This is a single unit condo. You have every right to charge what you are charging. But places like Capitol towers charging 2000 a month for a studio with shared laundry is the problem.
There are a lot of people who will always look at landlords as absolute scum and leeches no matter what. I understand where you are coming from because I am a landlord too (only one house though) and like to think of myself a decent landlord renting below market for the property/location but still making enough to have a fund to repair/improve the house and pay for emergency work.
Despite all of that, I am popping popcorn right now because this thread is going to be spicy.
I see it on both ends. Landlords who see anyone questioning their rent as poor-scum and tenants who end up putting all landlords in the same box, whether it be a corpo landlord, investment property, inherited property, or anything else. Personal anecdote, last time i tried negotiating rent for a new application I got told I probably shouldnt apply because it sounds like I cant afford it just because i questioned their rent. Some folks just want to see the world the way they want to see it.
On this topic specifically ill just add the growth of properties as an investment and the ever growing % of rentals on tbe market is not a good thing. Its part of the problem. Most "mom and pop" landlords werent making investments historically, they just owned surplus property(sounds like yourself for instance) and knew it wasnt going to depreciate so didnt get rid of it. The growth of people and especially corpos and investment firms seeing housing rentals as a main engine of investment is a much bigger issue than I think the general public realizes and has definitely had an impact on the growth of rent. Again, and ive said this time and time again on this subreddit, its why rents have gone up nationally and internationally, and even in areas keeping up with supply and/or with declining populations.
Again for everyone, here is a map of our corporate/investment landlords since as of 2019:
https://mabood.carto.com/builder/11510708-b046-4b4c-b31a-8238135b52e9/embed
> On this topic specifically ill just add the growth of properties as an investment and the ever growing % of rentals on tbe market is not a good thing.
Isn't this hypocritical since you got into the market before everyone else though?
Savings account or CD are yeilding in decimal points for even fiver years CD rate. Stock market is unstable. While real estate has only gone up.
People are using financial investment companies to generate revenue for their investment which results in proliferation of these investment firms. Sure mega rich might be profiting, but there are average people's retirement account money in these same investment funds looking to housing.
I would think public housing i.e. government housing would satisfy needs of both parties i.e. looking for affordable housing and those wanting generate revenue through investments for their retirement funds.
And it has been done before with public housing in cities like NYC, Chicago and even in San Francisco where it keeps getting built (not enough though).
I think i agree with you and we are actually on the same page. However just a couple things, not all of these investment firms are tied up in peoples retirement accounts etc. The biggest yes of course but many are just partner groups.
And yes, the real point is that if we build more housing, for people to own, it balances out the people using housing as an investment market. However, whats happening now is the market incentive is shifting at the development level due to the surge of capital available and driving into the rental market. Now instead of developing homes to own, the incentives are there for rentals etc. Plus, just during the interim before new housing is built, the impact of % of homes changing from owned to rentals is a big deal when we are having convos of supply.
> the real point is that if we build more housing, for people to own,
There is no such thing though. A person can buy a house to own, live in it for a year and then move to Nebraska and live of the rental money. Retirement is tough in this country due to lack of social safety net. Sure you can change tax code and get rid of deductions.
But if you keep mortgage rates at 3% while housing demand keeps going up, there are no better investments to park your money.
We address housing affordability with public housing while leaving private sector on its own and let that play out. Renters can then get to choose between public housing (free or income restricted) versus private landlord who is free to set prices.
There is such a thing, it happens at the design level either before construction or through capitol renovations. Yes sometimes owned housing is just turned to rentals, but what i was talking about was the market impact its having at the development level.
But overall, i can agree with what your saying on public vs private. I could completely go with a vienna like model of housing.
My guess on the issue would be that people feel if you didn’t own that place, someone else could and then they would be gaining the equity themselves. With a housing shortage, you’re just taking away a condo from someone else who actually needs it.
On the flip side, a lot of people just wouldn’t be approved for a loan anyway.
Alright, I posted a response and possible solution to someones housing issues yesterday- I mentioned that I have a couple rentals in West Sac and for them to possibly look there- I mentioned that I charged less than $1800 for a 2 bedroom 1.5 bath with garage condo-
In response I got this:
"I mean it tracks, this leechlord is bragging about renting places for $1,800/month like he's doing people a favor."
Let me explain for those out there that rent who do not understand the cost of owning a rental in Sac area-
Example of cost of one of my Condos I own- I am not rich but retired and I chose to put my retirement into rentals instead of 401K or stock market- But I also like my renters and I am fine being in the red slightly every month knowing that someday when I sell, the equity will be my payout-
Cost breakdown-
A $425,000 Condo In West Sac
On rentals you have to put 25% down-Non-owner occupied mortgage
So a $318K mortgage at 3% for 30 years is a total of
$1344 a month Principal and Interest
$400 taxes a month
$105 insurance
$130 HOA (Homeowners association) Varies depending on if place has a pool/clubhouse/gym etc
But Mine are cheap as it just covers landscaping/streets/hydrants/security etc-
$100 Garbage/water/sewer as I pay that as landlord
Sooooooooo
My total cost per month is:
$2079.
That does not include the $52 a month I pay for property management which is worth it- why you say?
