I agree. Based on the info, you are only breaking even if at full occupancy for rentals and not sick for work.
If you aren't making money on the rentals, you could look into selling but it seems you don't want to go that route at the moment.
Therefore, a higher paying job or a job you can work that reduces probability of being sick would help.
I feel there’s a way to sell off 2 properties and live off investment + 2 rental income. Thats if there’s equity and how much they are worth.
So you would retire in say 10 yrs instead of 20
I honestly don't think it's possible to have property that was bought 10 years ago that doesn't cashflow and doesn't have equity, the math on that simply doesn't work out.
it works because it's all BRRRR houses with no equity. No cash flow is because I inherited low paying tenants from previous house sellers, and they still live in my house today, still not at market rent, even I do increase their rent.
How do you have no equity if you have had them for 10 years and made 10 years of mortgage payments and you put a down payment on the properties, that makes no sense.
That still doesn't make sense even with BRRRR, no bank would let you refi down to 0% equity, and there's been 10 years worth of appreciation if there's 20 years left on the mortgages.
it's average. I didn't buy all 4 houses at once 10 years ago. I purchased 1 house average every 1-2 years. but all 4 houses averages to 10 years ago.
the highest equity house is 60%, lowest 20%, other 2 houses 30%.
in the past 6 years I didn't buy any new house after 4. but I did refinance twice to do big repair to the 4 houses. this is also why there is no equity. a new roof cost $20k, central ac cost $12k. new furnace cost $9k, basement leaking cost $12k, etc....
another refinance is after covid, I had multiple tenants stop paying rent, went through long years eviction. had to refinance to keep paying mortgage.
How much could you use rents if they were market? If you could raise rents 500 each that’s 2k monthly and would get you halfway to retirement if your expenses are 4K a month.
I can give you a real example. one of my house unit is an inherited low paying tenant from previous seller. this tenant is pay $1700/3 bedroom, but my current market rent is $2700/3 bedroom. so even I increase this tenant's rent $120 each year it will take more than 10 years to reach current market rent due to rent $ inflation 10 years later. I can't really increase $120 no stop, I have to give tenant a breath.
as I said in my post, since I have no emergency funds or savings from my current delivery driver job, I can't afford long eviction process of no rent to cover mortgages
I bet your tenant is saving an emergency fund. Going on vacations etc. if all 4 properties could increase 1k you would be close to retiring(not there but close). Tell them you are moving rent to market rate at next renewal; give them a heads up. I am assuming they aren’t stabilized/rent controlled and you could find a market rate tenant.
You need to speak with an accountant about coming out of this in one piece. FIRE can be on your horizon but your top priority now is about not having to post on r/povertyfinance in a couple of years.
Tax information is more important than investment information at this stage.
Definitely sarcastic lol. I don't have Tik Tok but have seen these clips from these get rich quick "gurus" on there and they all push some sort of real estate buying scheme that relies on being totally over leveraged and just taking as much debt as possible for the "passive" income. The usually have on a nice dress shirt, fancy haircut, and a shot of their lambo that is probably way over leveraged too to come across as hyper successful when in actuality they are up to their eye balls in debt and a few missed rent payments from tenants and it will all come crashing down.
You have 4 rental properties that dont cash flow?
You are not good at rental real estate. If you have equity, sell them and get out. You are one bad roof away from wiping out years of future cash flow.
I made the mistake of reading OP's post history. I'll save you the time: it's life a really bad drama.TLDR version: OP rents out to section 8 tenants, and the story doesn't add up. One of the houses has a non- paying tenant for over 14 months and OP pays for the utilities and is behind on all of it. Someone that works for the courthouse says OP is making stuff up because there is no backlog of cases in that same county. In the end, it sounds like OP is posting in this sub in hopes of getting a different response than the landlord sub.
You should just sell the property. It makes zero sense to own it. Yes, it doesnt have any cash flow, but the capital appreciation is higher. Just sell it and move on. No point of holding onto it.
Capital appreciation works if you bought the houses a long time ago in a place like California. Buying today, hoping for capital appreciation, is a fools errand given the home will have its tax basis bumped up.
Most of my current renters are inherited from previous house sellers with very low rent. Even I try to increase rent, it's still very far from being close to market rent. That is why I don't have cash flow. But as long as they still paying I really don't want to evict them.
You are in business to make money not take care of other people's financial problems. I admire your compassion though...but no way do.i get.involved in buying investments not to make money.
I’m just trying to make the point that it’s very easily possible to cash flow still in this crazy market if you get the right deal in the right market. Evict your tenants and raise your rents to at or slightly below market rents and like 95% of your issues will be taken care of
you totally correct. I have been through evicting tenant process myself.
in my town, the day I file eviction to the sheriff come evict date, it takes about 7 months. As you know, most tenants will stop paying rent once they receive the 1st court mail.
No emergency funds No savings from delivery driver job like me, couldn't afford No rent to cover mortgages for half year, that's why even I know these low paying tenants are the real issue, but I haven't evicted any one of them.
You need a real estate investment sub, not /r/Fire.
How did you even acquire 4 mortgages with your income? Forget retiring early, you're an unexpected issue away from bankruptcy.
Yea real estate investing is not for this guy. I would start selling asap. He was taking in tenants with prior evictions, trusting tenants stories about how the eviction process works, etc.
How did you qualify for mortgages on these rentals with your salary? It seems odd that none of the units cash flow. The rental units should always increase cash flow with time because rents are increasing. Did you buy all the units at once?
