Casual “Investors” becoming Landlords

[moneymaker]

I remember hearing that if one buys a 4-plex and lives in one of the units then owner occupied rates can be gotten, seems like a good way to try the water for those that are so inclined.

[patb]

I think anyone who wants to buy small scale out of state rental property should have their head examined.

No agent will ever do a good job, and the distance makes it a bad idea.

Unless you are close to retiring or moving, i’d forget it.

now if it’s reasonably close, sure.

[spdrun]

Assuming it’s a simple condo and you vet your tenants very carefully, why the hell not? With a 1ba unit with single wet wall, electric heat, electric stove, and external water heater, there’s almost zilch to break if the unit was properly renovated.

This is basically the description of my apartment in NYC, apart from the stove being gas and the heat being central steam. In my 3+ years of living in it, virtually nothing has broken to the point that I would need a tradesman in the place immediately. Only things that happened were a sliding door derailing (probably $200 if I’d have called someone) and a dishwasher leak (fixed under warranty since the d/w was new).

I may add that we’re talking about a 102 year old building. A very well-built 102-year old building where the apartment was renovated in the last 5 years, but still 102 years old.

[Anonymous]

[quote]I think anyone who wants to buy small scale out of state rental property should have their head examined.

No agent will ever do a good job, and the distance makes it a bad idea.

Unless you are close to retiring or moving, i’d forget it.

now if it’s reasonably close, sure.
[/quote]

The absolutism of the expressed opinion certainly shows that successful landlords with out of state rental properties, either managed by themselves or by ne’er do well agents should gracefully banish themselves from this realm of reality. Got it.

[earlyretirement]

[quote=patb]I think anyone who wants to buy small scale out of state rental property should have their head examined.

No agent will ever do a good job, and the distance makes it a bad idea.

Unless you are close to retiring or moving, i’d forget it.

now if it’s reasonably close, sure.[/quote]

I don’t think you can make such blanket statements like this. Many people are successful at doing this. Granted, it’s not for everyone and can be a big hassle. But I don’t think you can say, “no agent will ever do a good job” either.

I agree probably most of the property management companies out there are crap. There are some good ones out there in various cities.

I also think the point people need to realize is you’re not going to get rich off of small scale rental properties when you only have 1 or 2. But you can make decent money/returns/cash flow just depending where you are at. 1 can become 2, which can become 3 which can become 4, 5, etc. After a while it all adds up.

[Jazzman]

[quote=patb]I think anyone who wants to buy small scale out of state rental property should have their head examined.

No agent will ever do a good job, and the distance makes it a bad idea.

Unless you are close to retiring or moving, i’d forget it.

now if it’s reasonably close, sure.[/quote]

Yes and no. You are right in that it is counter intuitive, but modern communications helps remove one barrier. Many current investors are reluctant lanlords who aren’t able to get the return they want anywhere else, and the chances of finding that perfect cash flowing property on your own doorstep is often remote. Like any investment it is a risk you take, and requires that you manage your managers. I have remodeled, rented out and sold properties successfully across national borders without leaving home. The one job I wouldn’t want is a property manager’s so I respect the crap they have to put up with, and make allowances. Property managers are not the worst thing that can happen, but you do need to keep an eye on them.

[UCGal]

[quote=earlyretirement][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]

I’ve been posting on internet message forums since the Internet began. I’m very active on some and less on others.

My take is this…. you will ALWAYS have people that rub you the wrong way or that you disagree with or that disagree with you.

I’ve seen it all. The “know it alls”, “the crude and rude”, the “intelligent and polite and informative”, the “people that would write things they would never say to your face in person”, etc. All kinds and all types.

My philosophy is you can’t get too offended by ANYTHING someone writes. I don’t think some people care what others think of them while others do.

I’ve been on some message boards where people drive me absolutely crazy but typically I’ve never ignored anyone because it’s very rarely that I haven’t learned something or taken something positive out of posts from people. (Even if it was what NOT to do…).

I’m only speaking in generalities here but I think you have to take what anyone says with a grain of salt and not get too frazzled on these message boards.

My philosophy on internet message boards is anytime you get too frazzled or angry or stressed or worried from reading something, then it’s typically a time to take a step back and take some time off from it for at least a while.

You will always have people on the Internet that you disagree with or that annoy you. If it annoys you that much the ignore key is helpful.[/quote]
ITA. Well said, ER.

There are plenty of people on this board that annoy me regularly. But every now and then they post something that makes me think, or see an alternate perspective. I’m sure I annoy plenty of people, myself.

I wouldn’t come here to read/discuss if I felt I knew everything about everything, already.