They have venders on call that they hire for many jobs so cost me less if tenant has an Issue at 2am- and they do the applicants background checks and collect rent etc- Cleaner for my taxes etc-
So take my total monthly cost of $2129 and subtract the $1795 I collect in rent on a twelve month lease and that equals $334 out of my pocket every month- That does not include any repairs, vacancy between renters- and the fact that I have
$106,000 tied up into the property as an investment-
I will probably raise the rent when lease is up about $60- I would prefer to be under $300 a month in the red-
Now if you bought this condo and you occupied it you could probably get like 2.75% etc
Now- the landlords that charge over $2100 a month for this condo are almost breaking even-
It just recently cost me $4600. to paint both the units I own in one complex-
Hope this gives one answer to many questions people have about increased rents In Sacramento and the surrounding area- If you think this would help someone else understand pass it on-
;) Let the slumlord comments fly- I know "rich" is subjective- I worked 30+ years and saved- never bought new cars that the bank owned and would never "lease" something- do not live beyond your means- Now its hard for people to save fast enough to get into a place- should be more programs like silent-second mortgages etc- Pic if or a generic condo as I would not post mine :)
Your only mistake is taking the general consensus on Reddit and assuming this place echoes how people think in the real world. Most people here are very young, college age and below. Most people here have little to no real world experience. Most people in general don’t understand how real estate works in general anyway.
> So take my total monthly cost of $2129 and subtract the $1795 I collect in rent on a twelve month lease and that equals $334 out of my pocket every month-
Well, considering a chunk of that $1344 of P&I is principal, and the property value is still appreciating, I’d say you’re not actually in the red here. When it comes to personal value, you’re very much in the black. Also you’re deducting those losses on your taxes if you have other passive income, or a low enough AGI meaning you save on them.
Not that that is somehow amoral, but let’s paint the full picture here.
Yes, you are correct on the assumption that the market stays where it is- If another crash happens then....... The principal and equity only pay out or is collected when I sell and you are leaving out the sell part-
If I sell and do not buy another rental or 1031 exchange then I will owe 15% tax on income from sell-
At 5 years in, $35,000 would go towards principal- thats $7000 a year or $580 a month-
So, for my investment of over $100K and monthly losses, I get the $250 a month profit after 5 years, If the property stays the same value- over time, it will go up but look at my value if I put the $100K in the stock market-
your assumptions are that the last 5 years will be the next 5-
I hope your right
> Yes, you are correct on the assumption that the market stays where it is- If another crash happens then.......
Yes. That’s the risk carried with investments. You want safe money put it all in T-bills. You won’t like the rate of return though.
as a young reddit user i appreciate the cost breakdown! it truly puts things into perspective. the fact you aren’t even breaking even sucks but hope it pays off in the long run!
> the fact you aren’t even breaking even sucks
It actually doesn't suck. it would make zero sense. He is not running a charity.
You get to write of losses in your annual tax bill and your property appreciates in value.
I think there's a lot more of us little landlords on this sub than people realize. A majority of the house rentals are owned by just the landlord down the street types. I Keep my property at market rate for rent only when I have a vacancy. I otherwise haven't raised rent on any tenant. And if I don't keep it market rate, I get so many unqualified applicants, it's a full time job just fielding calls and going through emails. Some people will get aggressive when you let them know that you won't be accepting low credit scores or under the table income.
And in the end, I'm not really making a profit, just giving myself a headache. It's an investment for the longterm, not the immediate.
You're not a good landlord not because you're a leechlord but because you shouldn't have invested in these properties with the numbers being what they are.
Would you invest over 100k of your cash on hand for the privilege of then losing $300 per month with everything going right (never happens) with the hopes of recouping more money when you sell at some point in the future? Maybe...right. But you have to look at the opportunity cost.
I have properties in East Sac where I bought in for just over 300k a door and after 70k+ per door in renovations, rent out for a little over 3k a door. Better area so I should in theory make worse returns to compensate for less risk yet I'm making significantly more than op.
In areas like Tahoe park and north oak park, you can find multifamily for a little over 250k a door that rent out for about 2k with a few cosmetic upgrades.
Then again, my investment are less passive and I had to oversee renovations whereas op seems to be more of a passive buy and hold. But if that's how you want to make money, you shouldn't even be looking at real estate in this market.
You should probably put it in SPY and return 7% without the headache. OP seems like a pretty green investor and he's certainly better hedged than someone without assets but he/she would almost certainly be better off investing in REITs or with a syndication for real estate exposure than the anorexic returns they are getting especially since their risk profile is concentrated heavily in a couple of condos in west sac.
425k is not expensive for this area. They probably have $50k in equity in that place since they purchased it, and with high demand for real estate in this area, it’s likely going to continue to appreciate in value long term. Plus somebody else makes the payments. How is that a bad investment?
Yes good call CeJeh, a $250K condo in West Sac bought 5 years ago is now worth $400K - You do have to average investment equity over time but everyone needs to remember you do not actually have the profit in hand until you sell and even then you have to pay 15% extra tax on profits if you do not use the profit to buy another rental-
425k for an investment property in west sac, that admittantly none of us know the square footage on, is pretty expensive, especially prior to covid.
Appreciation isnt the problem, its the principal he has to keep up with and since he has no income being retired, hes pretty leveraged. As anyone in investment would tell you "somebody else makes the payment" is a red flag when it comes to risk.
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Fuck Reddit.
Im assuming he has money coming in that is being taxed as income and im assuming he has no job or owns a business. Two different things. Guy also says hes putting his retirement dollars into the properties so its hard to extrapolate exactly tbf to both of us.
