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Renting out houses

Discussion in 'BlackHat Lounge' started by ButcherPete, Feb 17, 2012.

  1. ButcherPete

    ButcherPete Regular Member

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    (don't think this fits in any other category, so I'll just post it here in the lounge)

    Does anyone here rent out houses or apartments for extra money? I have a few questions...

    - Once you get the house purchased (and fixed up, if necessary) how much work is actually involved with renting it out? Is it kind of a "set it and forget it" thing, where all you really do is some business paperwork and collect the rent every month?

    - If it is a lot of work to do, is it easier to hire someone to manage it for you?

    - Which is more profitable: renting out several houses all over town, or just buying an apartment building and renting out the apartments?

    - Is it possible to make a full-time income from this, and not have to do anything except some paperwork now and then and check up on your property manager (if you hired one) to make sure they're doing the job?

    Thanks!
     
  2. marusia

    marusia Senior Member

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    My Grandma owns several nice rental homes and I've asked her a million and one questions about her properties. I'll share what I've learned from asking and observing over the years and hope it helps. My comments in green. :playball:
     
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  3. gapster

    gapster Registered Member

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    At one time years back I was involved in this for a fairly nice living (not wealthy, but comfortable).

    marusia has included some great advise above.

    Some extra things to consider that cost me personally,

    - In many states of the US, you will be tagged as a "Real Estate Broker" once you hit a certain level of activity (ie number of units, frequency of signings, and in some states you will need to be licensed just to negotiate more than one lease in a year. WI and OR and WA come to mind, though it's been a long time) and will need the correct license status to continue. Check out your state requirements or risk all later.

    - estimate your financials using around 10% vacancy to stay financially liquid.

    - take "nothing" from the business until it will support you full time, and reap the benefits of others paying for your investments later.

    There is plenty of info on this from back in the late 70's and early 80's when the US economy sucked like it does now. (that was when I was in). Search on "zero down real estate" and others as a start. Start with some research there and apply today's methods and some IM how to from here creatively, and the gold days could be yours. ..... or not.

    Good luck
     
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  4. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    If you're UK based, shoot me a PM and i'll answer any questions.

    It's simpler than you think and the only tricky part is tax; but that can be put off initially due to legislation and can use money generated to pay for an accountant.

    My Advice; know your numbers. know your strategy. know your market.
     
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  5. Nick1

    Nick1 Junior Member

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    I was thinking of buying in the USA or Canada with a loan from the bank and 20 k down payment but

    Damn, after reading that thread, that sounds like a lot of work... I think I'll pass.
     
  6. W9go

    W9go Jr. VIP Jr. VIP Premium Member

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    i rent out. so your questions
    it is more work than a website ;). if it runns well there are times when you just collect the rent but then some stuff break and you have to fixit or they move out. Then its really work because you always have to renovate after people moving out there.

    hireing a real estate manager for taking care of i would not recomend. they are idiots and will steal your money. each renovation will be much more expensive compared to organizing yourself. they will put persons in your apartmant which you dont like to have and so on ...

    so do it yourself - or dont consider buying some stuff.

    go for appartment houses. it is better to have one place than several in different locations to manage. If you finace it i would say that you make ok money you need a 10% return of investment on used real estates. if it much less with low interest rate its ok as well but that can change over the time. Investments of less then 8% dont provide a sufficien cash flow. you can hope on better selling prices later to realize profit.

    full time income ...yes. but you have risks as well. a big credit at the bank and if you buy crap you maybe cant rent out. or rent is not paid and so on.

    if you buy .... buy location. buy where you can take care of and buy for a good price.
     
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  7. stallion45d

    stallion45d Regular Member

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    buying to let is not a good business nowdays. That is my personal experience. You have to deal with tenants, choosing the proper ones , paying the maintenance of the apartment , pray to god not to get the place destroyed and many other things.
    I´m from Spain , where tenants have a lot of rights. Here If you don´t get paid for the rent , it could take you over a year to take the tenant out. This never happened to me, because I always try to choose the proper person, If I don´t find it, I keep the apartment empty.
    Btw , unless you live in country where property prices are going up, I would recommend to invest that money in other thing. A bank deposit which offers 4% a year is much better than renting. Bank will always pay you, never phone you because something got broken and will still make you money in those periods when the house is empty.
     
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  8. ButcherPete

    ButcherPete Regular Member

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    I appreciate everyone's input, and hit the Thanks button.

    Sounds like renting could be a lot of work; maybe more than I'm looking to do.

    What does everyone think about flipping houses? I know there's been a craze lately because of that TV show where people flip houses and make it look fun and easy, but I'm interested in doing that. It SOUNDS much easier, albeit not as profitable.

    If I were to buy a house, hire some reliable contractors to renovate and fix it up, do you think I'd have enough money left to sell it for a profit?
     
  9. hispdcha

    hispdcha Regular Member

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    I'm a Realtor and have been since 2000. Flipping houses is a fucking art. That's all there is to it. Some people can do it, others lose their asses. My clients that flip houses successfully are RUTHLESS. They will not negotiate their bottomline.

    If you see a home you want to flip, you need to know EXACTLY what it will cost to buy, fix, and flip. Including Realtor fees if you use an agent, contractor fees, remodel fees, and how much you can sell it for when it's ready to be put on the market. You can make money, but right now it's hard as hell. I used to work with 11 investors, I now only work with three, and the others I told to get out of the business 3 years ago before they lost their asses in the market.

    The other three are extremely good at it and can still make money. They do their own work (they don't hire contractors) so they still have room for a nice profit.

    IMO, if you can't do the work yourself to fix the home up, don't even bother depending on the market you're in. Find a Realtor who has been in the business 20+ years and talk to them about investors they work with. You don't have to use the Realtor, but they should be able to tell you if they still have investors in your local market or if they've gone away. If they've gone away, there's a good reason, it's not possible right now to make money in that market. Good luck.
     
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  10. iiaok

    iiaok Regular Member

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    One thing you need to understand is, it all depends on where you are investing.

    Where I'm at, there are neighborhoods less than one mile apart that I use for completely different purposes. North of "Street A" I look for houses to flip. South of "Street A" I buy houses to hold and rent. Still further south, I wouldn't touch the houses because they're too risky.

    What you need to do, if you're really interested in real estate and not just kicking the tires, is to do REAL market research. Find some REO's, look at the demographics, pull comps in the area, research contractors (price and speed, flipping renters or homes is all about speed / holding costs), etc. You need to know EXACTLY what you're doing with a property before offering on it.

    That said, can you make a killing doing it? Absolutely. I personally prefer single family homes as rentals, because tenants stay longer and treat the units with higher care. And for flips, I prefer upper-middle class area. I can flip an REO at 60-70% ROI in less than six months in those areas, and for most people, two flips a year is "Full Time" income.
     
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  11. silentthunder

    silentthunder Jr. VIP Jr. VIP Premium Member

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    A great idea in any market.
    Lots of money making tips and strategies in this thread.

    Not sure if it was mentioned but a large percentage of the time
    a person who will rent his home to you wouldn't mind selling it if he
    or she could get their price.

    That leaves the door open for you to create a lease with option to buy
    (also known as rent-to-buy) which is very valuable on the buyer renter's
    end. Lots of free info about how to do that for all over the net.
    The benefits about options is renters and buyers REALLY, REALLY want them
    and you can make money a few different ways on one deal instead of just
    one way.

    No matter what, renting or optioning, check everyone's credit professionally
    and never give a slacker a deal. Especially when they're nice!
     
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