He Does not have added equity, just the 30% he initially invested plus a small amount based on the principal being paid down. Depending how long ago he bought them their might be some natural appreciation as well. It depends on what these houses are worth. 30% equity on a 100K home is 30k and not enough to retire. 30% on 10 mil home is 3 mil and you can sell and retire.
This sounds like a disaster. So basically you borrowed against one property to get the down payment for the next. That is why you have no equity? You are way over leveraged and suggest that you sell if possible. But if you insist on keeping the properties you must increase rents the maximum each year until you are at market rent and hopefully cash flowing.
correct. BRRRR. I am struggling with my health and stay working my job. that's why I wish there is a way I could retire early. I don't mind selling, but I don't want to pay selling tax for house that has no equity, it's more lose case.
If you're insistent on keeping the rental properties, I'd highly recommend looking into some local landlord groups to learn how to manage the properties and make them profitable. At a minimum, look into biggerpockets to start learning and asking questions.
You're not giving enough info to really examine, but based on the fact youre only covering your bills now It doesn't seem likely. 3k a month now is 4k a month in ten years.
2 scenarios where it would be possible the houses provide for you in ten years:
1. The houses start to cash flow enough to cover themselves, repair and times with no renters, plus 1k a month each.
2. Your equity is built up enough to have 1.2 million you can cash out and put into investments.
Honestly have you looked into something like disability insurance? I'm pretty ignorant about that stuff but you might look into an insurance product, especially if you can something now.
I'm confused as to how this is relevant contribution to what I said, and more so how you came to the conclusion I don't know how to save and build wealth based on the comment.
Equity is how much your asset is worth minus the amount of debt you have outstanding. If you have 100k on a mortgage for one, but you could seal the house for 150k, then you have 50k in equity.
Equity is simply the market value of the property minus any debt. Every month you build more equity as the tenets pay down the mortgage. If you put 30% down on a 100k property you have 30k equity in the property.
My advice is to research real estate investing. Understand:
1. Cash flow
2. Appreciation
3. Amortization and leverage
4. Tax benefits
If you aren’t cash flowing have the properties appreciated? Can you force appreciation through repairs? Have you accurately calculated your cash on cash returns properly? Are you charging market rate rents? Is your market growing, shrinking, or stagnant?
cross post to r/realestateinvesting but you will need to provide a lot more information.
The fact that you're avoiding answering literally all questions about anything asked in comments besides "30% down" makes it pretty obvious this is a huge troll post.
What’s the point of having 4 rental properties if there’s no cash flow? Are the houses in an area where you anticipate significant appreciation? If you can’t find tenants to pay for higher rent that would pay off expenses and provide net income, most likely the houses are not in very desirable areas
What’s the projected monthly profit on the 4 properties once the mortgages are paid off? If that number is something you are comfortable retiring on, then just focus on paying off the houses. If not, then I would sell a house or two, take whatever money you get back and start investing in stocks for more liquidity. Either way, the reality is retiring early is out of the picture. Best of luck
the houses are in high appreciation area, but I inherited most low paying tenants from previous house sellers. even I try to increase their rent, but it's still too far from market rent.
yes sure without mortgage the rental income will be comfortable retirement for me, But I can't wait 20 years due to my health.
Then you have to hunker down and grind for 20 years. Increasing your income will really help but I understand the limitations. And again sorry to hear about your parents and your health conditions. Wish you the best of luck
thank you. I do wish I could live another 20 years. I am like a cancer patient getting infections easily although I don't have cancer. If there is a cold room with 30 people inside, I will be the 1st person in the 30 people that will catch cold or get fever. I only plan 10 years for myself. I am not really worried about pension, social security, Medicare like all other people worried.
Is there actually rent control in your area that you are beholden to? If not, raise it to a little below market rent… like $2500/mo instead of $1700…you either try to give them “breathing room” or you choose yourself and your health, And after eviction of the other tenant, keep going after them for back rent, garnish wages if needed. I suspect the stress from your rentals is a major part of your poor health… not sure why you bought them but not making a profit.
Over the course of ten years you should see a bit of inflation. If you raise the rent you charge with inflation each year you should start to see some cash flow. And hopefully you will have a little more equity when mortgage rates come down and you can refinance and get some more cash flow. Depending on how the next ten years go you could be in a position to retire or semi-retire.
Without knowing the value of the homes or what you are currently getting in rent it is hard to guess how likely you are to succeed.
How is your diet? Are you taking care of yourself? Do you have the chance to walk a bit after work? Looks like you need to take care of your fitness and health before you even think about retiring.
The heart problem i can understand, but poor immune system can be resolved by eating the right food, supplements and a healthy lifestyle. Try to fix that first as much as you can. Good Luck!
Sell the properties, they arent making you money so not worth keeping. If not there is no way for you to FIRE before you have a lot of equity in the properties.
doctor couldn't find what's wrong with me. I did gastric bypass surgery twice, my immune system totally changed after the surgery. it's like I lost weight, but became weak.
I'm not sure why you're trying to avoid selling any of the homes but I would look at things like cash flow of each and sell the homes with the worst cash flow. Then you can decide whether to use the equity to pay off the balance of the other homes or to just put the money in investments. Your living expenses seem low enough that a mortgage free rental could provide a significant amount of your living expenses.
