To make matters worse 2 major storms did considerable damage to the property, the insurance did not cover it all. So basically all my rental income went back into the property for the past year. Good thing I planned for this eventuality.
Bottom Line, I would not recommend rental property as retirement income. Sell the property before you retire.
He took $100,000 in cash but his interest payments went from a little over $16 K to over $33 K a year, not a good deal.
If he needed the cash, he should have taken a short term personal note or if his credit was bad, sold the property.
There is no way to financially justify a doubling of your annual interest payment on a rental property where the annual income is stagnant.
$420,000 on the property, which is worth approximately $750,000.This guy is merely an inefficient middleman for the real owner of the property, the bank.
Over 80% of the adult male invaders who are willing to make an honest living want to work in construction.
Imagine what that is going to do to construction wages, and housing construction costs.
Paying more than the 2016 prices for housing is pretty risky.
When making an offer on property, include pictures of the invasive onslaught and write “Most males want to work construction” on the pictures.
He just needs to let the bank foreclose. /s
When looking to buy property, compare the “recently sold” count to the number of properties currently for sale in an area on realtor.com to gauge the strength of the market.
Sometimes and in some places the going prices are..., but little or nothing was gone recently.
We invested some retirement funds in apartment complexes and music royalties.
Cash flow has been great.
Would do again.
Why would I sell something that brings a good income and excellent equity gains?
I got smashed by Ian. One of ny units is still down after 1.5 years... still an amazing investment that's worth way more than I paid. Once it's up again I'll be killing it.
To your point though, when buying real estate you need to be able to hold and maintain it. Proper long-term planning too.
The subject of this article is a total moron, who doesn't even seem to bother with math.
Small landlords will never make money again. Cut your losses and get out.
I learned long ago do not run a business with borrowed money.
7.9%
I paid that on an old house back in 1977. Refinanced at a lower rate in 1986, sold it in 1994. Bought a vandalized house outright in 1989, rebuilt it and have been payment free since 1994.
Life is good payment free!
I know that people claim to do well with rentals but they are not for me. Most experience I hear of is similar to yours, a near net loss that may only be compensated on liquidation with the cap gain.
Rentalmuse to be great. Luckily, I got out before kung flu “eviction moratoriums “ were invented. I know people who haven’t gotten a single penny for three years. And when asked to pay rent the disgusting freeloaders get mad and trash the place and lodge complaints to get it fixed up.
You have to be crazy to refinance to a higher interest rate.
I lost a lot of money in the stock markets of 2003 and 2008, Mutual funds that were supposed to be safe. They weren’t. I took money out of the market and invested in rental properties. I either paid cash up front or got them all paid for by the time I retired. I wish I had started sooner. I have 8 properties and find them a lot more advantageous to have than my Social Security. Yes sometimes they cost money. You have replace roofs floors appliances but collecting 16k each a year gives me enough padding to pay for those things. I figure two to three months rent each year for expenses including taxes and insurance. If I get a good tenant I may have no extra expense for several years.
If I sold out I have to pay terrible capital gains tax but then I would have to figure out what to do with the money to give me the same income. It would cost me a good 50k a year.
I love my rental properties and recommend everyone young enough to get them paid off for retirement to do so.