This -1000x. Get a property manager. Mine takes 8% and does everything. I enjoy a monthly direct deposit. Every once in a while something breaks (just got a new oven), I send them a check, they do everything.
While I agree with this direction, it does make me begin to question why I don't just abstract the entire thing away with a REIT or other similar investment vehicle.
8% off the top depending on your particular scenario could get you pretty close to the same net returns at the end of the day. If you went with a few REITs, management would take maybe a few hours a month even for a massive portfolio. This also has the benefit of being much more diversified than a single investor directly owning various properties could possibly manage.
Granted, using REITs is a tradeoff in granularity of asset allocation and potential upside, so there is always that zone of opportunity to exploit. It just takes a delicate evaluation of the value of your time vs the opportunity itself relative to other competing strategies.
> why I don't just abstract the entire thing away with a REIT or other similar investment vehicle
Because REITs don't allow you to invest in one house via improvements at your discretion.
At least in the Bay Area, buying a somewhat run-down / older property, renting it out for a number of years, then renovating/upgrading it right before you sell has been a very profitable strategy for homeowners who have some project management skill.
In the Bay Area, buying whatever property, doing nothing with it, and selling after a few years has been a very profitable strategy. Will it continue to be so from now on?
I thought it would tank in 2001, then again in 2008, and yet again in the current bubble. It seems like the environs get hit, but SF and SV itself seem to be immune.
Los Angeles (where we were) is a bit more volatile (ie it actually goes down now and then). If I had bought property in the Bay Area in, say, 1999-2000, I’m quite certain I’d be more willing to put up with tenant bullshit in exchange for nearly endless appreciation.
It depends on the property manager. The one I had let the tenants stay 3 weeks beyond their lease end date rent free, pre-dated the move-out inspection and didn't even bother itemizing the damage the caused to the unit (which was well beyond their security deposit). They didn't get a forwarding address from them and there's no way to collect additional damages.
Sounds like a terrible property manager. Thankfully it is usually very easy to fire them and get a new one. At least where I am, there are a lot of them and competition is strong, so it's not hard to find a good one.
Yes! This seems to be the turd in the punch bowl. If you can find a good property manager and a good tenant, it’s not bad. Bad either can get ugly quickly (in CA).
Have you sold any of the managed properties? That seems to be where problems arise. A fellow landlord friend ended up having to dump his property manager and bring in a REA who whipped the place into shape for sale.
8% is not bad if the goal is income properties. However I would invest in a multi unit property if I were going to be a landlord again. Less concern about one bad tenant potentially leading to foreclosure if you get crunched from all sides. (Which seems to be how it usually happens)