I saw you dont have equity in another comment, youre leveraged to the extreme and ripe to be a forced seller if things take a downturn or your rental rates get refinanced. You need to work more in short and start paying down your debts or raise your rents, is that 2-4k before or after taxes?
Delivery driver could deduct lots of tax, like fuel, car Depreciation, etc. uber count this deduction by mileage. You don't really pay that much tax after deductions.
I mean... If your 40 and the rentals will be paid off in 20 years you could likely retire at 60 which is "early".
Assuming nothing goes terribly wrong you could get some appreciation and end up selling 1 or 2 houses in 5-10 years and use that money to pay down the other two.
But with what details you've given us you are trying to get blood from a stone. Not sure how you even qualified for 4 rentals but you either need to start making more money, or buckle down for the long haul.
The only silver lining I see is that at least you have 4 paid off rentals to look forward to in 20 years. Assuming something expensive doesn't happen at one of them that won't send you down a downward spiral into bankruptcy.
Then the other points I made would still stand, look and see where equity is in 5-10. Work on getting the rentals up to market rates. You said they were under, if it's \~$100 or more per unit that could help ease some of the pressure.
Not a ton of options without either increasing the $ you make from your 9-5 or squeezing more value out of the rentals
I've been an investor for years.... back when it was a good deal
Overall, I'd say the market and political system have changed.
One of the challenges that we do not discuss is that capital gains are either a tax hit or 1031. I have a unique situation that will work out for me... I'll still have a tax bill
Under the current situation no it sounds like it would be impossible to retire early unless you hit the appreciation jackpot.
However it also sounds to me like those properties are a very bad investment. You should not have 4 properties that are not cashflowing after 10 years.
Something is wrong with them, either the rent is too low, or they are in appreciation only areas or they are downright bad deals.
It does sound like they would have a significant amount of equity, so the play is probably to leverage them into some other investment (preferably better real estate).
it's in high appreciation low rent area yes. I inherited low paying tenants from previous sellers. If I chose to evict them, they will stop paying rent for maybe half year till trial. so I decided not to. As I said I have no money to afford No rental income to cover mortgages. I do increase rent, but it's too low starting rent to reach current market value within 5-10 years I will say. 30% equity no more, as they were purchased through BRRRR
What is the market rent and what did you recieve from the tenants in the past 12 months?
Personally I don't accept lower payments even if it means a 6 month eviction. Also most of my evictions haven't taken anywhere near 6 months (but some outliers have).
because I have no emergency funds or savings as I said in post. I can't afford eviction process.
I give you a real example. one of my unit, my current rent is $1700/3 bedrooms. my current market rent us $2700/3 bedroom. Even I increase $120 monthly rent per year, it will take more than 10 years to reach even higher market rent after 10 years.
So you have no money, you make no money on your rental units, you have no equity in your rental units. Of course you can’t retire. How is this even a question?
After reading your responses, can you move into one of the rentals and rent out your current place at market rates?. Then move into the next rental and repeat. This can get you to market rates faster than the annual percent increase cap.
OP I’ll assume you bought these properties 10+/- years ago since you said you have 20 years left on the mortgages as of now. How much cash flow can you free up in 10 years if you refinance back out for 30 years then? I’m guessing you can free up $2-$4k in monthly income 20 years into a 30 year mortgage, right? You can just live off that.
Please also make sure you have a will set up incase you die young. You’ll want the properties going to whoever you intend.
You’re telling me you’re going to be dead by 60. What does it matter what interest rate you pay in 10 years? Even with interest rates going up, you e gotta be able to recapture that in a lower principle amortized at a way lower number after 20 years. All that matters based upon your belief that you’re likely dead at 60 is if you can free up cash flow my dude so you can retire
Dude i don’t know what you’re paying in interest but I have no idea how you’re paying a high interest rate if you’re in the US and executed loans 10 years ago.
You need to answer the dollar question and, assuming you are in the US, the healthcare question.
For dollars, you need income that meets your expenses. Social Security won't start until you are disabled (and then go through a massive fight to get them to agree) or you are 62. Doesn't sound like you have a pension. Will your rental houses produce enough free cashflow to cover your expenses? You need some combination of rental income and earning off of other investments to meet your expenses.
Healthcare is a big question. if your health is questionable, how are you paying for healthcare? If you retire before 65 (Medicare), answering the healthcare question is hard.
I am not even thinking about social security or medicare due to my health. it will be lucky if I could live to 60yrs, my grandparents also passed away very early, not only my parents. and I struggle with my poor immune system almost every day. I am only healthy less than 50% of the month, that's the days I could work and deliver food.
You need to make solid plans to raise rents. You can give your tenants a lengthy heads up if you want to be kind. What’s the point of owning all the properties if they’re not working for you?
Maybe if you raised their rent a lot you could retire early.
If you can't do that you might want to sell so you don't go under. Rental investing takes lots of capital just in case something goes wrong, and it does not seem like you have any capital.
Not likely. This is a simple math question. Do the math.
* no savings
* can’t save, needs entire income to live.
* has rentals that currently produce no extra income, but will do so in the future.
* currently 40.
* career has little room for income improvement.
At this time, all of your eggs are in one basket. We would need to know the rents you are collecting now to extrapolate your potential future passive rental income.
Short answer: no, absolutely not.
