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Jan 23rd, 2013
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Re: Buying and renting out a house questions [Re: Bob Davis] #13309845 10/13/19 04:21 AM
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I just ran numbers on one of mine. 225k for the house, 2200 rent, 7k property taxes, 1100 insurance, average 1500 maintenance. About 17k a year net on a normal year. Compared to a savings account, alot of fixed income type of investments that isnt bad. Additionally the house in the example would sell for 260k now after 4 years. When I bought the houses I have I had some cash laying around, I had alot in stock market, I had alot in tax free, I had a fair amount in cash, I view them as high yield savings accounts. Lots of factors go it to it, not for everybody. I have had years where one of the houses hasnt preformed great due to above average repair or being vacant a month or 2, I have had years where my stock portfolio has performed poorly, I have had years my tax free stuff didn't do well, little diversification never hurts.

Re: Buying and renting out a house questions [Re: Bob Davis] #13309846 10/13/19 04:24 AM
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Originally Posted by Bob Davis
Originally Posted by fish4bass
I had a friend at work that tried it. Divorce in the rent house. Squat. And squat ended up pouring sackcreat down all the toilets.


That gives new meaning to the phrase "He shixt a brick".



When the entire drainage system is full of concrete.... the deposit ain't going to cover it. roflmao

Re: Buying and renting out a house questions [Re: Bob Davis] #13309847 10/13/19 04:24 AM
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Guy told me the only people he rents to are illegals. Says they pay cash and are never late very rarely do they complain. They just want to stay under the radar. Makes a lot of sense really.

Re: Buying and renting out a house questions [Re: Bob Davis] #13309848 10/13/19 04:24 AM
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Originally Posted by Bob Davis
Originally Posted by Team Skeeterless
It’s all about the renters. I’m an insurance adjuster and see the bad side of renting. People that can’t make rent and destroy property like it’s the homeowners fault. Also the law somehow seems to side with tenants over homeowners and eviction can take forever. But if you find good renters it can be a great deal.


Interesting points. For property insurance, as an owner, I suppose I would only have to insure the building and it would be up to the Renters / Lessee to insure their contents. I know my taxes will be higher since none of my exemptions /homestead, over 65 would apply.


You would buy a landlord policy they are cheaper, taxes have been the devil lately cause you are uncapped on the increases, mine have nearly doubled in 4 years.

Re: Buying and renting out a house questions [Re: bloo_rainger] #13309877 10/13/19 09:00 AM
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Originally Posted by bloo_rainger
Guy told me the only people he rents to are illegals. Says they pay cash and are never late very rarely do they complain. They just want to stay under the radar. Makes a lot of sense really.


I have seen quite the opposite, they will move many into a house and basically destroy it. If you have a ghetto rent house then they may be a good fit.

Re: Buying and renting out a house questions [Re: Bob Davis] #13309879 10/13/19 09:16 AM
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Rental property worked out great for me. Bought the house for $65k cash in terrible shape. Gutted it and fixed it up on my days off spending a little shy of $40k. Rented it for 4 years without any major issues @ $1150/month. Sold it 3 months ago for $205k to fund another property purchase. I know there are horror stories, but it does work out sometimes.
I also think it helps a lot if you can do the work yourself. I worked for a land lord in Lubbock while going to school doing make ready and flipping homes and learned a ton. Good luck!


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Re: Buying and renting out a house questions [Re: Bob Davis] #13309953 10/13/19 01:20 PM
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Or you could just give the $200k to Steez and make an easy $50k/year return.

Re: Buying and renting out a house questions [Re: Bob Davis] #13309954 10/13/19 01:20 PM
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Originally Posted by Bob Davis
Just mulling this over in my head. Is this a bucket of worms or a lucrative income generator? You would have to buy say a $200K home 3 or 4 bedrooms in good shape. Zillow says on average you should get $1750/mo. rent for this. So like $21K in rent you would receive for the year. Roughly $5K for taxes subtracted leaves $16K. Subtract $1500 for insurance on the house leaves $14,500. Subtract $4500 for a "maintenance fund". Leaves $10K yr. That is $833 per month income.

