All Forum Posts by: Kurt K.

I'd parrot what some others said about it being difficult to say how much I've "made"

...but net worth increase of 100k+ (and growing) in the 1.5 years is easily identifiable.

In the long-run for "Buy and Hold" cash-flow is the "why" to why we do this.

I was going to comment asking where you got the 7.3% return, but I found it. Over the previous 10 years ending Dec. 31st 2013, the annual compounded return was 7.3% for the S&P 500.

Since 1970 the S&P 500 has an annual compounded return of 10.6%.

I would be looking for a "premium" to that return. Just as banks require, the longer the term the higher the interest rate premium.

From a risk standpoint, the chances of you (or anyone of us individually) defaulting are MUCH greater than the risks of holding an S&P 500 index fund.

I don't want to invest in something that is significantly more risky with equal or lower upside.

The deposit/monthly fee has no bearing on influencing behavior in my experience. 

I allow pets and switched from a one-time deposit to a monthly fee (over a year collecting more 3 times more than the old deposit). I have also begun to "pet proof" switching out carpets with the vinyl plank flooring, with carpets being the biggest issues with pets, second biggest issue would be chewing/scratching doors/trim.

 I have access to a large group of tenants that are desperate to find a place that allows pets. Also, my place is not high-end.

I was told by a friend that his dad who runs an appliance business has "keys to every type of washer/dryer coin box". Meaning the keys were generic to each unit and could be stolen without sign of breaking in. This could be occurring in your case, or not.

 Raise to market rents if you're not worried about turnover. Market rates are fair.

How I look at it is, how much is that tenant really worth to you?

As you know, $270 a month is a total of $3,240 a year. There is also a significant opportunity cost here as well as that money lost is not available for reinvestment. For example, that money in a Vanguard Index Fund and in 10 years you haven't lost $32,400 but $50,691 (using a reasonable 8% annual rate of return). If the property is a multi-unit that roughly costs $32,400 in resale value if you were to sell, now we're talking over $83,000 lost due to low rents!

However, it also depends on your motivation/needs. If you're comfortable leaving all that money on the table, there is nothing "wrong" with that. Lastly, if you think the above numbers are worth the "Hassle-Avoidance", then that is fair to you, just be aware of the true cost (and lost investment opportunity) of that tenant. 

Exactly, that was what I was referring to. If you withdraw $133,600/yr you'll have nothing left if you had been keeping the money under your mattress. 

In the stock market, it is highly likely that not only will you be able to withdraw the $133k each year, but you'll also be able to withdraw more (in $ amount) each year as your nest egg rises in value.

This isn't accurate.

Raising the rent is the wise choice, I would personally go to $800 if that is what the going rate is, however, you may choose to go to $750 to match the other unit (if comparable quality). The Tenant may move if they get upset, however, when they go to look for a new place they are likely to only find places for $800, as long as they aren't more modern than yours, there is no reason to leave.

When I bought my first place, it was a 6-unit multi-family, going rates are about $475 to $500 in my area and an old lady that has been there for 40+ years was paying $305. After buying the place I raised the rent 2 months later from $305 to $485. She said "I understand". No fuss at all. The natural reaction to a rent raise is to be unhappy, however if the tenant knows they've been "getting away with it" for a while, they may not really get upset, even if they show disapproval. 

You aren't gouging if you bring your rents to market. As above, I didn't take advantage of the older lady and raise her rent to $600, because she is unlikely to move, I simply provided a "fair" price for both parties.