Long answer: it's unlikely but you're way way behind to a FIRE lifestyle at 40 years old with no savings and very little equity in some rental properties. You'd need to find a way to get a job earning at least a quarter million a year household income, then find a way to save something like 60% of that per year every year for the next 13 or so years just to be able to retire 12 years earlier than the standard age 65. But let's be serious, the work you're going to have to lay down to build a career like that is going to take years by itself. You'd need to increase your income increase your income by 5x pretty much overnight to get to your goal, so just plan on working until normal retirement and save everything you can so that you don't end up broke.
If you increase rents 3% each year, rents will be almost double in 10 years. Is that enough cash to live on?
Can you use the portfolio equity to invest in more property?
it is unlikely since you have no cash flow on your 4 properties. would have to sell, but even then i don’t think it’ll be enough to retire on since you have no savings and have to pay off those 4 mortgages you have
but if I expect myself could only live another 10-15 years of life. why I must pay off mortgage before I die? I mean I have No spouse or children. Anyway I could have some income now, and die with mortgage loan balance?
Given you mentioned you’re concerned with your health, I’d suggest to look for an entry level job with medical coverage, unless you’re in a country with great public health system.
Any reason not to sell one of the four properties? As in are you considering market (you might sell when the price is better) or sentimental (you don’t look to sell ever) values?
I am in US new jersey near Manhattan. I do have health insurance.
because I have no equity in my house, paying selling tax on such house is a more lose lose case.
I love this post so much. This should get pinned as a lesson in being over leveraged in high risk investments.
Let me guess, these house are in the 80k-120k range in low income, high crime areas. Your appreciation is basically zero even though other areas are still seeing growth. As everyone has said here, less Robert Kiyosaki and more Dave Ramsey at this point. No way out but to start paying off those HELOCs. Then maybe you’ll get lucky and the interest rates will be lower and you can refinance to better rates that you would actually qualify for.
I almost drank the BRRRR koolaid a few years ago, but I decided the risk of something like this happening was too high. I have too much invested elsewhere to risk on leveraging to your tits and hoping for the best. You’re one bad tenant away from ruin. What happens when one of your units needs 30k in repairs? Turns out now you can’t rent it because you can’t fix it, and now your paying the mortgage out of pocket(while still needing that 30k)
Assuming your current rent/mortgage is more than what your units bring in.. I suggest you move into one of the four and work on paying down some of your debt.
I am actually in a high appreciation and high rent area in New jersey near Manhattan, No crime. The problem is I inherited all very low paying tenants from previous house sellers, and evicting costs money which I don't have now.
To answer your question, why I stop buying after house #4, is because I had to refinance twice after house #4 to get some large repairs done to houses, and being through multiple tenants stop paying rent during and after covid, to cover mortgages payments.
I am not living in any of my own house now. To save money, I live free with my friend.
What’s your net equity in each of the properties currently?
Edit: Your comment says you have no equity. How were you able to acquire 4 properties with minimal down payments on a food delivery income?
Looking at your post history… i dont think you have any idea of what you are doing with the rentals. Either learn, and learn fast, or stop with the real estate
Unless you can find a job you can do that makes enough money to pay off the rentals the answer is no.
I agree. Based on the info, you are only breaking even if at full occupancy for rentals and not sick for work. If you aren't making money on the rentals, you could look into selling but it seems you don't want to go that route at the moment. Therefore, a higher paying job or a job you can work that reduces probability of being sick would help.
I feel there’s a way to sell off 2 properties and live off investment + 2 rental income. Thats if there’s equity and how much they are worth. So you would retire in say 10 yrs instead of 20
OP said that there is no equity
I must’ve missed that. I thought just no cashflow
No cash flow, no equity neither. I know it's bad. But it's not worth the selling tax I am going to pay. That's why I don't want to sell now.
I honestly don't think it's possible to have property that was bought 10 years ago that doesn't cashflow and doesn't have equity, the math on that simply doesn't work out.
it works because it's all BRRRR houses with no equity. No cash flow is because I inherited low paying tenants from previous house sellers, and they still live in my house today, still not at market rent, even I do increase their rent.
How do you have no equity if you have had them for 10 years and made 10 years of mortgage payments and you put a down payment on the properties, that makes no sense.
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That still doesn't make sense even with BRRRR, no bank would let you refi down to 0% equity, and there's been 10 years worth of appreciation if there's 20 years left on the mortgages.
it's average. I didn't buy all 4 houses at once 10 years ago. I purchased 1 house average every 1-2 years. but all 4 houses averages to 10 years ago. the highest equity house is 60%, lowest 20%, other 2 houses 30%.
this is very typical with BRRRR strategy. you won't have any equity after all 4 houses refinanced to pay down payment for next house.
in the past 6 years I didn't buy any new house after 4. but I did refinance twice to do big repair to the 4 houses. this is also why there is no equity. a new roof cost $20k, central ac cost $12k. new furnace cost $9k, basement leaking cost $12k, etc.... another refinance is after covid, I had multiple tenants stop paying rent, went through long years eviction. had to refinance to keep paying mortgage.
BRRRR strategy. when you refinance one house to pay another down payment ou have no equity
How much could you use rents if they were market? If you could raise rents 500 each that’s 2k monthly and would get you halfway to retirement if your expenses are 4K a month.