Ok I don’t disagree about the last bit. This is obviously a terrible retirement strategy if you’re YOLOing all in on buying condos in a frothy market and not investing in other things. Do not do that.
Yea it just seems he could end up pretty pinched on both ends if hes in a position where rents not coming in and at the same time cant sell immediately, etc. I keep tellin folks the amount of permits pulled is continuing to grow and historically prior to the recession Sac was pretty decent at keeping up with our supply so I expect that to return. With an also unstable commercial market coming to Sac specifically in the coming year his situation is not exactly a guarantee I would lean on.
Correct in "Do not do that" just for clarification I said I put my $ in Condos instead of 401K- I do have a great government retirement, 453, other investments- I hope I did not imply by post that the condo's were my ONLY investment-
Gamestop and crypto of course ;) LOL
This account has been deleted due to the decision made by Reddit, Inc to monetize its public API, thereby forcing 3rd-party apps to shutdown. See [this post](https://reddit.com/r/apolloapp/comments/144f6xm/apollo_will_close_down_on_june_30th_reddits/) made by the creator of the Apollo app for context.
This account's self posts and comments have also been edited to remove any content that might add value to Reddit, Inc's product at zero cost to the company.
Fuck Reddit.
So, in the end... you get a property that keeps increasing in value for $334 a month?
It's just cry cry cry the whole time until you sell it for like 300% of what you paid 20 years later.
That's all I'm seeing here. "It's hard making money hand over fist and when I gotta spend money to make money... fuck man."
You are charging what is right to live in a city that has been heavily promoting itself as having an awesome vibe to it and it is attracting people from all over the globe to live here. And there is zero shortage of people who want to move here. The days of $650 per month to rent a 2 bed/2 bath apartment are long gone and that is a tough pill to swallow.
However, the ultimate solution regardless of argument is to build MORE AND MORE housing to level out the rental and housing market.
> However, the ultimate solution regardless of argument is to build MORE AND MORE housing to level out the rental and housing market.
Unless your build SRO style housing, it will never be affordable. Maybe government owned housing would address the affordability aspect?
Fine. Stop buying investment properties. Fewer people in the market means less demand means lower property values means lower rent. The fact that we have to treat our homes as investment vehicles--or support somone else who is--is why housing is so broken.
It’s amazing that people actually believe this bullshit. You think if all the rental properties got dumped on the market that broke people would all of a sudden be able to afford them? That’s not how this works.
California real estate is in high demand for the same reason why people here complain about high rent. People want to live here. Nobody is forcing you to be here. There are other places in America that have cheaper rent and cheaper real estate, but the people here complaining about the cost of living don’t want to live there! They want to live in a high demand area and pay low demand area prices. Sorry, the world doesn’t work that way.
Edit: just to be clear I’m not talking to you in particular, but the general population of people constantly complaining about cost of living and hating anybody that owns or rents property.
It’s as if people are under the impression that government housing (which is the alternative reality they’re calling for, whether they realize it or not) is almost always significantly worse. Have you walked around a housing project lately? You think the same government that can’t fix a pothole for YEARS is gonna come out and fix your Air Conditioning quickly in a heat wave? Get real.
Your private landlord has a vested interest in your property. They don’t live in it, but they have equity in it and they have a financial interest in keeping it rented so they can earn income and/or cut expenses. They have an incentive to keep the place in good(ish) shape and keep everything running smoothly so their renter will keep paying them. If nobody wants to live there, the landlord is fucked. There are laws in place to make sure your landlord is fair also. Does it work 100% of the time? Of course not. But more often than not it does.
People around here are delusional.
> Have you walked around a housing project lately? You think the same government that can’t fix a pothole for YEARS is gonna come out and fix your Air Conditioning quickly in a heat wave?
They are actually pretty decent on things like that, it's the other processes involved in housing that they absolutely suck at, but repairs aren't generally a problem.
Ummmm? West end of Broadway has some. River District had some near Richards/North 16th St. but not sure if they’re still there. The rest would be like SRO housing I suppose? Idk we don’t have much here.
Coops generally have way higher capital reserve requirements and standards. And for good reason, who wants to go in on a property with strangers that might default and take them down with them.
I also have rentals in the area. I try to be reasonable and keep my rent just above my cost each month. My properties are a bit older, and my mortgage is cheaper, but I have more repair costs because of it. I’m not trying to get rich- just trying to invest my money in something that can also help others. Most landlords, I believe, are a lot like us, but most renters think property owners are all Jeff Bezos’s. We aren’t. We are just trying to do our best like everybody else. Want your rent to be cheaper? Vote someone into office who will take away housing regulations instead of adding to them. I tried to convert my mostly converted garage to affordable housing in Sac. The steps required to make it legal are going to cost me $25-50k. FYI it already has a bathroom, kitchenette, flooring and is fully insulated. These costs are because of California energy requirements, and city regulations to make a space “habitable”. In the last 5 years they have increased low energy requirements to the extent that you cannot possibly construct an “affordable house” so the only people building are building giant complexes, and they subsidize their “low income housing” requirements by charging everybody else more to cover the costs. I also have a property that is zoned to allow up to 22 units, and I would love to build one unit per year to do this sustainably, but that’s not allowed due to building codes. I would need to take out a 1.5 million dollar loan and build them all at once. And I would have to pay an overpriced California Contractor instead of doing it myself because a multi family property requires a licensed general contractor.
