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Old 02-02-2020, 05:20   #1
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Sailing Landlords

Hey Guys

This is for those who use rental income to pay for their cruising lifestyle. I currently have 2 doors, one of which is my primary residence. A breakdown will follow.

Gross rents: 2400/mo
Mrtg: 1300/mo
Net after vacancy/repair fun etc: 400/mo

Now I intend on purchasing a few more doors, throughout continental US (I'm a Canuck so the distinction is important). I figured, conservatively, I could purchase 4 more doors over the next 5 years. Making some assumptions I assume a net $300/mo each is realistic.

Leaving me with a total $1,600/mo income. Which is well south of the $3,000/mo I would wish to have. Now I am leaving equity in my primary residence and getting a HELOC as well as my emergency funds etc. I am just curious, how many cruising landlords, use equity from rentals in order to keep their boat top notch? My net rental income, coupled with my mortgage principal payments would mean I could have potentially $3,700/mo to expend.. if needed. With the mortgages being a write off, I'd be inclined to use Heloc's against the homes in order to keep he boat repaired and use my other accounts for the rentals in case of vacancies or repairs. Now since I am a Canadian buying in the USA all my rentals will start with 20-25% down.. so cashing out equity is quite realistic.

How many doors would you recommend? I invest for the 1% rule and screen fairly heavily, I pretty much can invest anywhere in the US/Canada for best ROI. I am not location dependent. I figure 4 more houses at 100k/each bringing in a gross rent of 1k/each/mo on top of what I have now is enough.. does anyone do more or less? I want the 100k range in order to geographically spread out my risk.

Also if it matters, I will have a company pension for retirement down the road, so my risk tolerance is quite high. I also plan on heavily refitting before I start cruising as well. Sept 2024 I will be set to depart hopefully, failing that I'll cast off spring 2025 and switch to contract work for the next few summers following to top the finances up.

Any who, insight?
RR
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Old 02-02-2020, 06:06   #2
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Re: Sailing Landlords

Great topic! I'm curious about the same with one full time unit and a primary residence that will become the second, netting around 1500ish.
Considering buying another one or two to net another 500or so each, but concerned about the balance of work, stress, etc associated with more units....
To add to this question, how have those successful ones dealt with property management companies ? Thoughts to that?
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Old 02-02-2020, 06:46   #3
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Re: Sailing Landlords

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Originally Posted by jhkm12345 View Post
Great topic! I'm curious about the same with one full time unit and a primary residence that will become the second, netting around 1500ish.
Considering buying another one or two to net another 500or so each, but concerned about the balance of work, stress, etc associated with more units....
To add to this question, how have those successful ones dealt with property management companies ? Thoughts to that?
I am going to be relying on property management in order to make it work, I feel the fee is worth it for the peace of mind. I find that online reviews tell a story.. but very curious as to what others think. Because management fees are up to %10 of gross rents.. which is why my numbers are lower then yours I suspect.
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Old 02-02-2020, 07:26   #4
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Re: Sailing Landlords

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Old 02-02-2020, 07:56   #5
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Re: Sailing Landlords

Belizesailor is a great resource on this topic. With his gentle guidance, we are now close to 20 units, which is essentially funding our cruising....in a roundabout way. Only one of ours is a single family, and that seems to be working very well for us. The more units you can have in one place, the easier it is to keep eyes on what's going on. Good management is the key, in my opinion. Our cruising is, and will be, a bit unorthodox for a while, but the rental income has been the key for us.
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Old 02-02-2020, 21:17   #6
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Re: Sailing Landlords

Belizesailor the member on here? Didn't see any posts regarding rentals.. or is it a youtube or blog etc? My google-** failed me on those grounds...
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Old 02-02-2020, 21:50   #7
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Re: Sailing Landlords

Quote:
Originally Posted by TheRailRoader View Post
I am going to be relying on property management in order to make it work, I feel the fee is worth it for the peace of mind. I find that online reviews tell a story.. but very curious as to what others think. Because management fees are up to %10 of gross rents.. which is why my numbers are lower then yours I suspect.
I have a few more than 2 uhh doors? (never heard that one before), but I was able to negotiate my management fees down to 7% in one city. Be sure to budget enough for property taxes, insurance, repairs and attempted murder (haha joking...but for reals, it happened once). Some months they all come at the same time, so you know what they say: if you don't have a buffer, you gonna suffer. Oh I'm killing it this morning (too soon?....) That monthly income seems low, not because you might spend it all each month, but because on a bad rental month, you might only have half that. If you have good savings/stocks, it's fine.

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Old 02-02-2020, 21:57   #8
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Re: Sailing Landlords

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I have a few more than 2 uhh doors? (never heard that one before), but I was able to negotiate my management fees down to 7% in one city. Be sure to budget enough for property taxes, insurance, repairs and attempted murder (haha joking...but for reals, it happened once). Some months they all come at the same time, so you know what they say: if you don't have a buffer, you gonna suffer. Oh I'm killing it this morning (too soon?....) That monthly income seems low, not because you might spend it all each month, but because on a bad rental month, you might only have half that. If you have good savings/stocks, it's fine.

Bad things come in threes my first post I stated my gross rents would be $2400~, while my net monthly income would be $400~. That 400 a month net, reflects paying a property manager, budgeting for repairs and vacancies etc as well.

