Do you know anyone who owns 100+ SFH rental houses?
I’ve heard of several people who have done this, but I don’t know any of these people personally. Specifically…
- About a year ago I read an article in a business magazine about a guy [around Denver I think?] who has over 1000 houses. He has investors in his business, though.
- I read an article on here about someone who supposedly has 85+ homes he purchased through the HUD/VA foreclosure process; thats not quite 100, but pretty close
- John W. Schaub [a real real estate guru, not someone like Robert Allen, Carleton Sheets, etc] mentions in his book “Building Wealth One House at a Time: Making it Big on Little Deals” about how some of his students have purchased just a few houses, while some have purchased hundreds
I’d like to hear of any other SFH success stories from you guys out there…anyone you know? Or know of? Or did you do it yourself?
i have 100 homes in monopoly
Yep. A very good friend of mine has over 100. He has been very disciplined about buying only positively cashflowing property. The more he buys, the more what he buys allows him to continue buying.
Since you seem to be in the business of selling long distance rentals, why not post the numbers of some properties that you are currently offering. I’m interested in Purchase Price, Gross Rents, Operating Expenses, and Cash Flow.
If this can be done turnkey and all I have to do is sit back and collect the rent, I’ll take 50 or maybe 100! Let’s see the numbers. I’d also like to know about your experience managing long distance rentals.
Here is one:
Gross Operating Income: $12,000
Mortgage Payment: $4,699
RE Taxes: $1,392
Property Insurance: $1,000
Property Management: $1,200
Total Expenses: $8,291
Cash Flow: $3,709
Cash On Cash Return: 23.90%
This assumes a purchse price of $70K and 20% down.
Not a whole lot left over for vacany, repairs, etc.
Here’s the way I see this deal with the real world expenses:
Gross rents: $1,000
Operating Expenses (in the real world): $500
Mortgage payment ($70,000, 30 yr. 7.3%): $480
Cash Flow: $20 per month or $10 per unit per month OUCH!
However, this is one UGLY property and almost certainly needs a rehab. If I’m reading this form right, the units are vacant and listed as fair condition. So, by the time you rehab these units, this would really be a negative cash flow property. OUCH!
So much for turnkey long distance investing, at least on this deal!!!
I think the main reason investors DO NOT own 100 single family homes is with that kind of portfolio it would be 100 times easier to just move into commercial properties with triple net leases. Think about it…
Even with professional management the cost of owning, renting, and maintaining 100 single family homes would be substantially more work than consolidating that real estate into a few commercial buildings at triple net. With the triple net lease the leasee pays…
The property taxes
and in some cases the insurance
Consolidated into 3 or 4 buildings in one geographical area like say a office park, your on the golf course, beach, boat, where ever you want to be.
Even with professional management you’re still getting called to OK repairs on those 100 houses. No thanks. I’ve done both. (not even close to 100) I’ll take the triple net commercial anyday.
There is no reason why you could not do a triple net lease with a residential tenant as well.
My first question is, am I on the right track so far???
I disagree with that. State laws in many states (including Ohio) require the owner to do certain things including maintaining the property to a certain standard. Commercial leases are different because the tenant is considered by the law to be more sophistocated.
That’s true, Mike, but the law only says that it’s the owner’s responsiblity to insure that the property is maintained. It does NOT stipulate that the owner must incur the expenses to do so.
Even if you wanted to keep all/part of the maintenance expenses to yourself, you could still net lease out the rest, if desired.
Legally there is absolutely no comparison as far as aggravation goes when comparing commercial to residential property.
When your renting or leasing a “home” to someone the rights they have FAR, FAR out weigh the rights commercial renters have. In my state there is no way to triple net a residential home. I’ve rented both, believe me, my commercial buildings are the easiest leases I have EVER had. These are businesses, established businesses, THEY PAY! They pay because the location is great! If they don’t, their out and I literally have a waiting list.
What do you mean by triple net? Never heard this term before.
From the glossary on this site:
Triple Net Lease - lease in which the tenant is to pay all operating expenses of the property so that the landlord receives net rent, frequently used to mean tenant pays taxes, insurance, and maintenance in addition to normal operating expenses
That's true, Mike, but the law only says that it's the owner's responsiblity to insure that the property is maintained. It does NOT stipulate that the owner must incur the expenses to do so.
This is the text from the Ohio tenant landlord law:
The landlord shall:
“(2) Make all repairs and do whatever is reasonably necessary to put and keep the premises in a fit and habitable condition;”
That doesn’t seem ambigious to me.
I can just hear your 100 tenants glee when you explain that not only do they pay rent, they’re also responsible for ALL maintainance and repairs, oh, and when the real estate taxes come due? yep, you pay that too. And just to be fair why don’t you pick up the tab on that pesky insurance. And last but not least YOU OWN NOTHING!!!
Raj, you find me some people willing to rent single family homes under those conditions, I’ll pay you a finders fee that will blow your mind.
It ain’t happening, that’s why it isn’t done. Who in their right mind who agree to it. The only reason it’s done in commercial real estate is for tax reasons. The business can write down those costs. Renters, unless their growing something funny in your basement, are not using the property to generate business or income.
Folks it all boils down to this. You can write whate ever you want in your lease. But when you get to the court room its all a matter of how the judge feels about the intention and the legality of what is on that paper. And believe me just because its legal doesnt mean squat if the judge doesnt like it.
I’ve got 55 SFHs all within a 5 mile radius in TX. Looking to grow to 100+.
I own 9 :biggrin. I have one friend that owns 78, one friend that owns 52, and one friend that owns 72.
having a triple net lease with a single family would be a nightmare,you have to make sure the insurance coverage is right, and keep up to date, make sure taxes are paid/protested etc…just escrow the taxes and insurance, and I don’t even want most of my tenants to do maintenance, talk about things either not being done or not done right.
Commercial property is easier to manage if you do a triple net lease, but in most cases the returns you get from single family will be better, paying you for your trouble (or just hire a management company, but then that eat into your return
I know (more know of) someone with about 85 single family,but he has partners in most of the deals
I had 52 at one point and I really hated them all to be honest… Now I am happy to only have 11 (Free and Clear) I think we are missing the point on the topic here. I would rather have 11 that are free and Clear then to have 52 at 80% and not really cash flowing. I remember when a heard a Tornado Siren I would fall to my knees and just pray that it would jump from one of my houses to another and take them all out. I have never read a post of do you know anyone that has 100+ Children. Having rentals (Even if you have a GREAT property manager) Is like have 100+ Children sure you can take the to Daycare (Property Manager) yet why would you really want them? Cash Flow is king and if you would have asked me about this 8 years ago I would have been wanting 100+ Now I really don’t even want the 11 I have I just enjoy the cash flow on them. And When (IF) the Market gets better I promise you I will not own a house. I will even sell my own and rent a one bedroom condo. Personally I love my life now more then I did then I bought them all at a good LTV and sold them right before the crash. Now I buy a NOTE and hold it for 20-30 minutes and make more then I did as a Land Lord that’s for sure. OWN NOTHING CONTROL EVERYTHING… And retire happy and young not old and in debt…