Rent or buy?

[RickTheToad]

Yikes. @RickTheToad what say you?



Primary residence yes, not good. However, there are some decent owner occupied programs right now.

Not in CT/NY/NJ/ I consistently raise the rents at least 3% each year. This offsets the prop. tax increase, BS tenant calls, and expenses. My costs do not really go up 3% a year, however, I try to keep it at market. I purchased three MF homes during the pandemic. If the deal works, go for it. I try to find homes which need a little work and then offer a fair price. I've not purchased anything in 2 years, as the prices are just too high with the current interest rates. I also only purchase 3 units are higher. In NJ or NJ, it would have to be a 3 unit, as 4 or more could trigger rent control (Jersey City, Hoboken, etc.). Connecticut isn't bad for rentals either; outside of Blackrock.

I used to buy the building and live in one unit for a year to get better rates, then move into my next one. That's the requirement from Fannie and Freddie.

When Republic Bank was around, they offered some good rates. However, since they are gone, hard to find some decent rates. As rates continue to go up, I will see if any itchy owners would hold paper at 5%. Then it would make sense for me. 7%+, no thanks. I get 5% worry free on my cash each month now from SPAXX.

 

[RickTheToad]

Renting and buying in the north east is about the same sans the down payment. Most people do not have the down payment for the mortgage; thus they are forced to rent. The more they make, the less they keep. Example, My GF makes significantly more than me on paper, however, since she's in a higher tax bracket, we earn about 800 difference net in salaries. We had this conversation the other day since we had a double date with another couple. The wife, I'm friends with both, asked me some ideas on how she can make more money with her degree (she's a doc). I suggested some ways, but the husband kept on saying it won't work. I said it does, because I did it.

On the drive back, my GF asked what I thought the big issue was. I said, he's old school and it may hurt his ego if she made more than him. She then asked, if it would hurt mine if she made more than me. I clearly smiled and said, respectfully, you will never earn more than me due to my real estate holdings. However, if you made more money then me, it wouldn't bother me a bit.

There in lies the problem. On paper, through a w-2, yes she would make more than me. However, I have significantly more in savings, credit lines, no debt other than mortgages, and 8 figures worth of real estate. She still, after earning 150k plus every year, doesn't have a down payment for a home. And there is the problem. People cannot afford the 20% down. We will turn into a renters nation. It's just a matter of time.

 

[RickTheToad]

If you have a tolerance for risk and choose wisely, the stock market would BLOW away real estate. If I had put my money into stocks 15 years ago, the right stocks, I'd be worth 100+ million now. RE is SLOW money, but safer...much safer and I'm risk averse. And being a landlord is NOT for everyone. I've met TONS of people who tried it and went bankrupt. One of my tenants actually tried to make it as a landlord and lost everything. This is not a game for the faint of heart. You're taking on a lot of debt, need to manage legal issues and liars, idiots, and other problems like eviction moratoriums that are unjust.

Oh yea, one person said she was leaving, so her lease ended, she didn't move out. She said may be in July or August; I had my attorney serve her the next day. She was gone at the end of the month. You need to be fair with them, but cannot allow them to run the show.

 

[RickTheToad]

The fvck? No way. RE is more profitable by a mile.

Depends. Timing has to do a lot with it. If you bought a sh!t ton of either in 2009/2010, you'd be sitting on tens of millions of profits. Unfortunately, most didn't; me included.

 

[RickTheToad]

Most of my houses rent for less than it costs me to own them. The rent barely covers the mortgage unless I bought them long ago and never took money out. Then I have to factor in vacancy, repairs, capex, etc. Add to that that I have hundreds of thousands of dollars of down payment money sitting in each of them that could be making me much more money in the stock market, in the short term it's not worth it. As I said before though, it's much less risky than the stock market and over time the tables turn in the landlords favor.

Need to look at your numbers dude. Are these MF's or SF? If MF, if I do not NET 600 a unit; I pass. Not worth my time. All my buildings are profitable from day one. A lot of the repairs I do myself. However, I have a team for maintenance which I give them so much work; I get some decent prices. Need to look and see what's a miss with your P & L? Are you in crappy C and D areas?