Am I missing anything in this equation? Anyone else do this?


You're leaving out interest, unless you plan to do this as a cash purchase. Even then, you should allow yourself an interest factor for the use of your cash - when it's tied up in the house, nobody is paying you for using that money. Here's a handy amortization calculator that I like to use:

https://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

Assuming for the sake of argument a 30 year $200K mortgage at 5% interest and no down payment (and ignoring any PMI/MIP that might normally be charged), the payment is about $1,073. The interest is over $800 per month for several years.

Termite service contract, lawn care ... if the tenant is supposed to mow the lawn, just wait for the notice from the city that you're being cited for an overgrown yard. If a realtor brings the tenant, you're almost certainly going to pay a commission or finders fee.

With all that said, if you can purchase a house for the right price, then renting makes alot of sense. Also remember to appropriately value your time spent on the property. One good rule of thumb someone taught me long ago is that your cost of insurance and property taxes should not be more than 1/3rd of your rent. So the example numbers you're giving would make sense.

Last edited by Uncle Zeek; 10/13/19 01:25 PM.

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Re: Buying and renting out a house questions [Re: Bob Davis] #13309984 10/13/19 02:12 PM
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Just go to Fair park in Dallas or Stop Six area in Fort Worth. Pick up a house for 20K, put 20K in it and then get it set up for Section 8 housing.

They take good care of the property since they are getting free housing, and don't want to loose their vouchers

Re: Buying and renting out a house questions [Re: Bob Davis] #13309994 10/13/19 02:25 PM
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Meet with a gentleman weekly for breakfast. He owns 26 rentals in the $40-$80K range. Most of his homes are 2-1 or 3-1 and around 1100 square feet. He started with one house 11 years ago and when he had equity bought another. 12 of his houses are paid off and next year 2 more will be. He is always looking for new investment properties. His latest idea is a tiny home subdivision in a rural setting.

It works but there are issues that sometimes arise. He buys when he can make 10-20% on his investment, anything less than 10% return he will pass. I've learned alot from him but currently own only 1 rental.

I'm currently looking at VRBO or AirBnB type homes. Something I can lease to corporations or insurance companies for extended periods.


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Re: Buying and renting out a house questions [Re: RedRanger] #13310011 10/13/19 02:42 PM
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Originally Posted by RedRanger
Just go to Fair park in Dallas or Stop Six area in Fort Worth. Pick up a house for 20K, put 20K in it and then get it set up for Section 8 housing.

They take good care of the property since they are getting free housing, and don't want to loose their vouchers


My experience has been, it is not the Section 8 renter, it is the people that visit the Section 8 renter. When I owned one property years ago, I was on first name basis with the town police. Sold it as quick as I could and will never have a Section 8 again. The higher end the property, the better off most landlords will be.




Re: Buying and renting out a house questions [Re: Bob Davis] #13310021 10/13/19 02:50 PM
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You have to think outside the box. A 225k house in Alabama, property taxes would cost you around $700 a year.




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Re: Buying and renting out a house questions [Re: Bob Davis] #13310043 10/13/19 03:24 PM
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I have a friend who does this. He sections8 the houses out and rent is on time every month and never misses payment.


Whether you think you can or you can't, you're right

http://constantpursuitoutfitters.com/






Re: Buying and renting out a house questions [Re: Bob Davis] #13310048 10/13/19 03:30 PM
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One tenant of mine is a school teacher, one a lawyer, one a retired colonel. Average time in house almost 3 years. I think if you get correct people renting and invest your money in decent areas that are desirable and growing you are gonna be fine. It's like any investment, there is some risk and reward. Go to stop six, get a property for nothing and then by some miracle find a good tenant you can make a nice return but like junk bonds or speculative stock you can get burned. Stick to quality areas and be highly selective on who you rent to and your percentages go down but things are alot more stable and predictable. If someone poured cement down the drains or cooked meth in your house you did it all wrong.

Re: Buying and renting out a house questions [Re: joebass2] #13310055 10/13/19 03:41 PM
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Originally Posted by joebass2
Or you could just give the $200k to Steez and make an easy $50k/year return.


I have no idea what this means. Sorry.


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