WatchA year ago, I posted 3 condo rentals I was buying. The market has changed, and such cheap condos are now impossible to find in Phoenix, ( I know this is antithesis to the bears on here, but I could see each one easily for $15K to $20K more now), and while I did stumble into one more by luck, the deals are few and far between. One tenant moved from one of my condos to another, and I evicted one tenant out of the 4 ( I had one I've owned for 15 years) but all in all, I've had less vacancy and repairs than I estimated when purchasing them.
So, I'm buying single family homes with mortgages. The latest one is $76K for a 4 bedroom 2.5 bath 2 car garage home near downtown. The area is shitty, but my other inferior 4 bedroom half a mile away is rented for $1095 a month. Factor in $1000 a year for taxes, $600 for insurance, $50 a month for HOA, and 4.5% loan with 25% down, and my monthly expenses will be around $500.
Note, I do not recommend doing this from out of state. I do a lot of my own maintenance work, and have local contacts to help inexpensively when I need it. I have a partner who helps with the management, as I am often too busy to get over there when necessary. See the Las Vegas thread to see how the inexperienced can get hurt in a market they don't know, and don't live in.
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47 male
Lafayette, CA
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It's best to put the childish twit who calls everyone a realtor on ignore. He's only here to troll.
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Foothill Ranch, CA
zzyzzx says
In escrow on a rental in Vegas (Henderson). Those numbers are right on.
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Scottsdale, AZ
robertoaribas says
I wasn't trying to discourage you.
Also, you are not competing with the government. You are competing with firms that bought homes from the government at a value that was probably one third to one half of what you paid. I hope I'm wrong on that value.
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Scottsdale, AZ
bgamall4 says
Are you saying Phoenix or Las Vegas?
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Pleasanton, CA
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edvard2 says
Yup, just invested in some new tires. Should last 2 years and by that time the original poster will have lost a few brand new cars of equity by then. All I will have is a pair of worn out tires. Good times for renters
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63 male
Las Vegas, NV
bgamall4's website
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GUAB says
I know Asians are betting on Las Vegas. Don't know about Phoenix.
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Scottsdale, AZ
robertoaribas's website
bgamall4 says
Why would I care if prices drop more? Hell let them drop! I'll buy more homes! Rent dropping would be more problematic, but I'm going to stress the numbers again:
Mortgage with EVERYTHING less than $500 a month, rent over $1100 If that is a 'good time for renters.. than... ok'...
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http://www.wat.tv/video/prince-little-red-corvette-382ut_3aghd_.html
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Pleasanton, CA
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robertoaribas says
As long as you don't get stabbed or shot when you go do some maintenance on the house. ;) You are correct though, if you are willing to pick up and deal with properties in the somewhat rundown areas then the numbers for landlords are great. I have thought of going down your path a few times. My comment was more in the affluent areas, where most of the BA potential buyers that check out this site are interested.
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Scottsdale, AZ
robertoaribas's website
Agreed on the bay area... I finished my graduate work at Berkeley and got the hell out of there. Ok I went to LA next for a few years, but I finally learned, and left forever!
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Scottsdale, AZ
robertoaribas's website
Another intelligent reply from horse brain. I'm truly sorry about your lack of ability to think. Maybe chemists will invent something to cure that one of these days, and then you can actually make a point rather than resort to personal insults...
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Headshots if you've got marksmen skills.
Body shots if not. You can let them bleed out a little and finish them off with your feet. Tenderizes the meat at the same time.
GameOver says
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I'm out of here.
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San Jose, CA
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iwog says
LOL. Already did that. I have over 10 people on ignore. The ignore function works fantastic though. :)
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It is not that hard to believe his story. I currently have mortgages on 7 rentals and my primary in Solano county (Bay Area outskirts). All are positive between $400-$900 per month. I do some work myself, but over the years found two handymen that can do pretty much everything for $20-$25/hour.
My 8th rental has a verbal bank acceptance.