 

[Slowhandluke]

We will turn into a renters nation. It's just a matter of time.

Too much land. It wouldn't happen. Also, you can always build up -- higher and higher.. more and more floors of condos NOT to mention, the USA has a lot of land and the population isn't increasing very fast and I think it's actually slowing down.

In any case, whatever.. Just only 70 years ago, people said Florida "swamp" land was worthless and would never amount to anything. They also said Texas was too hot and there wouldn't be a lot of people living there. Now we have AC and various ways to control the swamps and manage the land. There will always be change an innovation. Hell, California use to be the place where people flocked too... not anymore.

 

[RickTheToad]

Too much land. It wouldn't happen. Also, you can always build up -- higher and higher.. more and more floors of condos NOT to mention, the USA has a lot of land and the population isn't increasing very fast and I think it's actually slowing down.

In any case, whatever.. Just only 70 years ago, people said Florida "swamp" land was worthless and would never amount to anything. They also said Texas was too hot and there wouldn't be a lot of people living there. Now we have AC and various ways to control the swamps and manage the land. There will always be change an innovation. Hell, California use to be the place where people flocked too... not anymore.

Not much land not built on in the North East or SoCal; hence the reason why the real estate market continues to climb. Looking for a home in suburban NY, NJ or CT? Good luck. There are still over ask offers and bidding wars with rates at 7%.

 

[EyeBRollin]

Not much land not built on in the North East or SoCal; hence the reason why the real estate market continues to climb. Looking for a home in suburban NY, NJ or CT? Good luck. There are still over ask offers and bidding wars with rates at 7%.

Can confirm. Every time I look at a place, it is sold less than 72 hours later. And above asking price. Some of the stuff is fvcking garbage too.

 

[Slowhandluke]

Can confirm. Every time I look at a place, it is sold less than 72 hours later. And above asking price. Some of the stuff is fvcking garbage too.

Why are looking to buy garbage?

 

[EyeBRollin]

Why are looking to buy garbage?

Not. I notice that even the garbage is selling like hotcakes.

 

[Slowhandluke]

Not. I notice that even the garbage is selling like hotcakes.

At one point in time, in japan, you could buy used women underwear from vending machines. Ehhhh... I just don't care... People can buy garbage.. whatever...

 

[RickTheToad]

Can confirm. Every time I look at a place, it is sold less than 72 hours later. And above asking price. Some of the stuff is fvcking garbage too.

Renters will still pay it since there's nothing out there. It's batsh!t crazy. Prob. wise to stay out of the Oranges (west okay), Newark, and Irvington

 

[The Duke]

I bought my first house for $145k and It was brand new. I did all the landscaping, improvements, remodeling myself. Spent very little. 15yrs later I sold it for $460k. My payment increased from $950 to $1300 over the years due to property tax increases. But My payment didn't go up as fast as rents did. I also deducted all the loan interest. Typically where you come out ahead on ownership is on the appreciation. You can put money in a landlords pocket or your own.

I took the money I made, rolled it into a new place I built. Spent $850k building it. 2yrs later I could sell if or $1.2M. I project it will double in value in 8 more years.

When you lose money owning vs renting is when you buy when the price is too high, and sell when low, spend too much remodeling, or stay less than 5yrs or so.

As far as rental houses and commercial real estate go, the others that actually do it and have shared their insight are right on the money.

Best way to be successful in real estate is come to the table well financed, do as much work as possible yourself, time the market right.

And yep you get calls all the time when you are a landlord. I've spent more than a few Saturday nites boarding up a commercial building because some dumb azz drove thru it. Boarded one up when a tornado tried to destroy it. I've spent all nite mopping up a flooded property because a pipe broke. Cancelled several social engagements and a few trips to make emergency repairs.

And if you think landlords are rolling in cash you are sadly mistaken. There isn't a lot left over when you pay taxes, loan payments, insurance, and keep those air conditioners running. And not to mention set money aside to remodel and replace $10-15k a/c systems every 15yrs.

The money is in the long run. And you don't get to see it until you sell.