[Ren]

[quote=bearishgurl]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.
[/quote]

Gotta love your straw man arguments – leaving out the part where we use a great deal of our own money as well.

[quote]
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.”
[/quote]

My finances are none of your business, but your number is close enough. We also have two white collar professional incomes, 750-820ish ficos, and no debt other than the primary mortgage. We buy Mazdas instead of BMWs (wifey has to reign me in on that one).

*SNIP* completely irrelevant anecdote of “VERY knowledgeable” families burying themselves via awful decisions…

[quote]
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.
[/quote]

Blanket statements like this are meaningless. As if there are no good tenants in an entire city, or strategies to location and pricing that attract good tenants, or reasons why an otherwise financially stable person would rent instead of buy (there are many, recently listed on this forum. I’m one of them).

[quote]
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.
[/quote]

Apparently your arrogance knows no bounds. How about this for a reason – we live in Riverside county because everything is cheap there, from child care to hair cuts. Even adjusting for fuel, we save many hundreds of dollars/month doing so. I would think that someone who lives on expired food would understand frugality.

[quote]
Call it “paternal” if you will but it is my opinion that persons in the same station in life as Ren…
[/quote]

If it wasn’t coming from an asperger’s sufferer, the class insults would really piss me off.

[quote]
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.
[/quote]

We do that all the time. Of course any opinion that isn’t yours is wrong.

[quote]
WTR ALSO stated that having (two?) rentals in PHX were not EASY for him and that they involved WORK.
[/quote]

Gasp! Not WORK?! Say it isn’t so.

[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]

[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…
[/quote]

I don’t like to use this term much, but… LOL. You have a bad habit of describing in excruciating detail (including weirdly exact ranges) what you think happens to people, then applying them to an entire county and generation, as if everyone went through the same scenario. I live over here in Real Life, where every situation is unique.

[earlyretirement]

[quote=UCGal]
ITA. Well said, ER.

There are plenty of people on this board that annoy me regularly. But every now and then they post something that makes me think, or see an alternate perspective. I’m sure I annoy plenty of people, myself.

I wouldn’t come here to read/discuss if I felt I knew everything about everything, already.[/quote]

Exactly UCGal. As much as some people think they know it all. They don’t. Each of us learns something new everyday. (or at least I do). That’s the great thing about life. You never stop learning if you keep an open mind and willing to learn.

I’ve been on several boards (some of which I helped moderate) and it’s too boring when everyone has totally homogenous thoughts/posts. It’s almost like everyone is slapping one another on their backs agreeing. That’s many times good but sometimes it just causes “herd mentality” where no one has any differing opinions on anything.

I don’t mind reading people that disagree with me as long as they are disagreeing intelligently and not just diarrhea of the mouth or spam. If they are passionate about why they think the way they do and giving an intelligence discourse then I totally appreciate it. Even if I disagree with them it typically gives me food for thought, even if I still disagree with them.

I don’t always agree with all of BG’s posts, but to me it’s clear she is passionate about the way she feels. She has a LOT of life experiences and clearly an intelligent person. Yes, I have different opinions on some things and don’t always agree with her sometimes but that is ok as well.

The world would be a VERY boring place if we all thought the same thing and acted the same way.

Also, one thing I also learned is some people can’t be changed. They are who they are and they will say what they want to say. They haven’t changed in decades and they aren’t going to change now. I have lots of people I know that are like that and I love/hate them for it. (although sometimes it can get annoying).

So my choices are to (a) accept them as they are; or (b) cut them out of my life. I’ve done both options. On message boards the way to cut people out of your lives is the ignore key.

[bearishgurl]

[quote=UCGal]There are plenty of people on this board that annoy me regularly. But every now and then they post something that makes me think, or see an alternate perspective. I’m sure I annoy plenty of people, myself.

I wouldn’t come here to read/discuss if I felt I knew everything about everything, already.[/quote]

I wouldn’t either, UCGal. There are a LOT of subjects I don’t know about. I don’t have a full understanding of macroeconomics. I don’t really understand how the stock market works. I don’t understand how the yield on bonds is figured out. I don’t understand how to maximize passive investment income. Ad nauseum.

My education is highly specialized towards business, real estate and civil litigation.

I come by my opinions honestly …. by my own personal experiences and watching people fail miserably or become a victim of fraud and often having to help them clean up the mess as best as we can.

I don’t have a smartphone because I don’t want to learn how to use it and don’t want to pay for its services. I don’t text and have it turned off because I’d rather hear someone’s voice.

I don’t like rental cars because I don’t want to have to learn where everything is in order to comfortably drive it for a few days.

I would like to learn more about electronics and how to set up surround sound and home theatre properly. The manuals are all just too complicated.

I’d like to learn to fix my own sprinkler system.

