All Forum Posts by: Gail W.

@Jim K.

I came up with an agricultural background where you went out every day and did what needed to be done for the sake of getting the work done, with a hope that in 6 months or a year there would be a pay out. I also worked at a job for over 30 years earning a paycheck and a pension. There is something to be said for all that I learned too. The good and the bad.  

I have one checking and one savings account that is strictly real estate, I pay taxes insurance and mortgage out of this account. I have a number which is 6 months of expenses on all 5 properties which I remove from the check register, (it's accounted for but not counted) I try to always maintain this number in the checking. Then since my rents are due on the 1st of the month about the 5th I transfer 20% of the rent into my savings. Again I do not count a portion of this money that would be used to cover any major expense, in an emergency. In my case $12000 in this savings account. When I have reached that number the balance is what can be reinvested. I also transfer any extra in the checking into savings once a quarter.

My take is a little different than most of these because of my farm background. All of my life has been built around a routine. Every day something has to be done as far as my small investments are concerned, even if things are not going well the work still has to be done. I have seen several farm boys, just plodding along become wealthy because they do what needs to be done every day, no matter what other people might say. No matter the weather, or the poor markets, or breakdowns, or any other many different kinds of set backs. Their motivation is simply "this is what I have to do."

Positive attitude is necessary and that comes from education which gives confidence in your decisions. The discipline to keep moving is just as important, and for me discipline comes from the routine.

Not my own property I was working for a company that owned retail and office properties  as a maintenance supervisor and we had a c-store on the interstate where the toilet was plugged. The plumber gave me a call and said he had pulled a switch blade knife that was in a leather cell phone case, (the kind people wear on their belt) out of the toilet. 

I am in rural South central Illinois. In my market you can find a 2-1 in the 50's or a 3 bedroom in the 60's,(this is the low end of the market) that will rent for $500-$600, but as mentioned above capex, and repairs can eat your lunch. It costs the same to replace a water heater or AC in a $50,000 house or a $100,000 house that is renting for $1000. And you will find a need to do some work on every new purchase unless you are very lucky. There are no turnkey operators in my market that I know of so managing or finding management is all on you.

@Joe Villeneuve I have read enough of your posts to guess what your position would be, and I think I knew in the corner of my mind that you are absolutely right. It just bugs me to hold cash in a CD for less interest than the cost of inflation. Thank you for your response.

@Steve Vaughan Thanks Steve. I am in a similar situation as you. I am in what you have called in other posts "preservation phase."  I would still buy something if the numbers make sense but they are few and far between right now in my market.

My primary and another farm I have are fixed rates @ 3.25%. I will not mess with those and there is only 6 years to go. The rental houses are commercial loans at about 5% with a 5 year ARM, and yes I have to submit a financial statement every year. I should but, I don't know about calls, I have been doing business with the same local bank for almost 40 years, and I get a little to relaxed sometimes.

Here's another angle. In my market I am having a tough time finding properties that meet my criteria. Therefore my thinking is to park any cash I don't need for reserves into paying down my mortgages. All of my mortgages are commercial and I am paying around 5%, so I figure 5% is the return on my investment. What bothers me about this strategy is the potential lost opportunity cost. I would be very interested in hearing opposing views, particularly from @Joe Villeneuve.

@Jim K.

Damn Jim. I am still trying to recover from pneumonia after covid, and if I had to go pick up a refrigerator and haul it into a tenants house someone would probably be picking me up off the floor! Then getting stiffed on the rent...

Here's my opinion, you can take it and add a couple of dollars to it and get a free cup of coffee most places. After the election in my experience the nonsense usually falls by the wayside for a while, no one is standing for election for a couple of years. However with the Democrats holding a slim majority in both house and senate we can expect to see some over reach. That's just what they tend to do. So who Knows?

Twice in the past year I have had agents talk me out of looking at a listing. One sold the day it was listed and the other was on a couple of weeks. Both were light cosmetic flips, One of the two was recently listed and resold within a month. From now on if an agent slow walks me looking at a place I will be on the phone with agent after agent until one will show it to me.