For those of you guys who have invested your extra money in real estate especially mutli family buildings 8 families and up. How do you like 'em cookies? I am thinking of parking my spare $$$ in an investment that long term both appreciate and bring in monthly income. My wife would run it and she is a tough cookie. Any comments, ideas, pointers???? (about the investment not wife )
Do not get into the rental business unless you want a chronic headache 24/7. You'll have to deal with low-lifes, repairs, maintenance, etc. It is a huge pain in the ass and not worth it.
I've been the owner of a 12 unit (2 buildings, 6 apts- 3 upstairs, 3 down) in a low income area. I got into the deal with my brother and do not live in the area. I bought my brother out and have a property manager running it. We are basically breaking even on the deal on a cash flow basis. The mortgage, insurance and taxes are getting paid by rental income. The rest goes to fixing up apts. when the tenents leave. I expect to get my profits when the mortgage is paid off and I sell out. Expect about a 7% annual ROI. Although my property manager is great I think we would be much more profitable if me and/or my wife could be more hands-on. We pay the property manager 8% of rental income and I'm sure he adds on about 10% to repairs (not sure about this but I would). I would do it again but only if I could be more hands-on. I recommend that as soon as a tenet is late, file the first eviction notice. It seems to get them to pay and if they don't you might as well get them out ASAP. I have had people that have been with me a couple years, get behind and then catch up. However, the is the exception. If you let them get behind 2 months it becomes cheaper for them to move than to catch up. Good luck.
I was chatting with a guy from Russia on the way back from Czech Republic several years ago. Not even 30, immigrant from Russia, and he owns a tri-plex in downtown LA. He said the trick is, regarding privacy, just say you are the manager and will talk to owner, never admit you are the owner, that way you always go a way out if they want some unreasonable upgrade or something else. Seemed pretty smart. He lived in one of the three.
You know I generally feel the same way, but I really think it depends on up front screening. If you rent in better areas, which I previously did as renter, and pull credit, talk with the ppl., you probably will get responsible ppl. like I was a renter, pre-owning. I asked a long time family friend ( who became a self made millionaire investing in RE ) and he said it's about the upfront screening and filing eviction, as previously stated, right away when they flake. If you pull credit and they have multiple 60 day lates and judgments well then gamble if you want to rent to them or take a decent deposit.