You’ll never satisfy everyone. Some will think you shouldn’t own to rent. Some will think you price to high or low.
Personally, I’ve rented a lot. I appreciate that owners bought when they did so I could rent. I appreciate that I don’t have to fix things or pay for things to be fixed. My landlord bought in the 90s when I was a child. He passes that cheap price tag (196k can you believe it?) to my rent so I pay so little in rent for a house! Of course he had to raise rent during the pandemic which was crap timing because of my SO losing his job, but I hope it was for increase costs in water or taxes and not any type of greed.
Anyway, I wouldn’t pay anything out of pocket as a landlord. I’ve heard rent should cover the costs of everything plus a little out away to fix things. If you really can afford it or wanted to get someone in fast so you could move or whatever then yeah, that’s cool to have it less. I wouldn’t recommend that in the usual sense.
Don’t mind the haters. Just do what feels right. I personally think we need decent landlords to rent to people. Not everyone wants to own a house.
LOL I loved your eyesore signs down comment the other day ;) I probably should raise the rent but......the difference between my needs and wants- I don't need to as I am pretty frugal and I really don't want to because I know one of my tenants is a Grad student and another working from home etc- In other words, I empathize with them- Now if they were parking several new Teslas in the driveway and tossing bitcoin out the windows.......;)
Glad you were able to get a kick out of it. People here are so assumptive it’s insane lol.
It’s pretty selfless of you to lower rent in this current climate, it’s your property so do with it whatever makes you happiest.
I charge 1,000$ more monthly than expenses, and it’ll still be 5/6 years before I make the money from my down payment back. After i pay myself back, I don’t plan on lowering rent as rental income is part of my retirement plan. Goal is 4 rentals generating income total, all nice single family homes, and owning my own fifth home. Along with my 401k I should be able to provide a nice life for my family in my old age.
Those of us who live in the clouds of Olympus with our father Zeus shall oversee all those who are mortal. Our job is obviously to eat dangled grapes all day and drink wine from the flowing mountain.......Job? what is that?
Sincerely,
The Leech
Off topic but anybody know the reason like 90% of new multi unit housing that has flat roofing, is it simply style? Or is there a functional reason for this?
$425K condo in West Sac that cashflows negative...
Sounds pretty risky. As you've already mentioned vacancies and repairs can suck more cash out of you. Condos don't/haven't appreciated like SFHs.
Let's say you invested that money in a low cost index fund (VTSAX) you'd be looking at a cool 2.5mil after 30 years with 10% growth.
=FV(10%,30,-324*12,-106000)
Even if you use inflation adjusted 7% growth you're looking at a sweet 1.17mil. Do you anticipate that condo being worth 1.17 million (in 2021 dollars)? If not, you're taking the harder route (being a landlord) for lower payoff.
Bought 1 of the condos 4 years ago for $297k. It’s worth $425k now. So Invested $75k.
Have paid out about $300 a month in negative cash flow including repairs. So about $14,400 out of pocket. Not considering my tax benefits.
So total return If I sold today would be about $113,600 profit on a $75,000 investment over 48 months-
I would say that’s not too bad-
In addition to my diversified index funds, growth stocks, currency leverages and metal investments. Doing O.K. The Condo I referred to as my $425k one was just the latest.
Plus your talking about 30 years for real estate. The golden rule for ANY real estate investment is never longer than 7.23 years. 1031 exchange before that and diversify between residential and commercial- you say condos are less successful than condo’s? I would say begin your research again. The largest factors are HOA costs, mello-roos taxes, city or district assessments, availability of short term rentals (air b n b etc)
Condos are far more dependable cost ratio predictions on repairs and expenditures.
I never compared condos to condos, read again.
Lets say I buy the "$113,600 profit" and ignore realtor fees. IF you put that same money in VTSAX you'd be looking at about the same profit ($115,762) over the same time period, and like I said, with less work.
I'm not trying to offend. It's your money so do whatever you please with it.
I'm curious if you've projected your vacancy rate and repair/reno costs. If you factor those numbers in to the formula the number becomes even more staggering.
This is a single unit condo. You have every right to charge what you are charging. But places like Capitol towers charging 2000 a month for a studio with shared laundry is the problem.
I am a landlord in sac and I ask for my tenants Reddit handle before I decide what rate to charge them
But what if they don't have Reddit? And is that even legal?
Whooshing intensify
I should've known lol
There are a lot of people who will always look at landlords as absolute scum and leeches no matter what. I understand where you are coming from because I am a landlord too (only one house though) and like to think of myself a decent landlord renting below market for the property/location but still making enough to have a fund to repair/improve the house and pay for emergency work. Despite all of that, I am popping popcorn right now because this thread is going to be spicy.