Bubbles naturally over-correct. 17 years ago my first house I purchased in this county (city of Fairfield) for $91,500 - it was a HUD house, and needed everything. That same house in the same condition and same area, you are lucky to get $91,500 right now.
The problem I have now is banks able to lend to me or refinance me at all. Even with 25% down, Fannie Mae/Freddie Mac regulations that most banks follow kick you to the curb after 4 mortgages.
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Walter says
My yearly insurance on rentals runs $375-$595 depending on size, build, etc. of house. Taxes vary, but for a $96K house in CA they start at ~$1,200.
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San Francisco, CA
thomasdt12 says
That does sound like a problem.
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Clearly the inventory is way down, that's clear from my mls searches. I'm moving back to Phoenix in August and have been keeping my eye on things. But WOW, the data on http://www.deptofnumbers.com/asking-prices/ for Phoenix are way out of line with the Case Shiller data. I mean they are showing 30% increase YOY in median price. I get there is a difference between median asking and actual sales prices, and in the areas I track I don't notice a huge difference in prices. So what gives? Are the median data being pulled up by higher prices homes going into foreclosure now which aren't being picked up by the low end investors looking to buy in the
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True some new home building has picked up. I won't pretend I'm impartial - I want things to stay cratered until I get back in August. I see fewer low end sales and very little building to keep up pace. I can envision 04-06 happening all over again, perhaps not to those levels, but still with so few new homes going up there may be a sudden, sharp contraction in supply, builders coming back to the market in droves, contracts written that appreciate some ungodly % before the house closes, auctions for lots, etc. My saving grace are the investors hoping to check out and dumping most of this inventory back on the market. But if rents are steady or rising and values rising why would any investor check out now.
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Scottsdale, AZ
robertoaribas's website
atst1138:
I too noticed the disconnect between 'department of number' and case-shiller. A couple of observations:
1. as you mentioned, housingtracker.net is asking prices, NOT sales prices as per case-shiller.
2. many of today's sales are 3/6/12 month ago short sale contracts, so their contract prices were set in much older markets, and hence as lower asking prices.
3. there is tons of flipping going on. so, some of the increase in asking prices is not an increase in value of a given home, but rather an apples to oranges comparison. If a home was listed at 100K 6 months ago, sold, the flipper puts 20K into it, and lists it for 150K today, maybe selling it for 140k down the line, that particular home affects the data as a 50% increase in asking prices, when it is nothing of the sort obviously. So, we are seeing a very different mix of much nicer flipped homes now, compared to piles of foreclosures in the past.
That being said, anyone active in this market can feel price increases in the sub 150k sector for sure. above 500k is still quite problematic, but then again, that isn't my world.
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Belmont, CA
GlobalRoamer says
Simple - you used "cheap money" and good credit to buy a property on leverage, put in some work, marked it up at an annualized rate worse than most loan sharks, and then sold it. We the people and We the sheeple pay for these low rates through the massive inflation, middle men like you and the bankers take hard working people to the woodshed for a year or two of savings. You did nothing but buy on leverage with other people's money.
This is not productivity. And for what its worth, most of what gets done on an iPhone or iPad isnt very productive.
When a regular guy with a FAMILY and personal responsibilities cant take stupid risks. We just you and robert Kiyosaki and the bankers and the speculators wouldn't need a badly inflating dollar to play your games with other people money. Meanwhile, people who try to squirrel away for the future, for the winter, we are punished for saving and not for risk taking.
This system sucks. And forever people successful with this, there are plenty of Casey Serin types who destroy lives and families trying to pretend we can all be Gordon Gecko.
The system is fried. Inflation is required to support this ponzi scheme. And it sucks.
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It would be nice if they could somehow gauge housing interest in local markets. For example supply is clearly down, rents up, prices flat or maybe up a little. The buyers aren't gone but I suspect on the sidelines letting their credit heal. So as the supply declines there should be a second curve of people in the market, and by this I mean true owners that will occupy the property. But from a landlord's perspective when do you all cash out?
