General

My brother and I have been looking into real estate investing. We've been doing a bunch of research but haven't decided on which direction we want to take. I think the desire is to get into multifamily, like buying a small apartment complex, but we've also been tempted by the cash flow potential on rental arbitrage and AirBnB, but taxes and ramp up time might kill it for us.

Curious if anyone does real estate investing here and what you would look for in the current market.

Is Airbnb even a profitable endeavor without having a large inventory? My mother in law used to rent her place out in Japan consistently for years using Airbnb but she had to get out as the cost to maintain the standards that Airbnb required was getting out of hand. It’s also started receiving a lot of negative attention from the people that used to commonly use it, myself included.

Seems it started as a fun idea but once they ran out of venture capital the prices sky rocketed

SwiftJAB wrote:

This is a bit of a scary time to get into real estate, IMO. It could go great -- it could all fall apart really easily. So, keep doing research.


AirBnB is having some real problems lately. All those investors suddenly want their money back. Reviews of AirBnB have gone significantly downhill over the past couple of years. There is no way I would invest in something intended for AirBnB right now unless it was an absolutely perfect area at a low price (i.e. a unicorn).


I have 13 "doors" (2 4-plexes, a duplex, and 3 SFHs). I haven't seen anything worth buying in the past 3-4 years. I'm thinking seriously of selling more of them off actually because the market is a bit crazy still. Not as high as a year ago, but still high. In the current market, I'm not buying anything. I mean, others are -- there are deals to be had -- but it takes a lot more work than it used to.

I'm looking into real estate too as I actually have enough savings to potentially put a down payment on a mortgage now. But seems like on a duplex or triplex the mortage would be the amount you would rent it for or maybe a few hundred less which could be a loss with any repairs or months where it's vacant and that's on the high end where it might take a while to find a tenant, if the zillow mortage estimate is accurate. I've been trying to find a property where the other units rent would cover or mostly cover me living in one unit or a house where I could rent it out and live in the guest house but doesn't seem plausible rn i would still be paying almost as much as if i paid rent, renting out all units would only net you slightly more than the mortage. Is there something I'm missing? Why would other investors be buying these properties? It seems like on the low end I could get a duplex with 2 2 bedroom units for around 300k, rent for 1000 each quickly or 12-1400 if I wait for tenants, zillows calculates the mortage around 1800-2000 usually. In tucson arizona

I don't want to live at my dad's house still but would either be spending more than half my income on rent or living with roommates worse than him and paying more rent than he charges so it doesn't make sense

lightslime wrote:

Very high level response here, but this really depends on what market rates are in your area. Also, people buying a 3 unit may not have any intention if living in a unit but renting all 3, supporting the mortgage and still making a profit.

Without knowing a lot of details for your area or the property, it's hard to give specifics on properties.

Feel free to send me a message if you have any questions and I can try to help. I work in commercial lending and see this type of stuff fairly regularly.

lightslime wrote:

So, Zillow's mortgage calculator is decent then based on a current price -- but note that Zillow is commonly very wrong on it's approximated "values" for properties and rents. I belong to a Landlord group and we basically all laugh at any data from Zillow. So, don't base anything important off of Zillow estimates. Just FYI.


So, my advice to people looking to get into this is usually exactly that: buy a cheap or "needs some updates" duplex where you can live in half while you fix up the other half. Then rent that fixed up half out -- while you live in the other half and fix it up underneath yourself. After that, when you can, rinse and repeat a few times.


So, everything comes down to location. For comparison, in my area in mid-Michigan, even with housing prices what they are, you could buy a duplex that is 2 2-BR units for around $150k and rent for ~$800-$1000 per side. So, effectively, pay about HALF as much as there for the same income. (For more comparison, I bought a duplex here about 20 years ago for $70k that needed fixing and put about $20k into it. So, bought for $90k. At the time, each side rented for around $550. Today, that is $750-$800 pretty easily.

In my opinion, it's a hard time to get into real estate with rates what they are. But, rents are higher too, so it CAN work in the right area with the right deal.

Here paying $700-$800 a month rent gets you 1 bedroom and bullets whizzing by. Double that price for 2 bedrooms and less bullets. Triple that price for no bullets.

My rent went up this year.... again... I'm paying $880/mo for 1 bedroom, but it doesn't include the bullets whizzing by. It does include neighbors and their jackwagon guests that don't drive carefully through the parking lot. And It does include trash, fridge, stove, and dishwasher. Water bill is pretty cheap and electric bill fluctuates on the time of the year, winter being the worse because I'm first floor apartment.