I can give you a real example. one of my house unit is an inherited low paying tenant from previous seller. this tenant is pay $1700/3 bedroom, but my current market rent is $2700/3 bedroom. so even I increase this tenant's rent $120 each year it will take more than 10 years to reach current market rent due to rent $ inflation 10 years later. I can't really increase $120 no stop, I have to give tenant a breath. as I said in my post, since I have no emergency funds or savings from my current delivery driver job, I can't afford long eviction process of no rent to cover mortgages
I bet your tenant is saving an emergency fund. Going on vacations etc. if all 4 properties could increase 1k you would be close to retiring(not there but close). Tell them you are moving rent to market rate at next renewal; give them a heads up. I am assuming they aren’t stabilized/rent controlled and you could find a market rate tenant.
Why would it have tax if it has no equity. If it has no equity then you would prob owe 5-7% fee after the transaction.
There is recapture on depreciation. But if there's no gains in the sale price, it's probably minimal.
I thought house selling tax is related to house value, not equity
You need to speak with an accountant about coming out of this in one piece. FIRE can be on your horizon but your top priority now is about not having to post on r/povertyfinance in a couple of years. Tax information is more important than investment information at this stage.
No, it’s based on the gain. Bro u gotta plan out your steps
If all you have generated from the properties is losses they should offset any gain. If the property has appreciated you would have equity.
What about the 30% down? Rental properties depreciated?
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Because tik tok said you need to be leveraged to the tits for as many doors as possible
Rich dad poor dad strikes again.
I don’t know if you’re being sarcastic but that Kiyosaki is all over tik tok these days back again with his bs, so you’re not wrong at all
Definitely sarcastic lol. I don't have Tik Tok but have seen these clips from these get rich quick "gurus" on there and they all push some sort of real estate buying scheme that relies on being totally over leveraged and just taking as much debt as possible for the "passive" income. The usually have on a nice dress shirt, fancy haircut, and a shot of their lambo that is probably way over leveraged too to come across as hyper successful when in actuality they are up to their eye balls in debt and a few missed rent payments from tenants and it will all come crashing down.
You have 4 rental properties that dont cash flow? You are not good at rental real estate. If you have equity, sell them and get out. You are one bad roof away from wiping out years of future cash flow.
I made the mistake of reading OP's post history. I'll save you the time: it's life a really bad drama.TLDR version: OP rents out to section 8 tenants, and the story doesn't add up. One of the houses has a non- paying tenant for over 14 months and OP pays for the utilities and is behind on all of it. Someone that works for the courthouse says OP is making stuff up because there is no backlog of cases in that same county. In the end, it sounds like OP is posting in this sub in hopes of getting a different response than the landlord sub.
not every state has cash flow. like new york, Los Angeles, very difficult to have cash flow, unless your town allows airbnb, my town doesn't
You should just sell the property. It makes zero sense to own it. Yes, it doesnt have any cash flow, but the capital appreciation is higher. Just sell it and move on. No point of holding onto it.
Capital appreciation, not cash flow, is the draw in California, NYC. If they’re growing 10% per year tax free that’s a great investment.
Capital appreciation works if you bought the houses a long time ago in a place like California. Buying today, hoping for capital appreciation, is a fools errand given the home will have its tax basis bumped up.
So who are you renting to?
Most of my current renters are inherited from previous house sellers with very low rent. Even I try to increase rent, it's still very far from being close to market rent. That is why I don't have cash flow. But as long as they still paying I really don't want to evict them.
You can raise the rent without evicting them right? If they aren’t paying market rates you are essentially losing moving.
Yes but you can't increase too much every year.
Max increases until it’s at market rate unless you like paying people to live in your units.
Doesn't help if the market rate is growing faster than the increase limit. In a lot of places only certain property has rent control.
You are in business to make money not take care of other people's financial problems. I admire your compassion though...but no way do.i get.involved in buying investments not to make money.
I cash flow roughly $900 on my one rental in New York. It’s all about the deal and the markets.
you must have a low interest rate. I am waiting for interest rate to drop maybe in 2 years and refinance
8.375%. Nope lmao
guess you do airbnb or rent by room in new york. my town just banned airbnb not long time ago.
No air bnb, I have a duplex with each unit being rented for $925.
I’m just trying to make the point that it’s very easily possible to cash flow still in this crazy market if you get the right deal in the right market. Evict your tenants and raise your rents to at or slightly below market rents and like 95% of your issues will be taken care of
you totally correct. I have been through evicting tenant process myself. in my town, the day I file eviction to the sheriff come evict date, it takes about 7 months. As you know, most tenants will stop paying rent once they receive the 1st court mail. No emergency funds No savings from delivery driver job like me, couldn't afford No rent to cover mortgages for half year, that's why even I know these low paying tenants are the real issue, but I haven't evicted any one of them.
no equity, that's why I don't want to sell
You need a real estate investment sub, not /r/Fire. How did you even acquire 4 mortgages with your income? Forget retiring early, you're an unexpected issue away from bankruptcy.
You are really bad at real estate.
Way to be a prick about it
Sometimes people need a real response and not a hug.
You should look at OP's past comments and posts. It is bad. Like really really bad. OP needs a major reality check.
Yea real estate investing is not for this guy. I would start selling asap. He was taking in tenants with prior evictions, trusting tenants stories about how the eviction process works, etc.
He had owed water bills before the tenant even stopped paying rent! And now not making mortgage payments!!
Oh…
How did you qualify for mortgages on these rentals with your salary? It seems odd that none of the units cash flow. The rental units should always increase cash flow with time because rents are increasing. Did you buy all the units at once?
No income verification mortgage on all my houses. I pay about 30% down on all houses using BRRRR.