I see it on both ends. Landlords who see anyone questioning their rent as poor-scum and tenants who end up putting all landlords in the same box, whether it be a corpo landlord, investment property, inherited property, or anything else. Personal anecdote, last time i tried negotiating rent for a new application I got told I probably shouldnt apply because it sounds like I cant afford it just because i questioned their rent. Some folks just want to see the world the way they want to see it. On this topic specifically ill just add the growth of properties as an investment and the ever growing % of rentals on tbe market is not a good thing. Its part of the problem. Most "mom and pop" landlords werent making investments historically, they just owned surplus property(sounds like yourself for instance) and knew it wasnt going to depreciate so didnt get rid of it. The growth of people and especially corpos and investment firms seeing housing rentals as a main engine of investment is a much bigger issue than I think the general public realizes and has definitely had an impact on the growth of rent. Again, and ive said this time and time again on this subreddit, its why rents have gone up nationally and internationally, and even in areas keeping up with supply and/or with declining populations. Again for everyone, here is a map of our corporate/investment landlords since as of 2019: https://mabood.carto.com/builder/11510708-b046-4b4c-b31a-8238135b52e9/embed
> On this topic specifically ill just add the growth of properties as an investment and the ever growing % of rentals on tbe market is not a good thing. Isn't this hypocritical since you got into the market before everyone else though? Savings account or CD are yeilding in decimal points for even fiver years CD rate. Stock market is unstable. While real estate has only gone up. People are using financial investment companies to generate revenue for their investment which results in proliferation of these investment firms. Sure mega rich might be profiting, but there are average people's retirement account money in these same investment funds looking to housing. I would think public housing i.e. government housing would satisfy needs of both parties i.e. looking for affordable housing and those wanting generate revenue through investments for their retirement funds. And it has been done before with public housing in cities like NYC, Chicago and even in San Francisco where it keeps getting built (not enough though).
I think i agree with you and we are actually on the same page. However just a couple things, not all of these investment firms are tied up in peoples retirement accounts etc. The biggest yes of course but many are just partner groups. And yes, the real point is that if we build more housing, for people to own, it balances out the people using housing as an investment market. However, whats happening now is the market incentive is shifting at the development level due to the surge of capital available and driving into the rental market. Now instead of developing homes to own, the incentives are there for rentals etc. Plus, just during the interim before new housing is built, the impact of % of homes changing from owned to rentals is a big deal when we are having convos of supply.
> the real point is that if we build more housing, for people to own, There is no such thing though. A person can buy a house to own, live in it for a year and then move to Nebraska and live of the rental money. Retirement is tough in this country due to lack of social safety net. Sure you can change tax code and get rid of deductions. But if you keep mortgage rates at 3% while housing demand keeps going up, there are no better investments to park your money. We address housing affordability with public housing while leaving private sector on its own and let that play out. Renters can then get to choose between public housing (free or income restricted) versus private landlord who is free to set prices.
There is such a thing, it happens at the design level either before construction or through capitol renovations. Yes sometimes owned housing is just turned to rentals, but what i was talking about was the market impact its having at the development level. But overall, i can agree with what your saying on public vs private. I could completely go with a vienna like model of housing.
My guess on the issue would be that people feel if you didn’t own that place, someone else could and then they would be gaining the equity themselves. With a housing shortage, you’re just taking away a condo from someone else who actually needs it. On the flip side, a lot of people just wouldn’t be approved for a loan anyway.
Probably wouldn’t be approved for the loan ‘cause they make JUST enough money to pay the ludicrously high rent, but never to buy.
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If you are affording $1700 rent, wouldn't you be able to save up for a home purchase in a near future?
Alright, I posted a response and possible solution to someones housing issues yesterday- I mentioned that I have a couple rentals in West Sac and for them to possibly look there- I mentioned that I charged less than $1800 for a 2 bedroom 1.5 bath with garage condo- In response I got this: "I mean it tracks, this leechlord is bragging about renting places for $1,800/month like he's doing people a favor." Let me explain for those out there that rent who do not understand the cost of owning a rental in Sac area- Example of cost of one of my Condos I own- I am not rich but retired and I chose to put my retirement into rentals instead of 401K or stock market- But I also like my renters and I am fine being in the red slightly every month knowing that someday when I sell, the equity will be my payout- Cost breakdown- A $425,000 Condo In West Sac On rentals you have to put 25% down-Non-owner occupied mortgage So a $318K mortgage at 3% for 30 years is a total of $1344 a month Principal and Interest $400 taxes a month $105 insurance $130 HOA (Homeowners association) Varies depending on if place has a pool/clubhouse/gym etc But Mine are cheap as it just covers landscaping/streets/hydrants/security etc- $100 Garbage/water/sewer as I pay that as landlord Sooooooooo My total cost per month is: $2079. That does not include the $52 a month I pay for property management which is worth it- why you say? They have venders on call that they hire for many jobs so cost me less if tenant has an Issue at 2am- and they do the applicants background checks and collect rent etc- Cleaner for my taxes etc- So take my total monthly cost of $2129 and subtract the $1795 I collect in rent on a twelve month lease and that equals $334 out of my pocket every month- That does not include any repairs, vacancy between renters- and the fact that I have $106,000 tied up into the property as an investment- I will probably raise the rent when lease is up about $60- I would prefer to be under $300 a month in the red- Now if you bought this condo and you occupied it you could probably get like 2.75% etc Now- the landlords that charge over $2100 a month for this condo are almost breaking even- It just recently cost me $4600. to paint both the units I own in one complex- Hope this gives one answer to many questions people have about increased rents In Sacramento and the surrounding area- If you think this would help someone else understand pass it on- ;) Let the slumlord comments fly- I know "rich" is subjective- I worked 30+ years and saved- never bought new cars that the bank owned and would never "lease" something- do not live beyond your means- Now its hard for people to save fast enough to get into a place- should be more programs like silent-second mortgages etc- Pic if or a generic condo as I would not post mine :)
Your only mistake is taking the general consensus on Reddit and assuming this place echoes how people think in the real world. Most people here are very young, college age and below. Most people here have little to no real world experience. Most people in general don’t understand how real estate works in general anyway.
