All Forum Posts by: Rusty Thompson

Well done sir

That is a question that I have struggled with myself over the last 3 years. To raise rent or not to raise rent. 

Advantages to raising rent: Rent keeps up with inflation, expenses don't out pace CF. 

Disadvantages to raising rent: higher turn over, increased turnover costs including remodeling to keep the from looking dated. 

So if you took the amount shown above and divided it across 15 years you get a average of 18$ a month. which gives you a increase of 216$ a year. Over the last 15 years you would have realized a extra profit of  25920. Assuming that the tenant was ok with those increases then no problem. You just made a nice chunk of money. 

No lets assume that because of your rent increase policies you realize a higher turnover rate. With one month vacancy & "freshening" costs. To keep the math easy, lets say it costs you on average 6k. As long as you expected less than 4 turnovers in 15 years then I would say have at. But if you expected more turnovers than that then I would say not to do it.

I personally have only raised rents upon turnover. 

Someone should probably do a study to see which has made the most sense historically. 

Few things come to mind. 

First, are you working with a agent who is experienced working with investors? 

What kind of perpetuity are you looking for. SFR, Multi under 4, Large Multi?

Are you looking for Turn key or something in need of Rehab?

In my area most of the really good deals don't last much longer than a couple hours on the MLS. From my experience it seems that they go to someones who have a inside track. If it was a perfect world, then all properties would be equally available to everyone, but that just isn't the case. Once I know exactly what you are looking for I might be able to offer advice.

Work truck, but its my only car so not a lot of choices

I've watched the same thing happen. Property listed for 120k I offered 110k. They wouldn't budge so I got wrapped up in another deal. They eventually accepted 100k. Lost 10k chasing a illusionary 10k that never existed.

@Account Closed Brings ups a great point I wish I had mentioned. When I am looking for financing I always run the numbers between a 15 & a 30. If the payment is close enough I would go with a 15. Just hasn't ever happened

It's the argument of security vrs. risk. a payed of rental has more security, but the returns are low. A highly leveraged property is less secure, but can give the greatest return on investment. Its is your place to decide at what place you are most comfortable. I personally prefer to keep my properties financed at aprox 50% LTV. If one is paid off I would get a HELOC to get access to that equity. So I can reinvest that in other investments. But it is all about math. Right now re-investing in RE is giving me a great return on investment. That may not always be the case.

Moving from Hawaii to Portland OR might be a bit of shock. We average about 150 days of rain. It's something you get used to over time, but a lot of people deal with SAD (seasonally aggravated depression) because of it. The Portland market is also pretty hot. I would be surprised if you find any deals with a ARV bellow 200k is pretty rare. That being said, if you decide that you want to move out here there are a lot of locations outside of Portland worth investing in. I invest down in Salem (30minutes south) and do fairly well.

See if they will consider owner financing them. Since they are 4-plexs I think you would have to either find a portfolio lender who will give you a blanket on all 3, or get 3 conventional loans. Which would be prohibitively expensive.

I don't know if I would consider the number of properties equaling success as a investor. You could have 100 cash flow negative properties and a high paying w-2 to make up for the shortages each month. Hoping that appreciation will eventually cash you out. Or you could be a person who picks up a killer deal every couple years with just a few properties that is making awesome cashflow. I think a lot of investors us the # of properties they own as a marker of their self worth, no matter how good or bad those investments might be.