Quoted from Whysnow:curious, how many of you are strictly in stock/bonds?
Obviously RD has done well in real estate. Anyone else have rentals?
I have a few single family homes and have done well thus far. I am trying to figure out a longer term plan that is less hassle and more money for my time.
Basically I started with the plan of building to 6-10 single family homes and then think about a like kind exchange to something bigger/consolidated. Thus far I have found that single families are pretty solid for the increase in value and rent over time, ease to find good tenants, and ability to keep tenants for more than just 1 year at a time.
Down sides to single families are that they always do a crappier job on required outdoor maintainence then you would like, plus you have the multiple roofs/yards/etc... compared to a consolidated property.
Thinking of 4/8/16 units in the future but the calibur of renter obviously goes down and brings in new headaches.
Also thinking of some mixed commercial/residentail but that is a whole new world to enter in to.
I am struggling with finding real world tips and research short of quiting my current real job to go work for a few different management companies in town and that is not desirable as I liek my regular gig.
I have the advantage of knowing my side of the city VERY well and have mapped out planned redistricting/redevelopment. I know in particular of a few places that are slated for large scale changes in 2022-2024 due to some major artery changes for roads, but dont have the funds/ability to get on these properties just yet. They are going to double in value in 5-8 years and would be an easy resell (purchase at 600k now and will be worth 1.2 at minimum after redistricting.) They are less desirable currently due to location but that is turning quick in the next few years as plans become more public/solidified. I have thought alot about making the jump into commerical but honestly dont know where to get started and am risk adverse on this (things are good and relatively stress free with current properties).
Advice from those with experience/knowledge is appreciated as I continue to think things over.
As a young carpenter starting out many moons ago, I quickly realized there was no pension plan in my line of work and most of the guys over 40 were working in pain every day because they couldn't afford not to. Bad backs, blown out knees, etc were all too common for my liking. So I started buying up land when and where I could find it in my spare time and building rental properties on it during the slow season. Taking that path has been good to me, so I try to pass on anything that I think might be helpful.
I would say that "typically", you're going to cashflow more on a per unit basis with multi-unit properties as compared to single families. That, however is a very broad statement that has a lot of factors that can change things, such as the purchase price, financing rate, state of repair, local tax rate, occupancy rate, etc. But a dozen units under one roof has always provided me with much more free cash flow than a dozen single families, for less work on my end to boot.
What jumped out at me in your post was the assumption that moving up in size of property means accepting a drop in resident quality. There are good, hard working, decent people in every area and at all income levels. A good resident screening process makes all the difference. That and being willing and able to keep a unit vacant for a month or two if necessary to find the right new resident. A bad tenant is MUCH more expensive than a vacancy.
Our screening process begins with our ads, progresses through the phone interview, viewing and application process and is designed specifically to have the deadbeats self select themselves out of our process so we don't have to.
The next step after finding the right new resident is keeping them, and we've also worked out some simple things that help on the retention side. With proper screening and retention techniques, we've been able to get our average occupancy to 7 years as of now with a goal of getting it to 10. That's in both multi unit and single family, while keeping rents at market levels, with very, very few rent collection issues.
Of course a bad tenant slips through the cracks now and then, and a good resident occasionally turns bad, but that's an occupational hazard I'll take over climbing around a frozen roof in the dead of winter every day of the week.
Since you seem to be interested in gaining information/experience on the operational side of this business, I'm happy to share our ads, phone interview questions, application, etc, as well as explain our reasons for doing things the way we do, in the order we do. But it's a lengthy conversation best taken private. PM me after the holiday's are over if you're interested.
Also, I'd recommend Jeff Taylor's stuff over at mrlandlord.com. At least on the operational/tenant management side of things. Several years back, I booked into a conference he held in Orlando that was strictly about managing property. My intention was to get the write off for a preplanned vacation. We were going to Orlando, so why not? I didn't have high expectations, but I found our management philosophies very closely aligned.