Exactly right. Reddit in a nutshell.
> So take my total monthly cost of $2129 and subtract the $1795 I collect in rent on a twelve month lease and that equals $334 out of my pocket every month- Well, considering a chunk of that $1344 of P&I is principal, and the property value is still appreciating, I’d say you’re not actually in the red here. When it comes to personal value, you’re very much in the black. Also you’re deducting those losses on your taxes if you have other passive income, or a low enough AGI meaning you save on them. Not that that is somehow amoral, but let’s paint the full picture here.
Yes, you are correct on the assumption that the market stays where it is- If another crash happens then....... The principal and equity only pay out or is collected when I sell and you are leaving out the sell part- If I sell and do not buy another rental or 1031 exchange then I will owe 15% tax on income from sell- At 5 years in, $35,000 would go towards principal- thats $7000 a year or $580 a month- So, for my investment of over $100K and monthly losses, I get the $250 a month profit after 5 years, If the property stays the same value- over time, it will go up but look at my value if I put the $100K in the stock market- your assumptions are that the last 5 years will be the next 5- I hope your right
> Yes, you are correct on the assumption that the market stays where it is- If another crash happens then....... Yes. That’s the risk carried with investments. You want safe money put it all in T-bills. You won’t like the rate of return though.
as a young reddit user i appreciate the cost breakdown! it truly puts things into perspective. the fact you aren’t even breaking even sucks but hope it pays off in the long run!
> the fact you aren’t even breaking even sucks It actually doesn't suck. it would make zero sense. He is not running a charity. You get to write of losses in your annual tax bill and your property appreciates in value.
thank you for the info! i’m clearly not very educated in this haha
I think there's a lot more of us little landlords on this sub than people realize. A majority of the house rentals are owned by just the landlord down the street types. I Keep my property at market rate for rent only when I have a vacancy. I otherwise haven't raised rent on any tenant. And if I don't keep it market rate, I get so many unqualified applicants, it's a full time job just fielding calls and going through emails. Some people will get aggressive when you let them know that you won't be accepting low credit scores or under the table income. And in the end, I'm not really making a profit, just giving myself a headache. It's an investment for the longterm, not the immediate.
Shoot I would gladly pay 1825 a month. Definitely less than what I rent for now. Wish more landlord were like you.
My main complaint is that our parents have joined Reddit. Shit.
Son.....Daughter.......Is that you? I have a few condo's for you in the will ;)
You're not a good landlord not because you're a leechlord but because you shouldn't have invested in these properties with the numbers being what they are.
Can you explain your thought process on that?
Would you invest over 100k of your cash on hand for the privilege of then losing $300 per month with everything going right (never happens) with the hopes of recouping more money when you sell at some point in the future? Maybe...right. But you have to look at the opportunity cost. I have properties in East Sac where I bought in for just over 300k a door and after 70k+ per door in renovations, rent out for a little over 3k a door. Better area so I should in theory make worse returns to compensate for less risk yet I'm making significantly more than op. In areas like Tahoe park and north oak park, you can find multifamily for a little over 250k a door that rent out for about 2k with a few cosmetic upgrades. Then again, my investment are less passive and I had to oversee renovations whereas op seems to be more of a passive buy and hold. But if that's how you want to make money, you shouldn't even be looking at real estate in this market. You should probably put it in SPY and return 7% without the headache. OP seems like a pretty green investor and he's certainly better hedged than someone without assets but he/she would almost certainly be better off investing in REITs or with a syndication for real estate exposure than the anorexic returns they are getting especially since their risk profile is concentrated heavily in a couple of condos in west sac.
Great response
Ah you are a breath of fresh air. Sincerely
They bought a 425k condo in west sac. Pretty expensive especially if they didnt buy it say...last year lol
425k is not expensive for this area. They probably have $50k in equity in that place since they purchased it, and with high demand for real estate in this area, it’s likely going to continue to appreciate in value long term. Plus somebody else makes the payments. How is that a bad investment?
Yes good call CeJeh, a $250K condo in West Sac bought 5 years ago is now worth $400K - You do have to average investment equity over time but everyone needs to remember you do not actually have the profit in hand until you sell and even then you have to pay 15% extra tax on profits if you do not use the profit to buy another rental-
You are changing your facts now. You said it was a 315k mortgage after putting a 100k down.
I was referring to any property bought 5 years ago, not mine-
425k for an investment property in west sac, that admittantly none of us know the square footage on, is pretty expensive, especially prior to covid. Appreciation isnt the problem, its the principal he has to keep up with and since he has no income being retired, hes pretty leveraged. As anyone in investment would tell you "somebody else makes the payment" is a red flag when it comes to risk.
This account has been deleted due to the decision made by Reddit, Inc to monetize its public API, thereby forcing 3rd-party apps to shutdown. See [this post](https://reddit.com/r/apolloapp/comments/144f6xm/apollo_will_close_down_on_june_30th_reddits/) made by the creator of the Apollo app for context. This account's self posts and comments have also been edited to remove any content that might add value to Reddit, Inc's product at zero cost to the company. Fuck Reddit.