Etc.

Things I DO know a lot about as they pertain to CA:

RE Agency, RE Law, Escrow, Reg Z, Landlord/Tenant law, examination of title, quiet title, land use issues, erosion, survey, the Subdivision Map Act, local permitting procedures, trust deeds, non-judicial foreclosure, fundamentals of a “short sale,” eminent domain, residential leasing and 1031 Exchanges and Starker as they apply to 1-4 units.

In addition, I am a nearly “self-taught” public records “expert.” I taught myself before the personal computer even existed. Having seen so many recorded documents, I can make a very “educated guess” as to whys and wherefores of the current condition of title of real property. I can also go through a title presented to me and determine if something is missing from it w/o a preliminary title report.

Litigation: civil procedure, criminal procedure, domestic practice, some probate procedure, appellate procedure, administrative law incl tribunal procedure and collective bargaining.

Notary law, Secretary of State business filings, FCRA.

Robert’s Rules of order and how local ordinances and regional and state law is made.

Etc.

In my areas of familiarity, I know when a subd was built, what the original floor plans were, how much they originally cost and can tell by looking at a tract house from the outside if it has been expanded. I know which subds had construction defects and which HOA’s have litigated them. Often I know what was there before the subd was built and what still lies under the ground under portions of it. Sometimes I know what the land was used for prior to a subdivision being built on it. I know which side of the street/portion of a subdivision has cut lots and which side of the street has filled lots. Sometimes I can tell just by standing across the street from a house if a structural or soils engineer needs to be hired in escrow. I know the school attendance areas and which areas have a choice of schools, w/o consulting a District map. All of this without asking any questions of any RE agents/brokers (assuming they actually know). There is much more and this knowledge comes from traveling the same streets for many years. IMO, any “street knowledge” one can gain (as above) is far more valuable than anything one can learn in school. All of the knowledge in this paragraph and more, combined with a near-photographic memory has served me very well in life 🙂

I have learned that things are never what they appear to be and the devil is always in the details.

If I can make a good contribution to a thread and have the time to do so, I will. If I can’t do so intelligently, then I won’t.

[bearishgurl]

[quote=Ren]My finances are none of your business, but your number is close enough. We also have two white collar professional incomes, 750-820ish ficos, and no debt other than the primary mortgage. We buy Mazdas instead of BMWs (wifey has to reign me in on that one).[/quote]

[quote=Ren]. . . Of course I look at the rate of return, but never count on appreciation. That’s just not the point – income is. I like to view the entire rent as adding to it. Someone else will buy me multiple properties – paying the PITI and maintenance for 30 years and then funding my retirement (not to mention my primary residence, the kids’ college, and all our car payments). . .[/quote]

Ren, I don’t really care about any Piggs’ finances here. It’s not only me, but that old, crotchety Suze Orman would actually advise you not to pass go or collect $200 if you were carrying vehicle loan(s).

[Essbee]

[quote=carlsbadworker]
-1.
Although often time I don’t agree with BG’s view, I think she offers a good and distinctive perspective. This board would otherwise have too uniform views. And I really appreciate this kind of diversity especially less and less old-timers are here now.
Let BG be BG with her unique post style.[/quote]

Agree with this. I always enjoy her posts.

[SK in CV]

[quote=bearishgurl]
Ren, I don’t really care about any Piggs’ finances here. It’s not only me, but that old, crotchety Suze Orman would actually advise you not to pass go or collect $200 if you were carrying vehicle loan(s).[/quote]

Suze Orman? Really? If I was to advise someone how to learn about finances, I would advise them NOT to listen to Suze Orman.

[Essbee]

[quote=bearishgurl]
Ren, I don’t really care about any Piggs’ finances here. It’s not only me, but that old, crotchety Suze Orman would actually advise you not to pass go or collect $200 if you were carrying vehicle loan(s).[/quote]

0.9% financing was too good to ignore…

[bearishgurl]

[quote=SK in CV][quote=bearishgurl]
Ren, I don’t really care about any Piggs’ finances here. It’s not only me, but that old, crotchety Suze Orman would actually advise you not to pass go or collect $200 if you were carrying vehicle loan(s).[/quote]

Suze Orman? Really? If I was to advise someone how to learn about finances, I would advise them NOT to listen to Suze Orman.[/quote]

I was being facetious, SK. I don’t listen to her because I don’t like her voice.

But I HAVE listened to her call-in shows in the past where people call in with a list of their debts, asking her if they should buy something or invest in something. After hearing their story, she usually admonishes them to pay off their vehicles and consumer debt before making a big purchase or taking on other investments.

Besides, she’s slightly older and therefore slightly more “crotchety” than I am :=]

[Author]

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