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How Our 4 Plex Did In 2013

by retirebyforty on May 12, 2014 · 71 comments

in passive income, rental property

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how our 4 plex did in 2013

Now that April 15th is a distant memory, we can take a look at our 4 plex cash flow without cringing about tax. Here is a brief recap. We purchased a 4-plex through a short sale process in October 2011. The previous owner put a stop to all repair and maintenance at one point because the 4 plex was underwater and it wasn’t generating positive cash flow. We made many repairs over the last few years, but there are still quite a few things left to fix. Fast forward to 2014, the local real estate market has recovered nicely and we decided to take profit and a short break from being a landlord. Yes, we did have a property manager, but it still took time and generated stress for us.

Let’s see how the 4 plex did in 2013.

2013 2012 projection
Rental Income $35,822 $33,899 $33,630
mortgage -$14,292 -$14,292 -$14,292
property tax -$5,039 -$4,499 -$4,499
insurance -$1,258 -$1,354 -$1,084
advertising -$164
cleaning/maintenance -$500 -$2,215
professional services -$573
repairs -$8,082 -$7,907
utilities -$3,620 -$3,460
management fee -$4,316 -$3,049
supplies -$160
Operating expenses -$16,678 -$17,368 -$11,354
cash flow -$1,445 -$3,614 $2,401

Rent

We actually did pretty well on the rent. The place was almost 100% rented in 2013 and we increased rent a little bit. 2014 should be a bit higher, but not by much. One unit is rented to a section 8 tenant so we couldn’t raise the rent there. I heard rent is quite a bit higher in the neighboring 4 plex, but we’d probably need to overhaul the 70s era interior to raise the rent significantly.

Property Tax

We had a 12% increase in property tax. The appraised value increased only 3% as expected, but there were a bunch of bonds passed and other fees added. This was one of the reasons why I wanted to sell. The tax in that area is increasing faster than I’d like.

Insurance

I think this went down because I moved the umbrella insurance elsewhere. It’s pretty much the same as 2012.

Cleaning/Maintenance

This was much better than 2012. The tenants were relatively happy and nobody moved out. This minimized cleaning and various turn over fees.

Repairs

We fixed a few major items in 2013 and the repair cost was about the same as 2012. I think all the big problems are taken care of now so the repair cost should go down in 2014. The place is pretty old so I’m sure things will break. The appliances are getting old and probably will need to be replaced at some point.

Management fee

I’m not sure why it’s so much higher this year. I probably broke out part of it into the professional fee in 2013.

Cash Flow

We improved in the positive direction about $2,000. The 4 plex still isn’t cash flow positive, but it’s really close. Actually, about $4,500 of the mortgage payment went into the principal. So even if we’re not cash flow positive, it’s still a gain in our net worth for the year (about +$3,000.)

2014

For 2014, the 4 plex should be very close to positive cash flow assuming nothing major goes kaput. That’s a big assumption on this property though… Instead, we’re putting the 4 plex up for sale to take the gain now. We’ll probably bank 45 to 50 thousand dollars in profit after paying all the taxes and fees. That’s not huge, but we really need to simplify our lives right now and take a little break from being a landlord.

From the financial stand point, it’s probably better to keep the 4 plex for the long term. I’m sure in 5 years, it’ll be cash flowing pretty well. In 30 years, it would be a great part of a retirement portfolio. The big problems for us are the repairs and property management bills. Those two items inflated the overhead and made it really difficult to make money. Next time, I’ll try an owner occupied duplex/triplex. I’d be able to manage and maintain the property myself and reduce the overhead significantly.

How about you? Would you take $50,000 profit now or wait a few more years?

Photo credit – Zillow. Have you checked your home price on Zillow lately? If you haven’t, you might be surprised at how much it’s worth now. Usually the price at Zillow is a bit inflated, though.

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{ 71 comments… read them below or add one }

Financial independence May 12, 2014 at 12:33 am

Hi there,

You are seemingly make no provisions for overhauling the property in long term. Where would money come from?

I have been thinking about buying to rent the property, but could not get the math working over 3-50 years period cycle. How does it work for you?

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retirebyforty May 12, 2014 at 8:48 am

We have cash reserve and we’ve been using the rental income to make repairs. We got the property at a relatively good price so it could cash flow in 3-5 years. It would be very difficult if the price was higher.

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John C @ Action Economics May 12, 2014 at 4:01 am

I’d be doing the same thing in your shoes. I think the simplification selling it will have on your life exceeds the little bit of extra equity that will slowly be developed, especially with the property having a hard time of being cash flow positive. Having that extra $50K now will be nice too!