I would say if I include my utilities and renter's insurance, I'm paying closer to $950-$1100/mo depending on time of year.

I really dread the thought of moving but my state is just awful. I'm sick over some of the things they are trying to do to take away human rights. But trying to sell a house and move out of state with a family almost seems impossible and hopeless right now.

sa330206 wrote:

Florida?

John wrote:

My realtor sister in law used to say the same thing. Yet as of the last several years, the Zestimates are pretty spot on for what people are asking... Even though they end up selling for more. Same with Realtors estimates. Seems to be a pretty decent gauge with today's batcrap market.

MrBean wrote:

Ohio...look up issue 1.

sa330206 wrote:

Ah, yah, Ohio here too. Been seeing lots of signs on this.

I ... fortunately/unfortunately, avoid most politics like the plague. Thank you for the call out though, yah this is some bullcrap.

Didn't they just try to do something similiar to this in FL, and it failed?

Regardless, yeah, I need to vote against this.

We've been renting our place in Northeast Florida for 10 years now but a while back we were planning to buy a place when my kid graduated in 2020. Then Covid happened. Our place is OLD but in a quite area, and way unpriced at $1150 a month (2 BR, 1 BA). I don't have the money to put down for a place now so may end up renting where we may end up relocating to (still in NE Florida). Or are lenders giving away houses with no money down? I don't mind going up to $1750 if needed.

MrBean wrote:

Maybe they have gotten better. I can tell you this... About 5-7 years ago, we got a call from someone at Zillow asking how much one of our 4-plexes was. We stated that it was not for sale. They said "Well, if you wanted to sell it, what would you list it at?" and I said that I really didn't know. Then they said "How much would it take for someone to walk up to you today and offer cash for it so that you know you'd just take it?" and I basically gave a figure of like $400,000. At the time, they were probably worth maybe $180,000. I was just annoyed with the guy.

A week later, Zillow listed my property as "recently sold for $400,000" and had the current value listed as $425,000.

That is why everyone in the industry laughs at Zillow pricing. Lots of us have had similar experiences.

Just talked to a contractor about turning our finished basement into an AirBNB (adding a bathroom and kitchen) and he quoted us $100k-$120k, that’s gotta be a fudge off quote right? We were thinking $25k, maybe $50k at most.

Reed wrote:

That would depend if it’s wired, plumbed etc. but likely it’s a fudge off quote. Dude’s are charging a premium in the last 5 years for sure. That’s a 2500 sq ft home and lot here.

Reed wrote:

Not for nothing, but it could be cause of cost of materials.. right after when the pandemic was starting to 'end', we had someone come out and quote us on putting a sun room on the back of our house.. He quoted $52k, and he said 2 years ago it would have been like $30k but the cost of lumber exploded..
A plumber also told us the cost of everything is skyrocketing, almost 60-70% more than pre-pandemic...

Reed wrote:

All remodeling seems to be insane right now. My wife and I have been talking about doing a makeover of our house for years (new roof, siding, windows, and a garage door). We've had rough estimates before in the $30-$40k range. We finally had someone do a real quote now because we were ready to move at $40-$45k. It came back as $85-$90k.

So, for now, we're just sitting.

Would it be very unrealistic to fix up something like this?

https://www.zillow.com/homedetails/502-S-Fremont-A...

lightslime wrote:

I mean, if you know what you're doing, don't see why not ... For me personally, that's a hard no. I can do basic crap, but looks like that needs a fair amount of TLC!

Don’t even see any snakes staying in there.

John wrote:

Will remodeling prices go back down to half of what they are now or is this just the new normal?

lightslime wrote:
Yeah maybe not. I'm reading about the 1% rule in real estate investing and seems like it could potentially cost 100k to renovate that place, seems like a bad time to buy real estate here if you want it to rent for more than 1% of the purchase price

This seems like the best deal I could find: https://www.zillow.com/homedetails/1354-S-Avenida-...

Ha, haha, of course. Just got a letter today that our property was re-appraised (happens every 6 years), we jumped $70k! Jfc, cash grab galore, more taxes!

Guess our whole county is getting hit by upwards of a 34% increase, ours was 26%.

Crap is bound to crash soon.

This topic has new posts which were moved here:

https://gametz.com/General/housing-market--620672....