Would you take money out of equities and buy residential income property today?
- Thread starter OCtoSV
- Start date
woodburyowner
Well-known member
Depends on if he gets a good deal on his rental property. A lot can go wrong when purchasing and managing a rental property.
adventurous
New member
Residential rent becomes more and more complicated and regulated in California. Your friend should certainly assert the risks of the changing political situation and possible regulations.OCtoSV said:
qwerty said:
Depends on area and tenant your rental property is in. Our tenant had a sizeable amount in one of their accounts when we leased to them. Been ACH'ing rent every month for the past 4+ years. Never raised the rent once. If someone had a bad first experience I could see them wanting out and never being a landlord. I also think if you had a rental in a lower income area, you would face tenants not paying rent during covid or any downturn, but the cash flow may be better when times are good.
Thanks everyone.
He already has a duplex in a somewhat upscale area, and even successfully raised the rent recently. I told him not only should he not buy another but that he should sell this one as I also see owner /operator rentals as perhaps the highest risk investment short of ETNs.
He already has a duplex in a somewhat upscale area, and even successfully raised the rent recently. I told him not only should he not buy another but that he should sell this one as I also see owner /operator rentals as perhaps the highest risk investment short of ETNs.
momopi said:
Amid Pandemic and Job Losses, Council Votes Down Temporary Rent Freeze
https://fullertonobserver.com/2020/...ses-council-votes-down-temporary-rent-freeze/
Rent increase good for landlords in Fullerton. But tenants might not pay or break lease. I see this happening in other cities.
momopi
Well-known member
test said:
The stock market recovered faster than RE market in last round. The Dow had already recovered to 12,000 points in 2011 but RE market in many places was still near bottom until 2012. However this may change as private equity and hedge funds pour into the RE market.
In the last round I decided to sell mutual funds at a loss and use the money to buy real estate in 2009-2012. Investment properties only required 25% down back then, they were near bottom price and cash flow positive. It was a profitable decision. SFR's in LA County were selling at 50% off peak and in Riverside County as much as 66% off peak.
In the current market, the rent delinquency issue is over blown -- for now. The % of renters not current with rent payment has only increased slightly in fraction of a percent. But we don't really know what will happen in a year or two. It's possible that we may experience increased long-term unemployment and rent delinquency rate shoots up, making it more expensive and difficult for investors to obtain loans to buy investment properties.
In such scenario it will benefit all cash buyers with less competition. Note that all cash buyers do not necessarily mean individuals, but also billion dollar private equity and hedge funds. When Fannie Mae opened the flood gates to investment funds, some $36 billion dollars flooded into the housing market buying hundreds of thousands of foreclosed homes. In one Atlanta zip code 90% of 7,500 homes sold between Jan 2011 and June 2012 went to these investment funds. By mid 2012 the RE market was on the rebound.
For the small individual RE investor, we may be squeezed between tougher requirements to obtain investment loan, and billion dollar investment funds as competition.