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Under The Money Tree May 12, 2014 at 4:50 am

Did you have an exit strategy when you bought the property?

Personally with my property, so long as I break even and the mortgage is getting paid (capital repayment not interest only) I’m happy. I look at property rentals as a long term investment.

As you’ve stated once you factor in captial repayments (i.e. the equity you are gaining) you’re cutting a profit. Rinse and repeat for 20 years (or whatever term your mortgage is) and you have a mortgage free house that is yielding $35k (albeit before expenses) a year.

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retirebyforty May 12, 2014 at 8:51 am

I thought I would keep it long term, but there are a few problems that I didn’t anticipate. I’m too busy with our kid and I don’t have time to spare right now. When our kid goes off to school, I’d be able to do more. The tenants are okay, but they do create some stress. One family started to put up a tree house in the back and we had to tell them to take it down. It’s also 30 minutes away so I couldn’t keep an eye on it. If it was closer, it’d be better.

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Sandy May 12, 2014 at 6:29 am

Taxes can KILL the cash flow of a rental when they increase so much. My taxes increased by 25% in one year! It’s horrible. If they continue to increase at this rate, I won’t keep my rentals for too long. Thankfully one of then can stand the 25% increases. The other can’t absorb it so readily.

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retirebyforty May 12, 2014 at 8:51 am

25% is huge. Tenants wouldn’t understand the need to raise the rent to absorb the tax. That’s tough.

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Stefanie @ The Broke and Beautiful Life May 12, 2014 at 7:12 am

My net worth is only 30k so 50k in profit seems like a lot to me. I’d be happy with that :)

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retirebyforty May 12, 2014 at 8:51 am

I guess it’s all relative. :)

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nicoleandmaggie May 12, 2014 at 7:18 am

I have more than that sitting in savings right now (waiting to fund summer + one time annual expenses+ emergency fund). I cannot imagine ever willingly going into the real estate business as an owner.

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retirebyforty May 12, 2014 at 8:52 am

It all depends on the tenants. If you have good renters, then it’s pretty good.

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nicoleandmaggie May 13, 2014 at 12:10 pm

Playing the lottery is also great if you pick the winning number. Yes yes, maybe poker is a better analogy since getting bad tenants isn’t completely random. But it sure as heck isn’t a sure thing either.

I’d much rather play a game of chance where the odds are better for less effort.

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No Nonsense Landlord May 13, 2014 at 12:20 pm

No offense, but getting great tenants is relatively easy. You have to know what to look for, and how to market properly…

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Ricky August 9, 2014 at 4:43 pm

Are you honestly saying finding good tenants is like winning the lottery?

You’ve never heard of credit and background checks? Proof of income? Common sense?

Sure if you just rent your house to any ole person…

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Financial Samurai May 12, 2014 at 7:28 am

Real money is made over the long term. I advise my clients to hold on for as long as possible.

If I had sold my house in 2012 after I left my job, I would be kicking myself now. Then I thought 2013 was probably a good time to sell… and nope, I would be kicking myself again. Now I’m thinking this year is the time to sell… and I know I will regret in 10 years from now.

What’ $50,000? Will it change your life or do something special? I doubt it. If it was $250,000…. or $500,000…. now you’ve got a tougher decision!

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Even Steven May 12, 2014 at 8:41 am

I’m with Financial Samurai on this one, I would look at the 5-10 year picture, I think this decision is being made off where you are right now. I’m sure it will make your life simplier and the fact that you have it losing money or a small gain would influence my decision, but I’d hang on.

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retirebyforty May 12, 2014 at 8:53 am

I agree. We’ll see if we can roll it in to another property nearby. $50k isn’t a big deal to us, but we really do need a short break.

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peter May 14, 2014 at 10:25 am

Money in money’s form has a force about it.

Would you really prefer to be owning (stuck with) an illiquid asset even if you had the time and you were cash-flow positive?

Typically, those that have less have more in real-estate, followed by gold. It is the proverbial vicious circle.

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Jeff May 12, 2014 at 7:48 am

I have to agree with sam on this one joe. You’ve owned this property for 3 years (2.5?) and cashflow’ed out just 2k after all repairs were made. I understand that you’re leaving the property in a better position when you sell, but you’re basically eating all the repair costs and then selling. I think you’d be better served to hang on to it, and maybe find a someone that you could outsource all the work you dont want to do after the property management to. Pay them a few hundred dollars a month – it will cut into your cash flow, but from your estimates, your cash flow should start going up quite a bit.

Also, You mention wanting to have a live-in duplex – would this property not fit that bill for sometime later in your life?

