Thanks everyone. This is so much to digest. I'm beating myself up for being so complacent on my strategy. Will get back with more input and questions later today...

I have had a high-end (for Albuquerque) rental in Abq for the last 7 years with no problems. It is the low end homes/tenants that are troublesome. Tenants usually stay two years and there are limited repairs needed turnover. That said, it is one of the poorer performing markets when I have rentals.

For me, the key to SFHs is to only buy a home I would live in. When I leave, I usually make them a rental. I usually do a 30 year mortgage to make qualifying easy and to keep payments low if thing get tight...then pay the amount each month that I would if it were a 15 year mortgage. I just bought a very nice second home. I will use it for vacations for a few years and either sell or rent it (unless I like it so much that I just kept second). Maybe make it my primary, sell my current primary home and get another second in a different spot.

I have 6 rentals now and am content to break even each month on them. As long as repairs keep them nice, they are appreciating and the rent covers costs/mortgage...let them just pay off (deferred gains). If I ever need the money, I can either sell or borrow against the equity (still deferred gains). Keeps my tax bracket lower during peak earning years.

Hey Motion, do you mind sharing some of the type of people you are renting to and why did you scale back from 14 to just 4? Is it because you are tired of dealing with them remotely? Are they in the "middle class" part of town or working class? The reason I am asking is because I like to have a look at Abq but near the University or in some middle class area and purchase a rental unit or duplex. Since Abq is a small ciyt(compared to LA), I have to research a bid more and find out if that's worth doing or not. Abq is the largest city in the state, there has to be some decent folks there that will pay rent, have a good jobs. If you don't feel like airing dirty laundry over the net, its ok with me too.

Socal has become too saturated with investors fighting over everything from SFH to Apartments

Jeff

We have both commercial and residential rentals. The residential is in a desirable 55+ community with high standards and attracts good tenants that usually stay long term. The commercial property is on a major street with mixed office/industrial use. Both are owned outright with no mortgage. My brother manages these properties and both have been pretty good as income and appreciation over the years. The residential is very quiet and reliable while the commercial tends to be feast and famine.

We have had our share of sketchy tenants in the commercial property including a Middle Eastern auto auction firm, porn producers, stolen boat dealership, fly by night auto repair, med marijuana outlet and others. There is no sure thing as a landlord but being within an hour or two of the properties is the only way it works for me.

Oh, I didn't know one can buy into a 55+ community and rent them? That's great if more of those home are available. I always thought that big cooperation owns the whole shebang? We have been buying mainly SFH in LA in the typical slightly upper middle class neighborhoods with hopes of renting to families with jobs and long term stay.

I just looked it up and there are a bunch of these around, mainly out near Palmsprings and OC area. Very interesting. I think its better then going out of state since its close by and easier to rent to the 55+ crowd then the rif rafs. Hell, I might even live in it when I grow up. All amenities are there on campus. I ahve to look into it more and find out what they rent for. I notice they all say 55+ only. I wonder if I can buy into it since I am not 55?

Sorry Motion, I side tracked the heck outta your thread

Another idea is to pour considerable finances into a high end Los Angeles area residential property in the hope of getting some good capital gains. Obviously do your research and buy something undervalued, have it tenanted for, say, five years then sell.

Or, again in the Los Angeles area, buy a building with five units and get some good rental coming each month plus the capital gains. Downside is a bit more work dealing with new tenants or paying for a property manager.

Apartments here have gone through the roof and the rental income doesn't pencil out. large ones and small ones, same damn thing. In certain areas of the city, there are these older apartments that can converted into small condos. Sell them off and take that money and buy an apartments in cities without rent control. Everything rents here in LA due to the amount of people pouring into socal. The one thing we are sure about is that the market will bust and it will go back up but it always exceed the previous peak. If Motion can stomach playing land lord and deal with all the BS, then that's something worth think about.

