So yesterday I took another investor out to lunch to pick his brain and ask for some advice. This guy is like mike “property manager” on HGH. Real nice guy too.
Investing for 20 years and currently has 160 rental units!!! :shocked :shocked
Oddly enough, I’m starting to change some of my strategy after talking to him for a bit. I think after I flip a few and have a little reserves that I will pick up a few rentals on the cheap. I’m not all about being a landlord, but if it cash flows well and you can get it for half it’s real value - why not rent it for a few years and then sell if I don’t want it anymore? It’ll be worth more then and I’ll have made some on the monthly cash flow.
I’ve told friends that I NEVER wanted to be a landlord, but I think I see the bigger picture after spending a couple hours with that guy…
Rentals are a good part of an REI strategy. I recommend diversifying your portfolio among both buy & holds and flips. Both types will help you weather any phase of the market. Your new contact has a large enough portfolio that he’s likely not to hurt too bad when rates are low, ample credit is available and renters turn into buyers. At smaller quantities of rental properties, you definitely want to have more than one type of cash flow.
Also, if you aren’t into landlording personally but want to have a number of rentals, you’ll usually find that professional property managers offer price breaks when you have multiple properties with them to as little as 5-6% of collected rents. I’ve gotten breaks by placing as few as 2 rentals with a single manager.
His company manages a few of his friends properties too, and he says he actually has a waiting list for his rentals, so I know if I pick up a few and want his company to manage them that he would do it.
He agreed to fund any deals that I bring his way and only take a small portion of the profit too, which is great. It’s interesting how lunch with him changed my mind on the subject.
My parents invested only in rentals. At one time they had 58 SFR’s all rented and ALL PAID OFF! Now they maintain 12 for retirement income that brings in a steady $19K per month. I have seen the wisdom of buy and hold and rent out first hand.
Now, they have had a couple of property managment issues over the years, but in perspective with how much income they recieved from the monthly rent and then eventually the liquidation of the bulk of their portfolio after 20+ years, the issues seem paltry.
Diversification of your RE investments into rental properties is a wise course especially now. As mortgages are harder to obtain the pool of renters will rise, both in quantity and quality.
I hate rentals but have them. when I started out I never wanted a rental unit, just rehabs. Then I came across investors looking to liquidate their portfolios which is when I decided to hold some rentals.However I try to sell some after buying them cheap to make some quick money.
Over the last 4 yrs I have targeted real estate profolios where the investor usually has about 20-50 homes to sell and offer bulk price to buy it all. Usually they are selling b/c of age and just want out and own or very close to owning outright the homes so I can pick them up at 50-60% ARV.