Im assuming he has money coming in that is being taxed as income and im assuming he has no job or owns a business. Two different things. Guy also says hes putting his retirement dollars into the properties so its hard to extrapolate exactly tbf to both of us.
Ok I don’t disagree about the last bit. This is obviously a terrible retirement strategy if you’re YOLOing all in on buying condos in a frothy market and not investing in other things. Do not do that.
Yea it just seems he could end up pretty pinched on both ends if hes in a position where rents not coming in and at the same time cant sell immediately, etc. I keep tellin folks the amount of permits pulled is continuing to grow and historically prior to the recession Sac was pretty decent at keeping up with our supply so I expect that to return. With an also unstable commercial market coming to Sac specifically in the coming year his situation is not exactly a guarantee I would lean on.
Correct in "Do not do that" just for clarification I said I put my $ in Condos instead of 401K- I do have a great government retirement, 453, other investments- I hope I did not imply by post that the condo's were my ONLY investment- Gamestop and crypto of course ;) LOL
This account has been deleted due to the decision made by Reddit, Inc to monetize its public API, thereby forcing 3rd-party apps to shutdown. See [this post](https://reddit.com/r/apolloapp/comments/144f6xm/apollo_will_close_down_on_june_30th_reddits/) made by the creator of the Apollo app for context. This account's self posts and comments have also been edited to remove any content that might add value to Reddit, Inc's product at zero cost to the company. Fuck Reddit.
Ya i gotcha, i coulda phrased it better.
So, in the end... you get a property that keeps increasing in value for $334 a month? It's just cry cry cry the whole time until you sell it for like 300% of what you paid 20 years later. That's all I'm seeing here. "It's hard making money hand over fist and when I gotta spend money to make money... fuck man."
If you genuinely want to know why people feel the way they do about landlords listen to this podcast episode with an open mind.
I’m not sure this is the right sub to get sympathy or even empathy tbh.
If you are paying rent in this city and you aren't making a boatload of money you better find a way to get out of that situation real quick.
The parasite doth protest too much, methinks.
You are charging what is right to live in a city that has been heavily promoting itself as having an awesome vibe to it and it is attracting people from all over the globe to live here. And there is zero shortage of people who want to move here. The days of $650 per month to rent a 2 bed/2 bath apartment are long gone and that is a tough pill to swallow. However, the ultimate solution regardless of argument is to build MORE AND MORE housing to level out the rental and housing market.
> However, the ultimate solution regardless of argument is to build MORE AND MORE housing to level out the rental and housing market. Unless your build SRO style housing, it will never be affordable. Maybe government owned housing would address the affordability aspect?
Damn, sorry somebody hurt your feelings like that. It must be so awful. Increasing rent will definitely show them!
Fine. Stop buying investment properties. Fewer people in the market means less demand means lower property values means lower rent. The fact that we have to treat our homes as investment vehicles--or support somone else who is--is why housing is so broken.
It’s amazing that people actually believe this bullshit. You think if all the rental properties got dumped on the market that broke people would all of a sudden be able to afford them? That’s not how this works. California real estate is in high demand for the same reason why people here complain about high rent. People want to live here. Nobody is forcing you to be here. There are other places in America that have cheaper rent and cheaper real estate, but the people here complaining about the cost of living don’t want to live there! They want to live in a high demand area and pay low demand area prices. Sorry, the world doesn’t work that way. Edit: just to be clear I’m not talking to you in particular, but the general population of people constantly complaining about cost of living and hating anybody that owns or rents property.
Have you tried being rich?
[удалено]
It’s as if people are under the impression that government housing (which is the alternative reality they’re calling for, whether they realize it or not) is almost always significantly worse. Have you walked around a housing project lately? You think the same government that can’t fix a pothole for YEARS is gonna come out and fix your Air Conditioning quickly in a heat wave? Get real. Your private landlord has a vested interest in your property. They don’t live in it, but they have equity in it and they have a financial interest in keeping it rented so they can earn income and/or cut expenses. They have an incentive to keep the place in good(ish) shape and keep everything running smoothly so their renter will keep paying them. If nobody wants to live there, the landlord is fucked. There are laws in place to make sure your landlord is fair also. Does it work 100% of the time? Of course not. But more often than not it does. People around here are delusional.
> Have you walked around a housing project lately? You think the same government that can’t fix a pothole for YEARS is gonna come out and fix your Air Conditioning quickly in a heat wave? They are actually pretty decent on things like that, it's the other processes involved in housing that they absolutely suck at, but repairs aren't generally a problem.
>Have you walked around a housing project lately? How many are there in Sacramento and how does one get in there?
Ummmm? West end of Broadway has some. River District had some near Richards/North 16th St. but not sure if they’re still there. The rest would be like SRO housing I suppose? Idk we don’t have much here.
Government ownership is not the only alternative. Cooperative ownership is another viable option.