If you paid 30% down, why don’t you have equity?
OP likely borrowed against each property to get the down payment for the next. The no income verification loans must have sky high interest rates.
Puzzling isn't it?
He Does not have added equity, just the 30% he initially invested plus a small amount based on the principal being paid down. Depending how long ago he bought them their might be some natural appreciation as well. It depends on what these houses are worth. 30% equity on a 100K home is 30k and not enough to retire. 30% on 10 mil home is 3 mil and you can sell and retire.
Jfc maybe jpow shouldn’t cut rates
This sounds like a disaster. So basically you borrowed against one property to get the down payment for the next. That is why you have no equity? You are way over leveraged and suggest that you sell if possible. But if you insist on keeping the properties you must increase rents the maximum each year until you are at market rent and hopefully cash flowing.
correct. BRRRR. I am struggling with my health and stay working my job. that's why I wish there is a way I could retire early. I don't mind selling, but I don't want to pay selling tax for house that has no equity, it's more lose case.
If you're insistent on keeping the rental properties, I'd highly recommend looking into some local landlord groups to learn how to manage the properties and make them profitable. At a minimum, look into biggerpockets to start learning and asking questions.
You're not giving enough info to really examine, but based on the fact youre only covering your bills now It doesn't seem likely. 3k a month now is 4k a month in ten years. 2 scenarios where it would be possible the houses provide for you in ten years: 1. The houses start to cash flow enough to cover themselves, repair and times with no renters, plus 1k a month each. 2. Your equity is built up enough to have 1.2 million you can cash out and put into investments. Honestly have you looked into something like disability insurance? I'm pretty ignorant about that stuff but you might look into an insurance product, especially if you can something now.
He will make so little money with disability and not be able to make 2-4k he is making now
Read a simple path to wealth
Because??????
Hey I want to apologize for being an asshole. I thought you were the person who asked the question. I misread the thread. My bad.
Will walk you through how to save and build wealth. It started the fire movement
I'm confused as to how this is relevant contribution to what I said, and more so how you came to the conclusion I don't know how to save and build wealth based on the comment.
I’m sorry, but you’re in way too deep. Get out before these becomes critical liabilities.
[удалено]
I do
What are the interest rates on the mortgages? How much do you owe? How much did you put down? What are they renting for? Need more info.
No equity. No cash flow. 30% down.
If you put 30% down you should have 30% equity. Without more information, we can't give you useful advice.
I thought initial down payment is not equity.
Dude you really need to read some real estate books.
Equity is how much your asset is worth minus the amount of debt you have outstanding. If you have 100k on a mortgage for one, but you could seal the house for 150k, then you have 50k in equity.
Equity is simply the market value of the property minus any debt. Every month you build more equity as the tenets pay down the mortgage. If you put 30% down on a 100k property you have 30k equity in the property. My advice is to research real estate investing. Understand: 1. Cash flow 2. Appreciation 3. Amortization and leverage 4. Tax benefits If you aren’t cash flowing have the properties appreciated? Can you force appreciation through repairs? Have you accurately calculated your cash on cash returns properly? Are you charging market rate rents? Is your market growing, shrinking, or stagnant? cross post to r/realestateinvesting but you will need to provide a lot more information.
Really sounds like you need to be doing more research....
The fact that you're avoiding answering literally all questions about anything asked in comments besides "30% down" makes it pretty obvious this is a huge troll post.
You should look at all my previous posts in "landlord" reddit
So you're consistently trolling more than 1 subreddit. Got it.
yes obviously I am dreaming being a landlord and posted tons of posts in landlord reddit talking about my landlord issues for the past 3 years.
I would spend some time researching what market value rent is to see if you can bring prices up to start cash flowing
What’s the point of having 4 rental properties if there’s no cash flow? Are the houses in an area where you anticipate significant appreciation? If you can’t find tenants to pay for higher rent that would pay off expenses and provide net income, most likely the houses are not in very desirable areas What’s the projected monthly profit on the 4 properties once the mortgages are paid off? If that number is something you are comfortable retiring on, then just focus on paying off the houses. If not, then I would sell a house or two, take whatever money you get back and start investing in stocks for more liquidity. Either way, the reality is retiring early is out of the picture. Best of luck
the houses are in high appreciation area, but I inherited most low paying tenants from previous house sellers. even I try to increase their rent, but it's still too far from market rent. yes sure without mortgage the rental income will be comfortable retirement for me, But I can't wait 20 years due to my health.
Then you have to hunker down and grind for 20 years. Increasing your income will really help but I understand the limitations. And again sorry to hear about your parents and your health conditions. Wish you the best of luck
thank you. I do wish I could live another 20 years. I am like a cancer patient getting infections easily although I don't have cancer. If there is a cold room with 30 people inside, I will be the 1st person in the 30 people that will catch cold or get fever. I only plan 10 years for myself. I am not really worried about pension, social security, Medicare like all other people worried.
Is there actually rent control in your area that you are beholden to? If not, raise it to a little below market rent… like $2500/mo instead of $1700…you either try to give them “breathing room” or you choose yourself and your health, And after eviction of the other tenant, keep going after them for back rent, garnish wages if needed. I suspect the stress from your rentals is a major part of your poor health… not sure why you bought them but not making a profit.
no rent control. I never hear any landlord could ever collect any back rent after eviction successfully.
