTV purchase-money loans or pay cash for some of their properties? If so AND they didn’t bleed the properties, obviously some of them would be paid off by now and generating very good profits.
Could they also have purchased properties with more amenities with other equity partners? These properties tend to attract a higher-quality tenant.
I say “kudos” to your parents for hanging around long enough managing, for doing the repairs themselves and for their patience with flaky tenants and their (hidden) pets, etc. in good times and bad. My “negative” cash flow scenario presumes a 25% vacancy rate. This is in line with more a transient (low income and military) tenant population, which I am most familiar with.
My 12-year “landlord-stint” had nothing to do with bubbles. I myself have been a licensee since 1984. I’ve owned two rental properties, one duplex, sold ’90 (small loss) and one triplex, sold ’94 (break-even). In both cases, I HATED dealing with tenants and their lame excuses for late rent payment, when I am observing standing in their doorway that they have more cable channels and a much newer vehicle than I do. Never had to evict but hung several “3-day notices” and wrote letters to commanding officers. And I HATED spending my weekends cleaning, repairing and painting the units between the frequent vacancies.
I believe we will soon enter a very favorable period in which to purchase working-class SFR’s for rentals, but I no longer possess the “DIY” patience or personality for the landlord thing.
