Investing in Real Estate

[Sheherezade]

Does anyone do it? By choice? This is the kind of thread that I hate starting because as a resident spouse this would have been far from possible financially to consider whimsically. We did manage a rental house for a few years because we ended up owning two during one of our moves. The rental income was helpful to offset some of our fellowship years poverty, but it was a PITA.

I'm considering looking at some properties near Case Western here in Cleveland that are two apartment buildings. One up, one down. My daughter takes music lessons in the area and I realized that a lot of the houses are for sale and killing time on Realtor.com told me that they are actually pretty cheap. We have 7 more years on our own mortgage here and we still have consolidated med school debt (at 2.7%) that we don't intend to pay off quickly, we are just going to pay it on schedule.

Crazy? Or crazy like a financially savvy fox?

(I'd rather by a cool vacation home, but frankly, those are much more costly to consider.)

[Deebs]

Talk about crazy - we're in the process of buying a foreclosure on Bell. It's a price that DH and I feel comfortable that if we hate renting it, we can sell, once it's rehabbed a bit. I have an uncle who owns his own business but also four rental homes. He said the rental income paid for all three of my cousins' college tuitions and weddings. Here's hoping!


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[Sheherezade]

Is it the one near me?? (There is a house down the street that's bee for sale for years and is now in foreclosure.)

I was thinking the student and resident population down near the university would make the turnover in the apartments easier. I see a lot of white coats going in and out of the doorways on the street we are considering.

[OrionGrad]

Owning a rental property or two has always been a pipe dream for me, once training is over and we're more settled down. I hope you'll keep us all updated on the process, progress, etc. if you decide to move forward with it.

[diggitydot]

I've got one for less than $150K if anyone wants to buy it.

[Deebs]

A- I think that would be a good rental area. The house is across from SR police station.


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[Sheherezade]

Ah. Other end of Bell. Well, you've got the whole "good school district" going for you. I know a lot of people that have trouble finding rentals in this town. You should be in a good market.

[spotty_dog]

I have enough on my plate and no desire to be a landlord. The subprime crisis is still a little fresh for me to hang a lot of hopes on property values appreciating over time. Owning property near your primary home puts a lot of faith in one geographic location's real estate market. Owning it far from your primary home is not the most efficient way to manage the rental. Real estate is very illiquid, and you run the risk of being forced to sell low if/when you find yourself in need of the cash. So I guess I see a lot of downsides.

I've determined that about 3.5% of our investment portfolio can/should be in real estate investments, for diversification purposes. Sadly, our portfolio is not of a size that 3.5% of it buys a diversified selection of property types and locations with us as the primary owners. So I invest that portion of our accounts with TIAA-CREF's Real Estate Account, making me part-owner of 107 properties across the country and internationally, as well as a few mortgages. (This account is unique to TIAA, and not really equivalent to your typical REIT.)

I don't consider our primary home to be an investment, but rather a prepaid living expense. And I don't consider our timeshare to be an investment, but rather a recreation expense. If we're lucky we'll get our purchase price back when we're done with it, but I'm not holding my breath and the cost was inconsequential enough that it won't hurt our bottom line even if we some day just walk away from it.

[Deebs]

Our primary home isn't an investment.
A- I'm hoping that the school district is what will make it appealing, and it's why we decided to go for it. I know a couple recent divorcees who were looking for rentals in the district and there weren't any. Heck, we looked for a rental when we moved here - none available. Heck, the lot alone is worth $50-60K. I would only go into this very comfortable that we have many options when all's said and done.

[ides]

We don't want to do real estate per say but we are thinking about buying some cheap consecutive lots in an area we think is up and coming and close to downtown and holding onto it to either later sell or build on.

[BonBon]

This is something we've toyed with for many years, mostly because I like to tinker with stuff and it would fulfill my desire to spruce up a dump. I doubt it will ever happen though. I can barely deal with my own home crises let alone getting tenant calls about pipes bursting, etc.

[poky]

Angie, our landlord has 4-5 single-family homes in UH that they bought in the last few years for cheap, fixed up, and rent out. They set up a company to run everything through. I think they still actually live in the Cincinnati area, but they always seem to have someone local to call to fix whatever goes wrong. I could point you in their direction if you wanted to ask them about their experience.

[metroguy]

not sure what kind of experience you're looking for.. i have always hate HATED being an landlord--and here i am--one of them.
i used to own rental apt building in a so so neighborhood (now it's trendy).. it cause me so much grief, i sold it at near break even 4 yrs later. if i wait a few more months, i could have make 100k.
also own another smaller rental house that i lived in. that's ok. it cause me some grief but i have jack up the rent 25% in the last 3 yrs (and put up 30 to 40k in renovation cost). rental prices increase a lot in my area.

[The White Coat Investor]

Real estate is a viable investment, unfortunately with many characteristics of a second job. I think if you really want to do well at it (and that means as well or better than you could do putting your money into boring old index funds), you need to really spend some time both educating yourself and working on it. "Tinkering" and "toying" is probably not a great idea.

[Deebs]

I have to update. DH and I closed in March on a reverse mortgage foreclosure (the house I had mentioned). We ended up hiring a contractor to do most of the reno, and after having it listed in the rental market for a week, it is rented, starting in July, for more than double the mortgage payment. I am happy! Our plan is to pay the mortgage off quickly and just take in the income completely. Yay!


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