Landlording with a lifestyle... Is it possible???

Question

Ok people. I'd like to begin to get some ducks in line for some commercial property investing later this year. There are a few low income areas nearby that I'd like to buy a property in this year. I know there are headaches that come along with that but I'm going to consider that as I look.

So my questions is can I buy several rentals per year, manage them effectively and still have a great lifestyle. I've of course heard the nightmares of landlording and I've heard from people who never worry about their properties. I'm more interested in hiring a property manager but I don't know how easy it is to find a good one when you're starting out. I  would think a company managing a client with 50 units would give them presedence over your 3 unit. So I'd like t know how to start out where I can build up to that. I've heard about people who manage their own properties but how do you have free time if you manage a lot of properties.

Second question, I was evaluating my buying strategy and I wanted to know if this would work. I saw a guy who has a forum and for the last 3 years he's bought over 15 Cashflow properties. I don't think he explained how he finances them. Here's my thinking on what I can buy a 3 family property for in Newark nj
Purchase price: $75,000
Rehab: $55,000
ARV $200,000
Could I buy this property with a hard money loan and refinance at the $130,000. I would want to go with a higher LTV than that. I'm probably missing some details but if I could perfect this strategy I think it can be pretty good. Any thoughts/input appreciated. God bless

Theodore B. · Answer

Deshone Drummond  How are you and congrats on getting into the commerical side of things.  Looking forward to joining you soon!

As for your question, Landlording with a lifestyle...Is it possible.  I would say yes.  I am currently investing in Single Family Properties and I am at 12 all of which are mortgage free except 2.  Of my 12 I have 7 currently rented.  I landlord all my properties long distance, the last 2 I rented out I don't even know what my tenants look like except the licenses they sent me.  I am in NO way living a rich lifestyle, but I am taking baby steps, the first one is firing my 9-5 boss, which is happening in 1 week and 1 day lol..Yes I am counting down the days lol.

I know and believe that real estate can have us lead the lifestyles we want to live, but its all about staying focused and patient.  I read so many stories about people turning little money to fortunes in little time however, hasn't been my story, but I believe in staying in the race and soon enough, I will be able to go where I want to go when I want to go.

In Landlording you do get some calls that make you want to say, ARE YOU KIDDING ME!!!, but if you look at the grand scheme of things,  I would rather troubleshoot my own problems versus a company I am working for, so I just consider it part of doing business.  If anything be patient with tenants because at the end of the day they will be providing you with the lifestyle you want.

Good Luck on your investing!

Ibrahim Hughes · Answer

Deshone - your rehab costs will depend on the physical condition of the property. Maybe $55k if the roof was replaced recently (last 5 years?) with new plywood (not just another layer of shingles) and you already had vinyl siding on it. In other words some important aspect of the 3 family would have had to be rehabbed recently. An all out gut rehab of a 5/5/5 three family would run you about a $100k.

Dawn Anastasi · Answer

I have a full time job and manage 6 rental units (5 properties).  The hardest part is when I buy a new property and have to do some rehab, because I can only do it on nights and on the weekend.  So it winds up taking longer to complete.  Once everything is complete, I get maybe 1 call a month or so on something.  But the rehab duration is extremely stressful.

David B. · Answer

I'm currently a hands on/full time landlord that spends about 15 hrs a week on my properties. I own over 25 properties, SFR and small Multiunits, and I'm able to spend much time with my family.  There are the once in awhile late night or all day fixes but they are far and few if you manage well and have nice product.  I often do courtesy calls to my tenants to stay on top of things but also to have something to do.  I like having the option to work or not.  I can always contract out work if I don't feel like it.  My lifestyle is great but when it does get to be too much I will look for a PM.

Ned Carey · Answer

You absolutely can have a great lifestyle being a property owner.  I have many friends who actively manage their own properties and still travel a lot and have a wonderful lifestyle.

Of course you can do the same with a 9-5 job. The question is, how well can you manage; both your properties and your life?

Regarding your second question, that is a common formula. Buy a fixer upper. Add value by fixing it up. Refinance and do it again. However you have left out a LOT of details and numbers. It is great when it works but you have to run the numbers one each deal to see if it works.  Good luck - Ned

Allan Landfried · Answer

@Theodore B. I can't wait for "the day" my self! Congratulations! I currently have 4 units and growing.

@Deshone Drummond I too am working towards this goal. I feel that if you manage the properties correctly you absolutely can have a great lifestyle.

Dawn Anastasi · Answer

Well my ultimate goal is to just have rentals full time, maybe a flip here and there.  But even owning a property free and clear, it's important to remember that you still need to pay property taxes, insurance, and I also add in what I call a "repair escrow" (meaning I put away enough money so that if something goes wrong, I have the money on hand to fix it).  Once the repair escrow is loaded up, then any money after that I can take out for my own purposes.

Mostly the expense comes at the front-end when I buy the property.  The one I just rehabbed for rental already came with a new furnace, I just had to replace the roof and also put in a new water heater because the one that was there was getting rather old and was starting to leak.  So hopefully this property won't cause me too much trouble in the future, but it's better to hope for the best and be prepared for the worst.

Jeff S. · Answer

Dawn A. you have a small operation similar to what I did until retirement (between 5-9 units) which seemed plenty working full-time and having a life. It will be interesting to see how you scale up to be able to retire on rentals. Those that go big and work too, wow is all I can say.

Account Closed · Answer

That's great info Ankit, what are those properties worth after the rehab? I'd like to refi at no more than 70% and even that's a little high but tolerable. Not trying to be over leveraged. Thanks again Ankit.

Ankit Duggal · Answer

Deshone Drummond In Newark you see investors buying 60-80k houses in Weequhaic, Clinton Hill and Valisburg section of Newark. Those assets are getting gutted with 87 to 100k in rehab funds.

Landlording with a lifestyle... Is it possible???

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