My brother has about 5 rental properties. He manages them by himself.

I don't own any but I know people who do. For the most part I think people do ok with rentals but it can be a hassle as was said above.

Nah I don't own any but this guy who was in my class father owns one...I've never actually met or seen him but that's the closest connection I have in relation to rentals.

Hi,
I just recently sold one of my rentals. It's only a hassle if you don't do your homework which means check the background of your tenants, i.e credit, funds available, and employment.
Irene

If you have rentals in an area where you can dependable renters and the property values go up it's a great way to build wealth. However, it is very hard to do it with only one rental unit - you need multiples.

The best way to get into it is young like I did - buy a duplex or a quad and live in it. You do not have to get the full amount for the down payment (25%) that you would if you were going to buy an investment property.

I did this in Fargo, ND and was taking in $625 in rent every month with a $1100 mortgage payment - when I moved out the rents were a total of $1300 - the $2400 gross profit generally went back into maintaining the place.

However, when I sold it 4 years after I bought it I pocketed about $15K in appreciation. I did have some tax liability for that money but I didn't "do" anything to make it.

so $3750 a year in extra income? I can see the advantage of multiple units. How about now, do you own multiple units now?

If you do any real estate investing, you have to do your research. In the case of rental units, finding and keeping good tenants is critical.

Look for places that are near large employers, and clean locations where tenants will be glad to take care of the place. Lay down the rules and don't take crap from your tenants. Reward good tenants in any ways you can.

I don't own any rental units currently, but I have many clients who are real estate investors, including some that use 401k/IRA money to invest with. Early on, you hope to break even with income/expenses. Assuming you don't refinance it, after the property is paid off it becomes much more profitable, not to mention an asset that you can leverage.

Building net worth is all about acquiring appreciating assets while eliminating/reducing debts. Long-term, the mortgage will go away, and hopefully the unit will appreciate in value. Even if it doesn't, it will still generate an income for you.

Once challenge/problem with real estate investing is liquidity. Use lines of credit whenever possible, and learn about trusts (more specifically, CRT charitable remainder trusts).

I am thinking about getting back into that game but right now I'm out. I'm a part owner in two S-Corps (30 employees total) and I still do full time high end IT consulting for the Feds and Fortune 1000 companies.

There was a time when my plan was to buy the homes on both sides of us (elderly neighbors, the one couple is 93 now) but after having a while to consider it further, I don't think it's going to happen. You're right and I think it's more of a hassle than we'll want to deal with.

I also could have gotten in on some apartment complexes on the west coast and strip malls. Now that wouldn't be a tenant calling *ME* for a leaking roof or something (many investors involved) but it seems that everyone's money is always tied up and I don't want that either.

I have an apartment here in Australia however i am doing things a little bit differently (not sure if this is an option in the US but here is how i do it)

I purchased a 2 bedroom apartment for 280k last year, i financed it with an Interest only loan which keeps my repayments low i make $320 per week and pay 1500 per month so i am out of pocket a bit.

This is where my plan differs, instead of selling the property in 4 years to release my capital gain I revalue the property every 6-12 months.
once i revalue it i can go back to the bank and draw down the new equity, with that money i then invest in the stock market earning more than the 7% interest i have to pay to borrow it, the goal then is to use it as a deposit for my next property.


doing this removes the tax issue which you have to pay when you sell the property, as i am not making a capital gain i don't have to pay anything. in actual fact because i am paying interest on an investment property i get tax breaks.


The one thing many people struggle with when hearing this is the massive debt you get yourself into. However as the bank will generally only let you draw down 80% of the total value you can always sell it if something drastic happens

The key with this strategy is the type of property and its location. I am within 3 kms of major city so the property value isn't really affected by market fluctuations.

that is it in a very quick version but you get the general idea.

food for thought

Jason

I currently have 5 rental properties. I've had others and I managed over 100 properties. If you do your homework on the tenant, you will know what you are getting in to. Also having someone that can take care of maintenance is critical. A good property management company is a must if you can't take care of things yourself or with your team. I believe everyone should have at least one rental.

Who OWNS rental properties? Simple ... almost all Rich People!

Who MANAGES rental properties? Only people who want to stay poor!

Why? Time leverage ... rich people pay money to have others manage their properties in order to leverage their time (their ONLY limited resource)

Not necessarily. My father in law's family is very wealthy and owns a lot of property. His brother and sister ran a property management firm. My father in law isn't the type to manage property and just enjoys a somewhat simple life instead. Can you just imagine the hole I'm in for having his step daughter for a wife? Total emotional and financial drain.

Edit: oh yea! btw
I met a contractor who was working on my father in law's bro investment property that I was also working on. Oddly, he didn't seem like a contractor. He was much to pretty and classy. It turns out, he is a successful trial lawyer who was also born wealthy and is a part time contractor. He does both for fun. Isn't it just grand to be wealthy?