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Updated about 8 years ago on . Most recent reply
Buy and Hold Investment Tips
Question about starting out earning passive income by renting out duplexes, tri, or quad. This would be my first time going into REI.
1. Would it be wise to buy and rent out a unit that is a couple hours away? It is completely rented out currently with annual income of about 14k. The duplex is priced at 65k. It has a property manager. Positive cash flow is positive cash flow right?
2. Would it be better to buy a closer duplex? Live in one side and rent out other? Rent out both sides?
3. Any and all help would be gladly accepted. I am really interested into getting into this. Financial Freedom is in my future.
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Hi Derek.. Good topic.... I saw it in unanswered posts and here are my own views and some I have seen shared by some other small landlords (though opinions vary).
1. Closer is better if you self manage, in my view.
Why? You may need to go by the property frequently if you are working on a turnover or doing showings. Two hours might be past that limit for me.
For example, I seldom do that many routine jobs that are more than a couple of hours (unless painting or putting in flooring or something) so the drive would be the worst part of the many little tasks I do on rentals--showing the unit, checking on this or that, dropping off something, cleaning the gutter, cutting some weeds, etc.
In fact, I would worry the distance may cause me to skip an inspection or delay a minor repair which could lead to more problems. There will be enough hassle factors in landlording as it is, why add a 2 hour headache (4 hours round trip!) right out of the starting gate.
That said, you could just see if it works well with the current manager. Then your trips to inspect it may be very infrequent.
Or others might find two hours one way do-able. I actually like having a rental on my work commute, for easy inspection, snow shoveling, or dropping something off. It is 10-15 mins away for me, but if you have a long commute, why not look for rentals in that general path each day. That is my best distance hack.
2. The live in one side may be more of financing hack than a management distance hack, but you are on to something that the distance to work on the unit next door is ideal! Step right out and do it. In fact, you could do both units (mowing, snow shoveling, etc) at the same time for ease and convenience. No excuse for not getting it done there. Of course, you may have to sell or rent your current house (unless renting currently).
I like the "live in one side" idea for easy maintenance and management overall. Of course, you'll need to either wait out one of the current tenants (if in a lease) or give them notice if on a month to month to move in after closing (or target a unit with a side vacant). Later on, renting out both may work if you move on to rinse and repeat. This is when cash flow often accelerates the most.
3. Tons of info (forums, blogs, articles, resources) on BP for this journey!
Best of luck