Pace Yourself – Gag Damit

(edit; this was written pre Covid19, is likely still true but not exactly the same priority it was 2 months ago)

Fresh off finally pulling the trigger on a rental unit, I feel I now have The Fever for more rentals.


Likely a side effect of putting it off for 8 years, I have both pent up momentum and resources. My father used to love the expression ‘that money is burning a hole in your pocket’.

I noticed over my information gathering all these years that I am in a unique position when it comes to rentals.

That days of the great buys after 2008 are long gone(?) Many areas are priced out of buying an investment property and it cash flowing anything decent right out of the gate. There are even places where you expect to loose money renting it and are just banking on the appreciation over time to make the money on the back end.

That is not so in my sleepy little forgotten shire. Running the numbers here, I can still find places that have a cap rate between 8-14% (my chosen sweet spot). That translates to roughly $30,000 dollars of mine to buy a place that kicks back $400 in the black dollars every month.

Loads of investors would kill for opportunities like that.

I am not giving up on my dividend portfolio. The last 10 years in the stock market have rocked. But my dividends do only average 3.5%. Albeit at low risk.

Landlording may turn out to be a pain, but I have lots of nervous FIRE energy and returns of 10% are hard to resist.

Bottom Line – I want to keep buying right away.

I already have a next property in my sights. Almost the same numbers as my first buy but with a 3 rd unit included. It is two 2/1’s and a 1/1. The only drawback I see at this point is that it is 30 minute drive from my work and I do not have anything resembling property management or even handyman services staked out that far from home base yet.

The Dear Wife is already saying ‘let’s wait a year‘ but the little voice on my shoulder is saying strike now while the iron is hot.

I have the money, I have a pile set aside for just such opportunities and 100k worth of HELOC to tap if need be.

Also I feel I have the time and inclination to make it work. I have been mentally working myself up to be a multiple property landlord along side of my not too demanding day job.

Lastly, these numbers work. Not everybody can say that and I feel like the real estate markets are stable (*FN1) and a valid component to my FIRE plan.

Getting itchy to keep the boulder moving.

*FN1 = HaHa!

Added later; I have no idea what the real estate markets will do given the current state of affairs, but I would still pull the trigger on a good deal. In general, my assets are tied up more in the markets than in rentals. I am OK with some rebalancing there.

More from the Rental Property series;

Running the Numbers on a Rental Property

Zoning Laws and Red Tape

Problems with Appraisal

The Home Inspection

The New Building is Acquired!

My Permanent Tenant/sister-n-law

 

 

3 thoughts on “Pace Yourself – Gag Damit

  1. Once again, we arrive at similar mindsets. I decided to cash out enough for an investment multifamily property down payment in February (dumb luck on timing) but I’m still looking. Hopeful deals will start to surface, caveat is I can only look in areas not passing legislationhlegislation to landlords (which are fewer by the day). Cap rates here are 5-7%, nothing near your levels, but California offers appreciation as well over time.

    Wishing you success,

    CD

  2. Congrats on your entry into real estate! We’ve been doing it for years and is a key part of our financial independence plans. We have always done remote investing and so have to rely on local property managers for everything, so since you are investing locally, you have an even better chance to succeed and profit!

    Even when not looking to buy, you should always be on the lookout, because you just don’t know when a great deal will present itself, and it helps you to thoroughly know the market. Also, building up your network of realtors and sellers and wholesalers is a great thing, because one may some day bring you a great deal. With COVID-19, deals might be easier to find – ie: sellers that want to cash out.

    The nice thing about having multiple properties is that when you have a problem with one (expensive repair or vacancy), you at least have income from another (or more) to offset.

Let's get things nice and sparkling clear