I also keep an emergency fund of 6 months of bills handy and an ability to use an HELOC or pull out of stocks if needed. But this is all to cover the rentals. I was curious if anyone factored their principal payment each month towards their gross income due to the ability to pull it out if needed.. I am keeping my budget conservative, I hope. The 3k we intend to live off, is personal and the needs of the rentals are business. So I intend on keeping them seperate.


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Old 04-02-2020, 11:37   #9
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Re: Sailing Landlords

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Belizesailor the member on here? Didn't see any posts regarding rentals.. or is it a youtube or blog etc? My google-** failed me on those grounds...

Yes, the member here. To be fair, most of my questions were asked in private, so a google search wouldn't turn up any record. It sounds like you have a strong plan. We have struggled to add any rentals to the fleet in the past year, given the strong retail market for investment properties in our area(s). We are in a bit of a unique situation, but decided to add some construction equipment to our portfolio of rentals, and while not appreciable assets, the income is much stronger. They are $50-60k machines, and are on long term rent (12 month minimum) and rent for $3-4k per month. We also keep one around for short term rent, but it goes for about double per month. We are up to 4 total, and I would really like to double that this year. Of course, it takes more legwork and a more specialized management team than a property manager, but we already have those people in our organization.
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Old 08-02-2020, 04:52   #10
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Re: Sailing Landlords

Damn, at those low cash flow rates you must be buying single family properties right?

If so, multifamily offers much better cash flow rates per $ invested and many other advantages. One big down side to single family is that the property is either 100% occuppied or 100% vacant.

Last year I purchased another 4-plex. Renovated it while keeping it partially occuppied (thus at least breaking even on cash flow during renovations). Now, its netting about $2K per month!
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Old 08-02-2020, 06:32   #11
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Re: Sailing Landlords

I have had income properties for many years, and a mix between residential and commercial. I like commercial. If a triple net lease, you get rent plus expenses, but not mortgage. Generally the tenant is responsible for repairs, other than replacing full systems. They fix the hvac, plumbing leaks, electrical repairs, like fixtures. They also pay for renovations. Residential tenants can be either great, or whining p.i.a's. Also the judge is usually way more sympathetic to a residential tenant than a commercial tenant. This is just based on my experiences.
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Old 08-02-2020, 06:38   #12
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Re: Sailing Landlords

I like this topic. So for those doing this, what states are you renting in? My wife and I are struggling with a decision on what to do with our house now that we have sold our business and are ready to move aboard full time. We want to rent but the house is in New York and the rental laws here are so unfavorable for landlords that I'd prefer to sell and either invest in the market or use that money to purchase rental units in a place with lower property taxes and more realistic rental laws so I'd love to hear where you have had good success.
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Old 08-02-2020, 07:34   #13
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Re: Sailing Landlords

My rental income nets only about 3k/month now after divesting a bunch of property that had shot up in value. I think itís a little late in this real estate cycle to be going in, but nobody has a crystal ball and all markets are local so of course there are good deals out there. Definitely want to automate things so you arenít the one receiving phone calls and emails about little stuff.

Like a lot of people Iím sitting on a pile of cash waiting to pounce when the next correction happens and hoping there are people over leveraged. Just donít be one of those people and make sure you factor in the what ifís or else youíll find yourself in trouble. Real estate makes a lot of people very wealthy and it also has the ability to turn on a dime. Good luck!
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Old 08-02-2020, 15:37   #14
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Re: Sailing Landlords

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Originally Posted by keepondancin View Post
I have had income properties for many years, and a mix between residential and commercial. I like commercial. If a triple net lease, you get rent plus expenses, but not mortgage. Generally the tenant is responsible for repairs, other than replacing full systems. They fix the hvac, plumbing leaks, electrical repairs, like fixtures. They also pay for renovations. Residential tenants can be either great, or whining p.i.a's. Also the judge is usually way more sympathetic to a residential tenant than a commercial tenant. This is just based on my experiences.
Having a good pro PM company totally eliminates dealing directly w tenant issues and makes tenant issues less likely tp occur as a good pro PM screens tenants and avoids problems by following a good processes...and applying years of experience.

For years now Ive used a great PM company and had a great PM assigned to me.

As a cruiser/traveller/expat its not really practical for me to manage properties directly anyway.
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Old 08-02-2020, 15:44   #15
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Re: Sailing Landlords

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I like this topic. So for those doing this, what states are you renting in? My wife and I are struggling with a decision on what to do with our house now that we have sold our business and are ready to move aboard full time. We want to rent but the house is in New York and the rental laws here are so unfavorable for landlords that I'd prefer to sell and either invest in the market or use that money to purchase rental units in a place with lower property taxes and more realistic rental laws so I'd love to hear where you have had good success.
Texas is an easy landlord State. California is a nightmare.

A single family home, I would likely sell rather than try to rent. In most cases you dont make much net cash flow on single family...mostly you are betting on appreciation...single family is usually only worthwhile in a market that is expected to appreciate significantly.

If you've had good appreaciation on your home, and dont expect a big upside in the area in the near future then sell it...no cap gains tax on your primary residence...if you rent out then its no longer your primary residence and taxes will be due on cap gains.
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