Rental properties+investing plan - Page 3

maxtower · #21 08-12-2007, 04:24 AM

People keep saying it because in general markets are fairly efficient and if it was possible to get margins this good on real estate, more people would jump in and drive the prices up. It's possible that you could just be sitting on a sweet deal from a relative and that rental license thing you mentioned? But I am sure if I went up to Minnesota and tried to do what you are doing, I would be disappointed.

Kedu · #22 08-12-2007, 04:31 AM

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People keep saying it because in general markets are fairly efficient and if it was possible to get margins this good on real estate, more people would jump in and drive the prices up. It's possible that you could just be sitting on a sweet deal from a relative and that rental license thing you mentioned? But I am sure if I went up to Minnesota and tried to do what you are doing, I would be disappointed.

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Max,
Assuming my purchase price/rent revenue numbers are accurate what do you think?

If you're still doubting my numbers I can pm you some links to properties in the area within 2 miles of the college campus, otherwise you're just going to have to take my word for it.

maxtower · #23 08-12-2007, 04:39 AM

With the numbers you presented I think you'll make a nice profit, but in this market don't count on appreciation for a while.

I would double your maintenance estimates due to the college kid factor. I would also make sure what interest rates you can get these days are for an investment property. Other than that, you should profit handsomely. Just approach the situation with caution. In my experience when something seems too good to be true it usually is.

One other thing I thought of as a risk. Don't count on 100% occupancy. Even with the 1 yr. leases, you could still be in trouble. Since your target rental market is college kids, it might be tough to get any one else. I went to school in a college town and normal people wouldn't rent those places. So if a group of kids decides to stop paying rent for whatever reason part way through the semester, you could be sitting on an empty house for several months, since there won't be any other students looking for a place mid semester.

emon87 · #24 08-12-2007, 04:37 PM

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Why do people keep saying this?

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Because you asked if we thought it was feasible. We don't think it is feasible. But clearly you don't care what we think. So go ahead and do it. If you really have found as great of a deal as you claim, then congrats!

MatthewRyan · #25 08-13-2007, 03:52 AM

Kedu, u can at least try - make sure to keep us updated

Ray Zee · #26 08-13-2007, 02:13 PM

kedu, i dont know your market but it sounds more than a little oppimissic but you are on the right track. i have made mega millions doing kinda what you are asking. it isnt hard to keep 90+ occupency and low expenses in colledge or tourist towns.
****you may need to feed them sometimes so be prepared for that or you will go under.

the big plus comes in twenty years. i know a lifetime away, when all are paid for and the rents have quintupled. and the houses are worth many times more than you paid. if you can do this for that period of time you will be wealthy and set for life. the real break comes in when you can get rents up to more than cover any expenses in a few years. then you get cash and appreciation back. plus everything you do starts to become tax writeoffs. it aint a cakewalk though. i would do it in a heartbeat if you can keep them afloat.

APXG · #27 08-13-2007, 04:42 PM

quick question -- what's the advantage of investing at 7% if you are borrowing at 7%+? are you making a bet on loan interest rates vs. stock market returns?

if your numbers are actually possible, it seems you can get way more than 7 by just buying more houses.

APXG · #28 08-13-2007, 05:02 PM

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the big plus comes in twenty years. i know a lifetime away, when all are paid for and the rents have quintupled. and the houses are worth many times more than you paid. if you can do this for that period of time you will be wealthy and set for life. the real break comes in when you can get rents up to more than cover any expenses in a few years. then you get cash and appreciation back. plus everything you do starts to become tax writeoffs. it aint a cakewalk though. i would do it in a heartbeat if you can keep them afloat.

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ray,

i hear your logic mentioned a lot by real estate evangelized people my age in a similar tone to OP, but what about other forms of investment? are you implying buying+renting houses is superior to all other places to allocate capital to for 20 years? if that's the case, why isn't everyone buzzing about real estate buy+rent operators instead of hedge funds, stocks, etc?

maxtower · #29 08-13-2007, 06:18 PM

APXG, Because of leverage offered to real estate investors, if you can have renters cover the cost of interest + maintenance, eventually inflation will take care of your profits. This type of borrowing isn't possible for other investments.

Ray Zee · #30 08-14-2007, 12:12 AM

apxg i guess the real answer is its easier to amass a fortune in real estate over time rather than any other investment with little downside. plus its easier to be good at it.

to be really good at financial investments you must put lots more hours, take huge risks, and be totally on top of your game at all times. but those things are more sexy and exciting to do, so have more appeal.

most very rich people that are self made seem to be a few from running a company and working hard, a few from stocks, only a tiny amount from gold and silver, almost none from derivatives, and lots and lots of people got rich from just buying in good spots and holding.