[quote=EconProf]BearishGirl: Please reread and take to heart Ren’s comments about your posts. Your responses showed it had no impact on you. But it was constructive criticism and probably represents the feelings of many Piggs.
Anyone else agree?[/quote]
EconProf, Ren essentially stated here that he thought the monthly income from out-of-state rentals which he intended to buy with mortgages were going to pay for all his current and future personal expenses.
I stated at the end of my post that it was nothing personal. I was discussing that I felt that a family with minor children who are W-2 earner(s) could be voluntarily putting themselves in a position of potential hardship if they do this.
No insult was intended towards Ren. He has also repeatedly stated on here that he would like to move to SD County.
Who knows? Maybe Ren won the lottery and has a mil in cash stashed away to “play with.”
In recent years, too many families with minor children overextended themselves in many ways, many lost the homes their children lived in and now we are all now having to pay for this in one way or another. Some (previously, before 2000) “prominent” families here in South County bought up to five local rental houses (for the “monthly income”) with “funny money” during the millenium boom and ended up losing everything … even their longtime family residence bought long ago and later mortgaged to help with downpayments on rental properties! And these are families who KNEW their rental areas intimately and managed them themselves. A couple of them possessed CA RE Salesperson or Broker licenses and were actively working in the field. Of course, their downfall was that they purchased investment properties with NINA mortgages, which doesn’t apply here. But they were VERY knowledgeable about their rental market and still lost it all.
The two states Ren and others mentioned are trying to climb out of a VERY deep depression (FL especially, which went down in value 60-75% in most areas). The steady-paying, reliable and trustworthy tenants one (who is considering investing there) THINKS they will be able to repeatedly obtain are just not there, at least not consistently, IMHO. Ask yourselves, if a “rental grade” condo currently costs $20K to $70K in or near Orlando, FL and a “rental grade” house currently costs $70K to $220K in same location, why the locals who are currently renting there aren’t buying them. The REASON, IMO is because they have no credit established, they have credit issues AND/OR they don’t even have the necessary ~680ish FICO score and 3.5% FHA downpayment + closing costs with which to buy these low-priced properties.
Those are your available “prospective tenants” in that location.
Property mgrs just rent the easiest properties to rent every month and keep trying to rent the harder ones (ones with LL’s who are more “picky”). It’s no skin off their backs if a property remains unrented for a period of time. They’re not the ones covering the carrying costs. Everything can be rented for a price, no matter WHERE its location. But very picky LL’s are going to have a hard time renting their houses/units if they are too picky in locales where nearly every prospective tenant is undoubtedly going to have a hardship due to credit issues and possibly being previously evicted from their own home or another rental, etc.
I feel that a family with minor children whose breadwinner(s) work in SD County and live in RIV County do so for a REASON. A family who has car payments has those payments for a REASON. 99% of the time, those reasons are financial. I don’t care how HOW MUCH their gross or net income from wages are. I just feel that this is NOT the type of individual who should be taking chances with their hard-earned cash buying out-of-state rental property.
Call it “paternal” if you will but it is my opinion that persons in the same station in life as Ren shouldn’t be doing this unless they are VERY deep-pocketed (read: don’t derive their primary income from wages). It’s a recipe for disaster. It’s better left to persons who don’t have the responsibility of a FT job and supporting multiple other people (minor children and possibly spouse) in case the sh!t hits the fan. And it can, very easily, for owners of two or more out-of-state rentals. I’m entitled to my opinion and so are you, Ren and every other Pigg. If the buyer or his/her family member hold a RE license in said other state or the buyer has reliable and trustworthy friends or relatives in said state to manage rental(s) for him, then perhaps 1-2 rentals would be okay … not more, unless the friend/relative is a licensed professional property mgr or is willing to be a “resident mgr” indefinitely for the investor.
OTOH, a 60 yo single or couple who just lost $20K in rent, damage to their property and legal fees for eviction on their rental property in AZ (which they bought with cash) can just pack up their RV in the middle of the school year and park it in an RV park in PHX or even plug it into their rental home and get to work on cleaning up and repairing it for the next tenant. They won’t have to pay all the exorbitantly-priced licensed contractors that their property mgr will hire to do this job, and they don’t have any mtg payments due on the property.
If Ren or any other Pigg thinks I’m talking out my ass or giving bad advice, then they are free not to take it or post what they think is better advice. The OP here is asking why everyone who can is not buying out-of-state rentals in areas of the country where RE values were deeply depressed.
Want_to_Retire stated that he/she tried to get colleagues interested in investing in PHX, like he was and they replied that they didn’t want to “hassle” with it. There is a REASON people (who have the ability to invest) feel this way.
WTR ALSO stated that having (two?) rentals in PHX were not EASY for him and that they involved WORK.
[quote=Ren] . . . You’re ignoring the enormous number of people who have been successful at rental investments, including those I know personally who did so in a variety of markets over the past 40 years. So they all just got lucky, and there’s no level of intelligence, knowledge, or income available that can give an advantage? That’s essentially what you’re saying, right? It’s a good thing we have you here to stop us from trying.[/quote]
I’m ingoring no one, Ren. In CA, those `successful LL’s in a variety of markets over the past 40 years’ you speak of here bought their (SFR) rental properties for $20K to $90K and are currently paying $300 to $750 annual property taxes on them. Some inherited their rental properties, complete with low property taxes appurtenant thereto. They bought properties within 25 miles of their residence or the residence or business of a relative or longtime biz partner who is managing some or all of them. Except for receiving CA real property as an inheritance, this cannot be done today. A good portion of these LL’s are now over 75 years old, have always resided in the area of most of their rentals and still do and still maintain their own rental properties when tenants call with a problem and clean them up and perform repairs on them between tenants by themselves or with the help of grown children. This includes more difficult repairs such as windows, plumbing, roofing and concrete (where equipment must be rented). They bought their first rentals close to where they were raising their families and it was hard for many of them to pay their $160 PITI per month on their rental house when they only received $150 in monthly rent!
Yes, this is/was in SD County.
Many of these “experienced LL’s” didn’t see their way clear to pay the balance of their remaining mortgages off until after they retired, when they had access to retirement funds.
These were “local” LL’s who had full control over every aspect of their rental properties for the life of their ownership, NOT “absentee owners.”
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I’m not opposed to families with minor children buying rentals in or near the area of their residences and managing them themselves.
All I’m saying is KNOW the fundamental issues with the particular rental population you are dealing with, NOT the “pie-in-the-sky perfect tenant” you THINK you might get and realize that your property mgr likely has SEVERAL properties to rent which appeal to the type of tenants you want and they will rent them whatever property they apply for if they are qualified for it. That may not necessarily be your property.
I never intended to stop anyone from trying to be an out-of-state landlord. I wish Ren or any other Pigg all the luck in the world in their current and future out-of-state landlording endeavors.