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Wallingford, PA
Not trying to be a smart allick...
I live just west of Philadelphia, Pennsylvania (property tax is approaching 3% of the current value of the homes).
I usually vacation in Santa Ynez, Ca., Charleston, SC., Tennessee.
Santa Fe, NM is quite nice, but was surprised when snowed upon one April. Albuquerque is quite nice also.
I'll need to find a place to retire one day (also I grew up in Florida on the east coast).
Question: Is there any reason I would want to consider Phoenix?
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63 male
Las Vegas, NV
bgamall4's website
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citizen jpp says
Phoenix does have Desert or Valley Fever. You do not have to have full blown Valley Fever to be allergic to the Valley Fever spores in the soil. Agriculture kicks up the spores around Bakersfield and it exists in Phoenix as well.
Vegas has the spores but little agriculture and is at higher elevation, limiting the little buggers.
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Phoenix is usually described as a shit hole in the middle of nowhere that aspires to the cosmopolitan sophistication of Scranton but will never achieve it.
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Oakland, CA
I was just listening to a podcast with some guy from phoenix who was bragging about how he sold off a bunch of investment properties to a bunch of dumb investors from California who thought they were getting a good deal.
That's not you is it?
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Los Angeles, CA
There are 3 groups here...
group 1: Prices will crash to 1975 levels, anarchy and chaos will arise
group 2: bulls
group 3: there are good deals out there, even if prices drop, you have to live somewhere so if rent = mortgage (or slightly less) why not do it, we have somewhat stabilized here and may go flat for years
What surprises me is that the negative group that foresee's the worst, never thinks of yet another version of chaos. Not the chaos of 1975 prices but the chaos where the 1% turn into the 0.5% that own everything!
Most of us will be the 99.5% that mostly rent/slave-fee's to the 0.5%.
Apocalypse is gun-ready, potatoe bags in the basement but when the landlord comes with a tank and threatens to wipe him and his potatoes out in one shot, he'll cough up the monthly rent/slave-fee.
Ownership will be much harder to achieve than ever before because we are in the process right now of investors coming in and picking up the scrap left and right.
Nobody needs stocks but everybody needs a place to live.
I am not a doomsday guy but if you are going to be that negative...consider this version of negativity as well.
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Pleasanton, CA
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SubOink says
I don't equate rent to a slave-fee. That I reserve for the poor bastard that is paying an incredible sum to the banks for that balloon mortgage he was forced to take out to buy a 1000sqft 2/2 in a crappy neighborhood, where after people part their cars on the street you basically have one lane left for people to use. This is the slave-fee, not paying rent to someone who is trying to make an honest living.
I have never rented from an organization, so maybe would have a different opinion then. I have always rented from someone I have met and liked and have actually became friends with most.
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Los Angeles, CA
RentingForHalfTheCost says
The example of balloon mortgage is also a slave fee...you are right. But make no mistake about it...rent is exactly that. You pay as long as you live in a rental and never built equity, have nothing to show for. Somebody else, gets their house paid off with YOUR money.
At this point those types of mortgages are not really the norm at all. 20% down, 15 or 30 year fixed is. At these low rates it's stupid not to lock it in.
I say slave -fee only to go along with apocalypse's and followers lingo.
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Pleasanton, CA
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SubOink says
Not true is some cases. I have rented for 14 years and have enough now to basically not need a mortgage if I desired. Instead of taking my savings and putting it into equity and interest, I put it into good old dividend paying stocks. My practice looked horrible when houses appreciated in 2000-2007, but now it turns out to be at least as good or better in the long run. To me, a house is something I buy when I have been successful in my savings and investing. Not something I use to create wealth for me.
I have also had the good fortune of testing out each city in the BA and finding which areas and ones I like. I now know exactly where I would like to live, not just guessing like many.