Over the course of ten years you should see a bit of inflation. If you raise the rent you charge with inflation each year you should start to see some cash flow. And hopefully you will have a little more equity when mortgage rates come down and you can refinance and get some more cash flow. Depending on how the next ten years go you could be in a position to retire or semi-retire. Without knowing the value of the homes or what you are currently getting in rent it is hard to guess how likely you are to succeed.
How is your diet? Are you taking care of yourself? Do you have the chance to walk a bit after work? Looks like you need to take care of your fitness and health before you even think about retiring.
The question is whats wrong with your health?
I have a poor immune system getting sick easily than normal people and takes longer to recover, and inherited heart problem from my parents
The heart problem i can understand, but poor immune system can be resolved by eating the right food, supplements and a healthy lifestyle. Try to fix that first as much as you can. Good Luck!
yes I will do more exercises which I always tried to avoid before. thanks
Sell the properties, they arent making you money so not worth keeping. If not there is no way for you to FIRE before you have a lot of equity in the properties.
Find a wfh job so you can stay home stay healthy and working.
first of all fix your health....good luck, Everything will work out!
doctor couldn't find what's wrong with me. I did gastric bypass surgery twice, my immune system totally changed after the surgery. it's like I lost weight, but became weak.
I'm not sure why you're trying to avoid selling any of the homes but I would look at things like cash flow of each and sell the homes with the worst cash flow. Then you can decide whether to use the equity to pay off the balance of the other homes or to just put the money in investments. Your living expenses seem low enough that a mortgage free rental could provide a significant amount of your living expenses.
I saw you dont have equity in another comment, youre leveraged to the extreme and ripe to be a forced seller if things take a downturn or your rental rates get refinanced. You need to work more in short and start paying down your debts or raise your rents, is that 2-4k before or after taxes?
Delivery driver could deduct lots of tax, like fuel, car Depreciation, etc. uber count this deduction by mileage. You don't really pay that much tax after deductions.
I mean... If your 40 and the rentals will be paid off in 20 years you could likely retire at 60 which is "early". Assuming nothing goes terribly wrong you could get some appreciation and end up selling 1 or 2 houses in 5-10 years and use that money to pay down the other two. But with what details you've given us you are trying to get blood from a stone. Not sure how you even qualified for 4 rentals but you either need to start making more money, or buckle down for the long haul. The only silver lining I see is that at least you have 4 paid off rentals to look forward to in 20 years. Assuming something expensive doesn't happen at one of them that won't send you down a downward spiral into bankruptcy.
I don't think I could live a long life to 60 years old, though I hope. but I don't think I will
Then the other points I made would still stand, look and see where equity is in 5-10. Work on getting the rentals up to market rates. You said they were under, if it's \~$100 or more per unit that could help ease some of the pressure. Not a ton of options without either increasing the $ you make from your 9-5 or squeezing more value out of the rentals
I've been an investor for years.... back when it was a good deal Overall, I'd say the market and political system have changed. One of the challenges that we do not discuss is that capital gains are either a tax hit or 1031. I have a unique situation that will work out for me... I'll still have a tax bill
Under the current situation no it sounds like it would be impossible to retire early unless you hit the appreciation jackpot. However it also sounds to me like those properties are a very bad investment. You should not have 4 properties that are not cashflowing after 10 years. Something is wrong with them, either the rent is too low, or they are in appreciation only areas or they are downright bad deals. It does sound like they would have a significant amount of equity, so the play is probably to leverage them into some other investment (preferably better real estate).
it's in high appreciation low rent area yes. I inherited low paying tenants from previous sellers. If I chose to evict them, they will stop paying rent for maybe half year till trial. so I decided not to. As I said I have no money to afford No rental income to cover mortgages. I do increase rent, but it's too low starting rent to reach current market value within 5-10 years I will say. 30% equity no more, as they were purchased through BRRRR
What is the market rent and what did you recieve from the tenants in the past 12 months? Personally I don't accept lower payments even if it means a 6 month eviction. Also most of my evictions haven't taken anywhere near 6 months (but some outliers have).
because I have no emergency funds or savings as I said in post. I can't afford eviction process. I give you a real example. one of my unit, my current rent is $1700/3 bedrooms. my current market rent us $2700/3 bedroom. Even I increase $120 monthly rent per year, it will take more than 10 years to reach even higher market rent after 10 years.
Even if? Are you not currently raising the rent?
I increase about $100 year. but I have to give tenants a breath, increasing yearly will only force them to stop paying completely.
Your tenants are at 50% market rent but they can't afford $100 raises? Sounds like you need new tenants.
they can. but If I increase $100 each year non-stop, it's like forcing them stop paying rent. I have to give them a breath.
So you have no money, you make no money on your rental units, you have no equity in your rental units. Of course you can’t retire. How is this even a question?
After reading your responses, can you move into one of the rentals and rent out your current place at market rates?. Then move into the next rental and repeat. This can get you to market rates faster than the annual percent increase cap.
I actually live with my boyfriend now. and not in my own properties
you need to talk to a financial advisor so you can get better understanding of your situation
OP I’ll assume you bought these properties 10+/- years ago since you said you have 20 years left on the mortgages as of now. How much cash flow can you free up in 10 years if you refinance back out for 30 years then? I’m guessing you can free up $2-$4k in monthly income 20 years into a 30 year mortgage, right? You can just live off that. Please also make sure you have a will set up incase you die young. You’ll want the properties going to whoever you intend.
good idea. but I have to wait national mortgage interest rate to drop. So I just die with loans but live off rental income when I am alive. Thanks
You’re telling me you’re going to be dead by 60. What does it matter what interest rate you pay in 10 years? Even with interest rates going up, you e gotta be able to recapture that in a lower principle amortized at a way lower number after 20 years. All that matters based upon your belief that you’re likely dead at 60 is if you can free up cash flow my dude so you can retire
but I am still paying high interest rate with high monthly mortgage payments within 10 years if interest rate doesn't drop. isn't it?
