Current Events > Owning rental property ain't all that

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All of my friends who owns rental properties talk about how much stress and work it costs them and how they don't even profit off them. I'm sure if you find the right tenant and know how to fix house problems it would be better but if you dunno the first thing about fixing a house then you shouldn't even be in the business. Better to invest in something else.

Even with no to little profits...someone is paying a mortgage for you.

JuanCarlos1 posted...

Even with no to little profits...someone is paying a mortgage for you.

Not if the tenant is shit.

JuanCarlos1 posted...

Even with no to little profits...someone is paying a mortgage for you.

That part. And even better, if you can buy fixer uppers for cheap in full or pay it off quickly you'll be able recoup that initial investment quickly and start making bank.

If you're hiring plumbers/contractors etc at every notice then you're not doing it right. If you're going to have rental property you must learn the basics of plumbing/carpentry/roofing etc. The only one I'm skeptical about touching is electricity, but even then you have to know how to at bare minimum change out a switch or install a fan.

With all this, I still believe rental property is the best way to build wealth.

JuanCarlos1 posted...

Even with no to little profits...someone is paying a mortgage for you.

Wanted to say this. TCs friends are likely fudging reality a bit when they say they make no profits. I had a landlord friend telling me how it wasnt all its cracked up to be because the rents barely cover the mortgage. Utter cognitive dissonance to feel better about himself.

JuanCarlos1 posted...

Even with no to little profits...someone is paying a mortgage for you.

Maybe. But not necessarily all your costs: insurance, property taxes, etc. Depending on the market, you may not be able to charge enough rent to cover all your costs.

They are investing in real estate so they are earning equity. Might not seem like they are making bank month to month, but home prices are way higher than they were. I guess it also depends how long ago your friends bought homes. They could be sitting on 10s of thousands of dollars in equity.

JuanCarlos1 posted...

Even with no to little profits...someone is paying a mortgage for you.

This. We have a rental property. The rent is just a little more than the mortgage (along with insurance and property taxes), to cover maintenance. I just want someone to pay off the house so I can gift it to my daughter one day. Housing market is horrible in CA. I dont want her to struggle with it when shes older. My husband is handy and can fix most things himself. We live 10 minutes away.

My mom doesnt know shit about fixing things but has owned a triplex for about 15 years. She rents the other two apartments and lives in the other for very little. She doesnt make money off it but shes 67 and its a way to have very affordable housing for her. If something needs to be fixed, she calls family friends who give her good deals.

Key for managing rental properties: hire a property manager.

even if you are a handy man why would you want to spend so much time fixing up all your rental properties all the time. i don't even want to cut my own lawn wtf.

Veggeta_MAX posted...

even if you are a handy man why would you want to spend so much time fixing up all your rental properties all the time. i don't even want to cut my own lawn wtf.

One of my moms tenants cuts the grass for her. She charges him a little less rent. She hasnt raised the rent much in all the years hes been there because he does a lot for her. Sometimes the key is landing a great tenant.

EzeDoesIt posted...

Wanted to say this. TCs friends are likely fudging reality a bit when they say they make no profits. I had a landlord friend telling me how it wasnt all its cracked up to be because the rents barely cover the mortgage. Utter cognitive dissonance to feel better about himself.

Oh so they're only getting appreciation on an asset that's outpacing basically every other asset for free (down payment notwithstanding).

Sariana21 posted...

Maybe. But not necessarily all your costs: insurance, property taxes, etc. Depending on the market, you may not be able to charge enough rent to cover all your costs.

Lets say the mortage and all expenses are $1,000 and rent it for $950 cause it's a competitive market somehow. Now lets say 500 of it goes interest, insurance and the rest goes to the loan. You're still gaining a lot of money even with no profit, plus its more likely than not that the house will appreciate. Its an easy game if you have the money cause you can just cash out refinance after sometime and keep buying more houses. Thats probably one of the big reason house prices have skyrocketed with so many people offering cash during these historic low interest times. Somethings gotta be done about it. Dont mind people with a few properties, but owning dozens makes you a capitalistic vulture.