Luckily my parents lost their house to the crazy interest rates of the 80's back in Canada. Unlike here, you cannot lock in a fixed rate for 30 years, or at least you couldn't back then. You get a 30 year mortgage that is refinanced every 5 years. You can easily see how people can lose their home in an increasing interest rate environment then, as my parents did.
Glad I lived through it, and was the wiser for it when I moved down here.
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Los Angeles, CA
RentingForHalfTheCost says
If you had the same payment as your rent every month - what would stop you from doing all that anyways?
At this point, 14 years later you either would have paid the house off (if you put the extra money in the principal) and would live rent free OR you would have all your dividend stocks AND a house that is at least 50% paid off = equity.
Yeah, I agree about the moving around and checking out areas, we did the same thing.
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Pleasanton, CA
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SubOink says
Yes, if that was ever true around here, but for me it hasn't and continues not to be. I have always rented under the home ownership costs. The difference was basically what I invested and basically paid off a house in 14 years (100% equity). If I had tried to do it with owning I would only have about 40% of the house paid off. That is a huge difference.
If I had been lucky enough to move here in 1992 or earlier then it would have been different, but I wasn't. Take what you are given I guess.
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Wallingford, PA
Thanks Bgama and Tony, Phoenix is off the list, especially when there a 1000 small towns that:
Offer nice homes for less than 100k
Have their property tax under 1k/yr (have control of expenses and pensions)
Have reasonable weather
I thought I had heard "everything" when I first moved to PA and was told stories of people needing to move because of high property tax (which only go up -- a lot) in this part of the state -- big problem. Last year I was in the credit union getting a fantastic rate 2% cd and spoke to a manager to find out whether homes for sale were being priced anywhere near appraisal and the tax issue came up. She said some the loans they were making were for people needing to pay their property tax. The "savers" can never save enough in this current environment...
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San Jose, CA
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Congrats Roberto. That was quick that you're up to 9 properties now. See you on the next market top liquidating properties. Well, maybe not. These properties would generate you a nice dividend from now and well into your golden years.
It appears that the market in my neck of the woods starts to creep up in the last 3 months. Inventory is pathetically low. Competition at the steps is fierce. Some flippers have started to buy & hold on the lower-end condo and townhome market. Definitely seeing a change in the market recently. :)
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San Leandro, CA
robertoaribas says
Will you consider consolidation in the future. If so, How many units do you feel will cover the extra expenses of management, maint. etc..
6 Plex, 12, 24. Kinda like comparing computer memory eh ?
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Are we posting every business deal we do on Patrick.net now?! I have lots of exciting stories if we are...
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Scottsdale, AZ
robertoaribas's website
I don't see how to consolidate them. There is actually serious money chasing after apartment buildings, and thus the collapse has not been so extreme. They are paying $/door that don't interest me.
My actual hope, is that the economy will get better, rents will increase, and thus when i pass off the entire management to my business partner, the increased rent will cover all management. I can retire from my regular job in about 7 years, so that is the timeframe I'm hoping for. I don't see a 15% rent increase in 7 years as impossible...
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Half Moon Bay, CA
m1ckey6 says
Tell us your success stories. It's good to hear somone is making a profit.
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RentingForHalfTheCost says
Not sure if you really feel that it was 'lucky' for your parents to have lost their home. Anyway, just moved to the US from Canada and the loan interest terms are much the same. Most folks still lock in for 5 years, you can pay a higher interest rate to lock in for up to 10 but that is about the max term. Everyone is vulnerable to future interest rate hikes. Unfortunately, with the current price levels of real estate in Canada, and with prices still going up but incomes stagnant at best, the danger is obvious and worsening. If/when interest rates go up, most of Canadian mortgage holders are at severe risk of losing their homes. In addition, all of these mortgages are backed by the government itself, so Canada's entire economy and economic health is at risk when this happens.
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Scottsdale, AZ
Buster says
No.