All Forum Posts by: Terra Padgett

Our insurance has basically doubled across the board over the last four years or so. Taxes have been fairly stable. 

Started shopping around for insurance more than I usually would and have found some HUGE differences in premiums that I didn't realize were possible. Slowly moving polices over to new providers now. 

Of course, screening tenants thoroughly and maintaining properties proactively helps keep our costs low too, so we are doing more preventative maintenance than we used to. 

Insurance has been the biggest jump for me with taxes right behind it - especially taxes here in illinois.  Other areas like tennessee the property taxes are so nominal that a 10% increase would be like 100 bump a year if not less so that one is very market specific.  Here in illinois, a typical tax bill for a 200k house is 6k.  So a 10% increase is 50/month in expenses. Its tough here.

But here's the other thing. Our expenses going up do not equate to the ability to raise rents.  thats not how it works.  Rents are driven by supply and demand and by the ability of renters in that market to afford the rents.

Its much like someone that over-rehabs a house and then says that they need to sell the house for 20k more because thats how much they went over budget.  The market is what the market is so that 20k more is a loss.  

We can't raise our rents just because our expenses went up.  Much like we were able to raise our rents significantly over the last few years (far more than our expenses went up during that time) because the market allowed us to.

A number of investors in Texas have experienced the taxes going up faster than any rental increases could keep up. I’m not going to do a spreadsheet to prove my point, but there are some ambitious investors that might just provide ones for you. :-)

Right now I'd take the cash because I could allocate that to pay off high interest debt or I could use it to buy undervalued properties that could double the money and create some cash flow.

There’s more people that are equity rich and cash poor than you might realize. An (skilled) active investor could actually take one million in cash and turn it into  5-10 million in equity. 

Not sure I know what I will do with a million dollars in cash, so equity for me. Unless deployed thoughtfully, cash may end up in the dead money pool where it losses its value every day or is horridly invested in an instrument that may go south. So, equity in a great business will be my take unless?

Terra, are you stirring up trouble again after your 7 streams of income? Lol. Cash, all day long.

 It's more if I had time. Then probably invest in technology that can disrupt the archaic aspects of this business plus add analysis for all types of homeowners, and products for home services. 

This industry desperately needs disruption.