All Forum Posts by: Terra Padgett

Look into secondary and tertiary markets to the main city. Like the outskirts of Colorado or some other city you may be considering. If they're drivable and relatively easy access to the same type of amenities (grocery, restaurants, entertainment) that the main city has, then you'll likely get better bang for your buck both from a purchase price and operating cash flows perspective. 

Look into "house hacking" if you need a lower down payment percentage. Live in one unit and then rent out the other units as LTRs, STRs, or even PadSplits. Stay a year a two and then move out and put your unit up for rent as well....Also, if you have older 401ks left with prior employers, see if you have enough in those to cover the down payment by doing a qualified rollover to a SoloK. Another option is to see if you can borrow the down payment from friends and family. If you're able to, pay them back with all proceeds first and fully before you pay yourself anything. 

It all certainly depends on your risk/reward tolerance. As someone in the insurance industry who's always thinking & discussing risks, I personally have found placing smaller amounts like $5k/$10k into deals via a group or an investment club as the best way to mitigate risk, earn higher than stock market returns, and still be passive in the investment. While all other factors matter in choosing what and where you invest in, it's a much easier pill to swallow putting $10k at risk versus $100k. 
I hate to hear your investment went south as it's not easy to accept losing any amount of money in an investment. However if you do decide to enter the passive REI space again, I encourage you to look for a group to be a part of to cut the check down to size.
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Quote from @Corby Goade:

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. 

Yes, as a license p&c insurance broker, shopping around for insurance is one of the best things you can do to help control those rising costs. It definitely takes more effort on your behalf to shop every year, but the savings can be well worth it; as you noted already. 

I'm in the Houston market and have a couple of condos and am experiencing the same thing. The HOA fees and special assessments have gotten out of control and there's very little you can do about it. And the condos don't appreciate anywhere near as well as the SFR. Along with a mix of other issues at the properties, I'm planning on selling as the juice isn't worth the squeeze.

Quote from @Mike H.:

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.

We can certainly raise our rents with increased expenses. The increases won’t be dollar for dollar or even more so won’t keep up with increased expenses, but as costs rise and margins continue to thin, rental increases will be inevitable. Unless of course the landlord is running a charitable house in lieu of a business. Lol 

Quote from @Joe S.:

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. :-)

I’ve seen Taxes increase, yes, but Insurance has been the biggest increase for my portfolio in recent years. Even with rental increases to help soften the blow, the increases certainly haven’t been able to keep up with expenses. 

All landlord expenses have certainly risen. Taxes, Insurance, HOA, etc. It's been estimated to be around a 20%+ increase in 2024 alone. So it's inevitable that rents will/would/should go up.

📌 How much have your expenses increased?

🖊️ Which expense has been the biggest jump?

✏️ What tips do you have for the community to help control or lower those expenses?

Quote from @Shiloh Lundahl:

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.

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Quote from @Joe S.:

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. 

That’s the thing about real estate; balancing your equity vs liquidity.