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Anyone here own investment property?

Discussion in 'BlackHat Lounge' started by chaotic, Apr 1, 2012.

  1. chaotic

    chaotic Registered Member

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    I'm looking to diversify my investments, and since I'm not a fan of gold/silver, I'm considering buying an investment property and renting it out.

    It looks like there's a lot of pitfalls if you don't know what you're doing. I know that I would definitely hire a property management company because I am treating this as strictly an investment and do not wish to spend too much time on it. IM is already a full time job for me.

    What features are the most important to look for in an investment property? A house close to freeways? Close to schools? 1 story or 2 story house? Does the house just need to be clean and functional - how important is curb appeal? Is it better to buy really cheap houses that would rent for ~$1,000/mo, or larger, more expensive houses that you could rent for ~$1,500/mo? I would think cheaper houses would be easier to find renters for, but on the other hand, would they also be more likely to attract less than desirable tenants?

    I've found some decent deals on some different real estate listings sites, but is there better places to look for potential investment properties? Foreclosures, auctions, etc.?

    All of this is still new to me so any advice from people with real life experience would be greatly appreciated.
     
  2. JL4W25

    JL4W25 Newbie

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    I don't personally invest in real estate just yet, but my family has been heavily involved in real estate for well over 20 years. Hiring a management company is a must if you don't want to be bothered all the time. Your best bet in getting your questions answered would be to find a veteran real estate agent in your area that knows the area well. He/she will have the greatest understanding of the demographics in the locations you are interested in and will be able to answer your questions much more thouroughly than anyone else.
     
  3. Nigel Farage

    Nigel Farage BANNED BANNED

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    I'm in the industry. You have a fatal flaw in your business plan, and that is that you think you can delegate running the property off to the rental property management company and simply derive what they call "passive income".

    I also plan to have investment property, but having been in the business for many years, I would never under any circumstances trust any management company to do anything for me other than find tenants and collect rent. If you are not going to be "hands-on" with regard to the maintenance (i.e. repairs) to the property, you can expect to have the worst-possible quality work done, and the value of your property will continuously degrade. I haven't the time to spell it all out here, but the people that run and/or work in management companies are some of the stupidest people I have ever met. They are either being overbilled for work that doesn't need to be done, overbilled for work that was done poorly, or they are being underbilled for work that should have been done, but wasn't. Instead some clown with a caulk-gun, a spray can of Kilz and some drywall mud slapped some stuff all over the area and called it "done" and no one had the sense or the courage to call that idiot both and idiot and a liar.

    These are the people that cannot find anyone else to hire them. The bottom of the barrel, literally. The only way you are going to survive as an Investment Property Owner is to become familiar with the correct way to do roof repair, how to know when you when you A-coil ($3,000) really is bad, or maybe it's icing over because the last jackass AC Tech over-pressurized the system, and now your Management Company has called-in the most over-priced and dishonest AC company in the entire city, and they are lying to you about the need for a new A-coil.

    I could go on & on. "Hands-off" and delegating property owners get screwed regularly and royally. Good tenants move away from the inevitable crap that comes from having to do business with the incompetent, and it takes 60-90 days to evict the bad ones, and you take that loss while your management company lies to you and makes-up stories and redirects attention away from the real cause of the problem which is that they (for example) pocketed the $25.00 criminal background check and leased your property to the first people that showed-up with cash in their hand.

    One story I heard was that a company let a house stay vacant for 2 months while they pocketed application fees and background check fees from dozens of applicants. I know a guy that, before he went to prison for the 2nd time, said that the most money he ever made in his life was when he was selling crack to the prostitutes that lived in the apartment building, and he was the "maintenance man". He sold to the girl in the front office, too. That's how he kept his job. He can't fix a peanut butter sandwich, much less a garbage disposal.

    Okay, that's enough scary stories. You want a clean, hands-off investment? One guy I know has a best friend that does e-Trade. He pays his friend a percentage of the money that he makes (based on his friend's advice) AFTER he makes the money. THAT shit is automatic. He makes about 15% a year, on average.

    Oh. Yeah. And Ferrell Gas & Propane (FGP). Buy. A lot. Now. Look them up on Google Finance. Note the history of dividends. It's been a very warm winter, and the stock is VERY undervalued. They also bought several smaller companies, and haven't started making money from them yet. Those two factors will cause a very high peak. Look at the cyclic nature of the stock. You'll see what I mean.
     
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    Last edited: Apr 1, 2012
  4. chaotic

    chaotic Registered Member

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    Thanks for the advice Nigel. I have a couple family members that work in the construction field, maybe I could pay them instead of a property management company. I'm sure I could find a solution to that.

    I like the idea of owning assests like a house, because if the dollar drops in value substantially I feel like owning property would be one of the better options in that situation.
     
  5. SEOScott

    SEOScott Newbie

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    Everyone tells me I need to be in real estate. But when I watch my dad waste his life away making repairs to all his properties, hell to the no. My time is worth WAY more than what a Plumber/Carpenter/etc make. I just don't need hassles of dealing with people, evictions, courts, late fees, state government bureaucracy (landlord rules). Nope nope nope.

    My stocks and other investments don't need to be evicted.
     
  6. SEOScott

    SEOScott Newbie

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    The stock market increases with inflation too. Why else would it be at 13,000 with only a small recovery so far. But yes, I own my house to pin my house to inflation.

    The best part of owning a house, the first 5 years are hard, then after that, the payments get easier an easier as inflation goes up.
     
  7. badman2

    badman2 Registered Member

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    I have recently started a portfolio. If you are willing to put the effort in to find a nice family to rent to, its pretty easy to make some passive income. Don't rent each room out, just rent the whole thing to a nice family. Tie them to a 12 month contract and they will look after the place - make random checks.
     
  8. partymarty4870

    partymarty4870 Elite Member

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    I come from a land downunder
    I own 2 investment properties - 1 is a commercial property, surrently rented to a naturopath and the other is a family home rented as a holiday house. I would not advise going down the holiday rental road unless you can fill it yourself.

    I easily fill mine as my main business is a travel agency, so I sell 80% of the nights myself (well the wife does!). Our basic equasion is this. We need to rent it 3 nights a week ourslves to make money. We would need to rent it 4 nights per week through other agents to get the same return. Currently we're running at about 3.5, so are doing OK with it.

    Commercial is so much easier - the numbers aren't as big, but it is so so easier.
     
  9. dentawor

    dentawor Power Member

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    I live in Bali and real estates here is growing like a crazy. I am also working in real estate company. Most customers will build a villa and rent it. If you get the villa in a good places with than you will get nice profit. It is a sure thing in a high season this villas will be full booked. Even in a low season most of them still have people renting it.

    At the moment we are building villa in canggu area. This is one of growing area in Bali. If you are interested to invest in Bali just PM me and we can find out something.