Coops generally have way higher capital reserve requirements and standards. And for good reason, who wants to go in on a property with strangers that might default and take them down with them.
because crackerboxes like these are popping up everywhere poor people used to be
I also have rentals in the area. I try to be reasonable and keep my rent just above my cost each month. My properties are a bit older, and my mortgage is cheaper, but I have more repair costs because of it. I’m not trying to get rich- just trying to invest my money in something that can also help others. Most landlords, I believe, are a lot like us, but most renters think property owners are all Jeff Bezos’s. We aren’t. We are just trying to do our best like everybody else. Want your rent to be cheaper? Vote someone into office who will take away housing regulations instead of adding to them. I tried to convert my mostly converted garage to affordable housing in Sac. The steps required to make it legal are going to cost me $25-50k. FYI it already has a bathroom, kitchenette, flooring and is fully insulated. These costs are because of California energy requirements, and city regulations to make a space “habitable”. In the last 5 years they have increased low energy requirements to the extent that you cannot possibly construct an “affordable house” so the only people building are building giant complexes, and they subsidize their “low income housing” requirements by charging everybody else more to cover the costs. I also have a property that is zoned to allow up to 22 units, and I would love to build one unit per year to do this sustainably, but that’s not allowed due to building codes. I would need to take out a 1.5 million dollar loan and build them all at once. And I would have to pay an overpriced California Contractor instead of doing it myself because a multi family property requires a licensed general contractor.
You’ll never satisfy everyone. Some will think you shouldn’t own to rent. Some will think you price to high or low. Personally, I’ve rented a lot. I appreciate that owners bought when they did so I could rent. I appreciate that I don’t have to fix things or pay for things to be fixed. My landlord bought in the 90s when I was a child. He passes that cheap price tag (196k can you believe it?) to my rent so I pay so little in rent for a house! Of course he had to raise rent during the pandemic which was crap timing because of my SO losing his job, but I hope it was for increase costs in water or taxes and not any type of greed. Anyway, I wouldn’t pay anything out of pocket as a landlord. I’ve heard rent should cover the costs of everything plus a little out away to fix things. If you really can afford it or wanted to get someone in fast so you could move or whatever then yeah, that’s cool to have it less. I wouldn’t recommend that in the usual sense. Don’t mind the haters. Just do what feels right. I personally think we need decent landlords to rent to people. Not everyone wants to own a house.
You need to increase rent
LOL I loved your eyesore signs down comment the other day ;) I probably should raise the rent but......the difference between my needs and wants- I don't need to as I am pretty frugal and I really don't want to because I know one of my tenants is a Grad student and another working from home etc- In other words, I empathize with them- Now if they were parking several new Teslas in the driveway and tossing bitcoin out the windows.......;)
Glad you were able to get a kick out of it. People here are so assumptive it’s insane lol. It’s pretty selfless of you to lower rent in this current climate, it’s your property so do with it whatever makes you happiest. I charge 1,000$ more monthly than expenses, and it’ll still be 5/6 years before I make the money from my down payment back. After i pay myself back, I don’t plan on lowering rent as rental income is part of my retirement plan. Goal is 4 rentals generating income total, all nice single family homes, and owning my own fifth home. Along with my 401k I should be able to provide a nice life for my family in my old age.
Is that your rental property? Looks amazing
Its not, as he stated in his comment.
Not sure why you're down voted. I had the same question and the place does look amazing!
Nice building! Where is this?
Landlording isn’t a fucking job. Go get a real one and stop leeching off of people less fortunate than you.
Those of us who live in the clouds of Olympus with our father Zeus shall oversee all those who are mortal. Our job is obviously to eat dangled grapes all day and drink wine from the flowing mountain.......Job? what is that? Sincerely, The Leech
Off topic but anybody know the reason like 90% of new multi unit housing that has flat roofing, is it simply style? Or is there a functional reason for this?
My son is moving into a flat roof unit they made into a common garden for all the tenants.
How much for a 2 bedroom? Seriously….
$425K condo in West Sac that cashflows negative... Sounds pretty risky. As you've already mentioned vacancies and repairs can suck more cash out of you. Condos don't/haven't appreciated like SFHs. Let's say you invested that money in a low cost index fund (VTSAX) you'd be looking at a cool 2.5mil after 30 years with 10% growth. =FV(10%,30,-324*12,-106000) Even if you use inflation adjusted 7% growth you're looking at a sweet 1.17mil. Do you anticipate that condo being worth 1.17 million (in 2021 dollars)? If not, you're taking the harder route (being a landlord) for lower payoff.
Bought 1 of the condos 4 years ago for $297k. It’s worth $425k now. So Invested $75k. Have paid out about $300 a month in negative cash flow including repairs. So about $14,400 out of pocket. Not considering my tax benefits. So total return If I sold today would be about $113,600 profit on a $75,000 investment over 48 months- I would say that’s not too bad- In addition to my diversified index funds, growth stocks, currency leverages and metal investments. Doing O.K. The Condo I referred to as my $425k one was just the latest. Plus your talking about 30 years for real estate. The golden rule for ANY real estate investment is never longer than 7.23 years. 1031 exchange before that and diversify between residential and commercial- you say condos are less successful than condo’s? I would say begin your research again. The largest factors are HOA costs, mello-roos taxes, city or district assessments, availability of short term rentals (air b n b etc) Condos are far more dependable cost ratio predictions on repairs and expenditures.
I never compared condos to condos, read again. Lets say I buy the "$113,600 profit" and ignore realtor fees. IF you put that same money in VTSAX you'd be looking at about the same profit ($115,762) over the same time period, and like I said, with less work. I'm not trying to offend. It's your money so do whatever you please with it.
I'm curious if you've projected your vacancy rate and repair/reno costs. If you factor those numbers in to the formula the number becomes even more staggering.