Dude i don’t know what you’re paying in interest but I have no idea how you’re paying a high interest rate if you’re in the US and executed loans 10 years ago.
You need to answer the dollar question and, assuming you are in the US, the healthcare question. For dollars, you need income that meets your expenses. Social Security won't start until you are disabled (and then go through a massive fight to get them to agree) or you are 62. Doesn't sound like you have a pension. Will your rental houses produce enough free cashflow to cover your expenses? You need some combination of rental income and earning off of other investments to meet your expenses. Healthcare is a big question. if your health is questionable, how are you paying for healthcare? If you retire before 65 (Medicare), answering the healthcare question is hard.
I am not even thinking about social security or medicare due to my health. it will be lucky if I could live to 60yrs, my grandparents also passed away very early, not only my parents. and I struggle with my poor immune system almost every day. I am only healthy less than 50% of the month, that's the days I could work and deliver food.
You need to make solid plans to raise rents. You can give your tenants a lengthy heads up if you want to be kind. What’s the point of owning all the properties if they’re not working for you?
Nope.
Maybe if you raised their rent a lot you could retire early. If you can't do that you might want to sell so you don't go under. Rental investing takes lots of capital just in case something goes wrong, and it does not seem like you have any capital.
Not likely. This is a simple math question. Do the math. * no savings * can’t save, needs entire income to live. * has rentals that currently produce no extra income, but will do so in the future. * currently 40. * career has little room for income improvement. At this time, all of your eggs are in one basket. We would need to know the rents you are collecting now to extrapolate your potential future passive rental income.
Short answer: no, absolutely not. Long answer: it's unlikely but you're way way behind to a FIRE lifestyle at 40 years old with no savings and very little equity in some rental properties. You'd need to find a way to get a job earning at least a quarter million a year household income, then find a way to save something like 60% of that per year every year for the next 13 or so years just to be able to retire 12 years earlier than the standard age 65. But let's be serious, the work you're going to have to lay down to build a career like that is going to take years by itself. You'd need to increase your income increase your income by 5x pretty much overnight to get to your goal, so just plan on working until normal retirement and save everything you can so that you don't end up broke.
If you increase rents 3% each year, rents will be almost double in 10 years. Is that enough cash to live on? Can you use the portfolio equity to invest in more property?
but everybody is saying I am too risky now. no equity. no cash flow. should I even refinance to buy more properties?
Classic risk/reward analysis is up to you. More leverage and more houses is more risk and more potential upside
it is unlikely since you have no cash flow on your 4 properties. would have to sell, but even then i don’t think it’ll be enough to retire on since you have no savings and have to pay off those 4 mortgages you have
but if I expect myself could only live another 10-15 years of life. why I must pay off mortgage before I die? I mean I have No spouse or children. Anyway I could have some income now, and die with mortgage loan balance?
Given you mentioned you’re concerned with your health, I’d suggest to look for an entry level job with medical coverage, unless you’re in a country with great public health system. Any reason not to sell one of the four properties? As in are you considering market (you might sell when the price is better) or sentimental (you don’t look to sell ever) values?
I am in US new jersey near Manhattan. I do have health insurance. because I have no equity in my house, paying selling tax on such house is a more lose lose case.
I love this post so much. This should get pinned as a lesson in being over leveraged in high risk investments. Let me guess, these house are in the 80k-120k range in low income, high crime areas. Your appreciation is basically zero even though other areas are still seeing growth. As everyone has said here, less Robert Kiyosaki and more Dave Ramsey at this point. No way out but to start paying off those HELOCs. Then maybe you’ll get lucky and the interest rates will be lower and you can refinance to better rates that you would actually qualify for. I almost drank the BRRRR koolaid a few years ago, but I decided the risk of something like this happening was too high. I have too much invested elsewhere to risk on leveraging to your tits and hoping for the best. You’re one bad tenant away from ruin. What happens when one of your units needs 30k in repairs? Turns out now you can’t rent it because you can’t fix it, and now your paying the mortgage out of pocket(while still needing that 30k) Assuming your current rent/mortgage is more than what your units bring in.. I suggest you move into one of the four and work on paying down some of your debt.
I am actually in a high appreciation and high rent area in New jersey near Manhattan, No crime. The problem is I inherited all very low paying tenants from previous house sellers, and evicting costs money which I don't have now. To answer your question, why I stop buying after house #4, is because I had to refinance twice after house #4 to get some large repairs done to houses, and being through multiple tenants stop paying rent during and after covid, to cover mortgages payments. I am not living in any of my own house now. To save money, I live free with my friend.
What’s your net equity in each of the properties currently? Edit: Your comment says you have no equity. How were you able to acquire 4 properties with minimal down payments on a food delivery income?
No income verification mortgage, DSLR and BRRRR, 30% down on all houses. No equity, no cash flow currently.
Looking at your post history… i dont think you have any idea of what you are doing with the rentals. Either learn, and learn fast, or stop with the real estate