SFHs are peaking still, I sense the slowing or correction is coming, but the question is when? My real estate broker and I had been talking about this for a year now and see no real signs of slowing up the following year. If the market bust nest year, then I am going to have to tuck my lil' tail between my legs and ride it out and eat cup-o-noodles for my wife's birthday in the next couple years. We just closed on two homes in the Beach city in the south bay. We are keeping one and selling the other after adding another bedroom and a bath to it and redoing all the inside.

Also, high end LA residential is hard to sell, because our high end is near 1.5-2 mil. at today's market. That narrows the market up in both sales and rent. I think the sweet spot is the 800k to a few bucks over a mil. In the 400-500k range, you are fighting with the bottom feeders/flippers covering up all kinds of crap with a coat of paint and carpet screwing people making a buck. There are lots of older homes (build in the 20-50s) here with mechanicals near the end of its service life. These dirty flippers cover them up and resell the homes to make 20-30 k and move on to the next, rinse and repeat.

The problem is that there is so much desert land, available for cheap, that DR Horton and other low-cost builders just keep building super cheap houses. Nearly anyone can buy one and everyone prefers the newer homes. This really limits the stock of well-qualified people for rentals. Even then, they rent for a year then get out once they've improved their FICO score to a point where they can get financing on a home.

I won't even consider buying/renting in CA any more. Prices are too high, and the laws are stacked heavily against the landlord.

I may check into building a self storage unit out in Apple Valley, Lancaster, San Bernardino, etc. I know everyone thinks these things are slam dunks, but you have to be heavily involved in marketing to keep them rented. Its a big job.

Anyone with any intel re: costs, beyond the dirt?

Yes, the best play in Albq is the northeast where you do not have to cross the river and fight huge traffic jams to get to the high paying jobs at Kirtland AFB or Sandia National Labs...and the schools are better. The home prices are much higher, so it is hard to make a buck...but you get better tenants and more appreciation. There are few new homes to compete with and lied are pricey as the mountains are on one side, the reservation on one, the mountains on one and the airport/airbase on the fourth.

I was a landlord for a few years (rented out a townhome).
On a good/bad scale of 1 to 10, dealing with renters was waaaaay down at the bottom, right next to the 1.

Never again. Not for any amount.

Did you pay the depreciation recapture on each of those rentals that you sold?
Are you going to 1031 exchange from the remaining SFR's into something else?

I am also curious about the self storage game.

About 6 months ago I reached 100% occupancy on a 40 unit multi that I own. I plan to reconfigure the laundry rooms (3) of them into really really nice efficiency apartments. As such, I was literally out of storage space on the property when we filled the last apartment. I have a 17' box truck but my crew is using that daily as a mobile tool and materials shed for my little fix/flip hobby...

Anyway, without asking the city for permission, I bought a 40' shipping container, placed it at the rear of the complex and filled it up with building materials and clean used appliances. After several months, Code Enforcement finally caught me and gave me a notice of violation.

I painted it to match the brick on the buildings and installed a 40'x3' railroad tie planter along the entire length of it. I paid a $25 fee to go in front of the zoning board to request a conditional use permit for 6 months or so until I could buy a house with a garage on the same street or come up with some other solution.

I found out during the hearing that they don't have conditional use permits like in California. I said my piece, showed them photos and told them that the planter would be filled with flowers and nice shrubs when spring comes. To my amazement, the board issued me a variance for a 40' shipping container in a residential area for not one or two years, but FOR AS LONG AS I OWN THE PROPERTY.

I was humbled.

So after owning this thing and seeing the usefulness and flexibility of it, I was wondering if a person could buy an appropriately zoned lot or vacant business, place a number of cargo containers on the property, run lighting and electricity OUTSIDE of the containers (customers can bring their own lights but electricity inside the containers would be forbidden), do fencing and security, and hire a senior citizen to babysit the gate and handle rental transactions. Maybe turn the original business structure into an unofficial residence for the caretaker/manager..

In Cincinnati , 40' containers are about $1,800. Interestingly, the 20' containers are the same price in this market.

I think that that might be a viable business, especially if you could covertly get it up and running before bureaucrats could shut it down. A thrift store of some sort might be a good cover for the real business which is self storage.

DL