All Forum Posts by: Alan Pederson

I took a loan from my 401k in May 2017 to buy my 3rd rental. We came across a really good deal on a property and didn't want to wait to build up our savings. We pay the loan back with interest. There is some opportunity lost because I made 25% return on my 401k this year but I think in the long run it won't make much of a difference. I'm in my 50's and I took out $35k to buy the house. I'm paying it back at around $500 a month but we're making $570 a month on the house. I feel the opportunity gain (home prices continue to climb and buying now vs waiting another year) outweighed any opportunity lost by the gains that money might have made if I left in in my 401K. If we were only making $400 a month on the property it would have been a much harder choice to make.

I hope to some day have this problem. I set a goal of having 10 SFR by the time I retire in 8 more years. I looked at what my Social Security, pension, 401K, and Roth would bring in and with 10 rentals we should be well above the income level we have now. I figure we won't be rich but we shouldn't have to worry much about money when we're retired. Buying property is addictive and we might change our goal as we get closer to it. I could see expanding this to 20 or even 30 properties or even looking into some MF properties at some point. What's exciting it that just a couple of years ago I didn't even think where we are now was even possible. Who know where this will end or what will be possible a few years from now if we keep going. This is why I love doing this stuff. You can do as much or as little as you want. If you want to have an extra $10 or 20k a year coming in or if you want $100-500k coming in, it's up to you. I only wish I would have started doing this when I was younger.

My mortgage broker and her husband have 3 rentals and they have no plans to expand. It brings them some extra money and they use part of it to pay for a place they bought on the coast in Mexico.

My wife's former father-in-law has 5 SFR rentals and he's in his late 70's. He just bought 2 houses last year and uses the money from those to help his son pay for private school for his grand kids.

So when to stop buying is a tough question.

@Garrett Vita I set up an account with Realtor.com and posted pictures immediately. When people would come to see the house I would just tell them this is the "before" and I'm working on the "after". I told them what I was going to do and showed them pictures of other houses I fixed up so they would know the kind of work I do. I'm sure some people walked away and thought there is no way I'm going to trust that this guy is going to do what he says. I wasn't concerned about it because I was looking for the people that trusted me. The couple that rented from us kept coming over every few days to check on my progress and everything ended up being fixed prior to them moving in and they were very happy with all the work. A neighbor came by to see the house and they said it looked like a new home on the inside.

My next door neighbors (an older couple) lived in that house for over 30 years. He ended up having to put his wife in a nursing home but continued to live in the house by himself. About a year later, he passed away and his son ended up with the house. We offered our condolences on his loss and my wife went up to see his wife a few times to take her flowers from our garden. We made it clear that we were in the market to buy more homes and we would love to buy this one if we could. The son said he was going to rent it out for at least a year and then decide what to do about it. During that year, we tried to buy a few homes but nothing worked out. We were friends with the new tenants and they told us the son that now owned the house had talked to them about buying it from him. They weren't interested but we called him up and made an offer. We got the house before it went on the market and  my agent said she couldn't believe the deal we got on it. So you just never know what response you're going to get from somebody.

If it has a fireplace I would call around and find out what it would cost to get it fixed. You could replace it with an electric one starting at $500 + install. Or just get rid of the fireplace all together. It just depends on how much you're willing to spend.

If they're complaining about being cold there might be a different problem. Drafts coming from old windows, missing caulk around windows, or maybe low or no insulation in the exterior walls. I know my house used to be bad about this. Every time the wind blew you could feel a draft. The windows were so bad you could hardly open most of them. In the winter you could put your hand on the window and it was ice cold. We broke down and replaced all of the windows and it wasn't cheap ($7,000). We did see a $50 a month difference on our electric bill. No more draft and no more worrying about there being a fire and my family not being able to get out because they couldn't open a window. 

I'm not an avid reader but I have learned so much over the past 3 years it's hard to believe. I read a lot of articles before buying my first rental so I kind of knew what I was getting into but the real world experience has been a good teacher to. I figure if I want to keep moving forward and make better deals, I better hit the books just like I did in college. Several weeks ago I started writing down all of the stuff I've learned and I'm at 23 pages so far. Maybe some day someone will read what I wrote and they will learn from it. That's a long way off though.

I've heard of some of these book and I need to just dig in. Thanks for the info so far, keep it coming.

That fee is for up to 2 pets. That's all I allow and the pet can't be anything over about 35lbs.

My mom paid a pet fee when she had her dog in Colorado Springs. I think it was about $15 a month. My 3 kids and my niece also got stuck with this same pet fee thing when they rented apartments in the DFW area. I was originally going to just charge a deposit for people that had pets but decided to charge a one time non-refundable pet fee $100 and a $15 a month charge to anyone who has pets. I know I'm going to have to spend more on cleaning when they move out and pets do cause wear and tear to the yard and interior of a house. It also brings in $180 a year, every year. I haven't heard one complaint yet about it.

What are some good books to read? I'm interested in learning more about rental property, flipping, making money, or saving money.

Sean, I just read a post from someone that did pretty good buying a rental in a college town and then a few years later the college changed their requirements and now Freshmen and Sophomores are required to live on campus. That cut his available tenant pool. Lots of good info on here. I don't know what the vacancy rate a college town would have but I'm sure there would be plenty of interest in the property if they're priced right. I know my step-daughters stayed in some pretty nice places when they went to college. One went to Texas Tech and the other one went to UNT. My wallet still hurts from those girls.