If it were me, I’d be reluctant to sell for such a (relatively) small amount of profit after all the time and headache that you’ve put into it. You seem to have most of the major work done at this point, and your margin should go up. Also, if you rehabbed one of the units you’d be able to increase your rent (same goes for moving the section 8 tenant out)

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retirebyforty May 12, 2014 at 8:56 am

This 4 plex is too far away for us. I think we’ll still need to put more time and headache into it. That’s why I’m taking profit now. I’ll try to find something closer in a better neighborhood.

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Brent @ All About Interest May 12, 2014 at 8:00 am

This is a tough one. Not only is it not cash-flow positive, but it doesn’t sound like it’s the type of property to attract the best renters. That has to play a factor as well. The overall wear and tear from bad tenants and constant maintenance due to age of property would make me want to sell and profit the $50k.

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retirebyforty May 12, 2014 at 8:57 am

You’re right. The tenants are generally good, but they do have some problems. The next place will be in a better neighborhood. That way we can charge more rent and I can keep an eye on it.

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Frugal pediatrician May 12, 2014 at 10:27 pm

We have a few rentals. The nice condos don’t cash flow for us as well as the ones in ‘lower’ rent neighborhoods. I think for those who have rentals as long term investments its worth it, especially after the mortgages are paid off. Each rental we paid a good 30% or more down so it cash flows and got good mortgages. I would definitely hold and tough it through. It will be hard to find a rental 4 plex again.

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retirebyforty May 13, 2014 at 5:25 pm

That’s the same for us here. The nice places don’t cash flow very well because the purchase price is so high. The lower rent neighborhood cash flow better, but have more problems…

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Frugal Pediatrician May 13, 2014 at 8:17 pm

Our one really nice unit we are renting to a cousin as costs, so we’re only making the equity and appreciation. But at least he won’t try to build a tree house! That situation you had really sounds like a nightmare. I can only imagine the stress when you had to tell them to take it down!

Justin @ Root of Good May 12, 2014 at 8:09 am

I’d take the $50k, or at least put it on the market and give it a shot. It sounds like it keeps you pretty busy (at times) and it isn’t making a ton of cash flow (yet). You can let it sit on the market for a while and see if you get any nibbles. Having 4 tenants in place that have renewed their leases might make this an attractive property, since it will produce cash flow from day 1.

And with a dated interior, it might be hard to raise the rent long term (or get and keep quality tenants). I can’t imagine what updating 4 kitchens and 4 sets of bathrooms would cost.

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retirebyforty May 12, 2014 at 8:58 am

It’s in escrow now and should be closed pretty soon. Yeah, it would cost a ton to renovate the whole place and I don’t have time to DIY right now.

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Dave May 12, 2014 at 8:34 am

I would of kept the property simply because with any investment, you can’t be short sighted, you have to be in it for the long haul, everything has its ups and downs(plus diversification from just stocks). When the stock market was dropping like a rock or shooting up 2008 to 2012, if you had sold at either point and taken your loss or taken your profit, you’d of left a lot of money on the table had you left it invested there. So with our one rental property, we increase our networth by 6K a year (not counting the increase in the property value), I handle most the repairs myself and manage it myself. But you also have to realize its a business, you can’t take everything to heart or personal, i.e. when something happens, don’t let it stress you out and affect your life, I figure out my options and pick the best one and move on(just like if the stock market crashes, you shrug and don’t sell but buy some more).
The one thing I find very concerning is in 2008, if you had rental properties, stock, or many other typical investments, they all dropped like a rock, nothing was “safe,” so I’m concerned what about when it happens again, what can you do about it except throw more cash in?
Also with a investment property vs a REIT, most REIT stock values dropped in 2008, if they went out of business, you’d lose your investment, but with a property, you get to hang on to it as long as you can continue to afford it.

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retirebyforty May 12, 2014 at 9:00 am

I agree that long term is better. It’s just tough to make much money because of the repair and the property management bills. It would be much better if there weren’t so much repairs. I’ll try to roll the profit into another property, but we’ll see…

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davidmichael May 12, 2014 at 9:06 am

This is a tough call. Nearly all of my colleagues (teachers) in the San Francisco Bay area are now multimillionaires because they purchased one extra house at a time, then a duplex or fourplex. As the real estate market went nuts they were rewarded handsomely. For instance, my house went from $37,000 to 2.5 million over 30 years. Of course, I sold much earlier at $240,000 which wasn’t bad when we moved to Oregon.

The question becomes is it worth the aggravation of being a landlord, with property management or not, for extra monies? In my case, it was not because I wanted to devote my time to other more rewarding interests such as world travel. It’s possible that Portland real estate will experience another bubble such as the city of San Francisco today. One interesting piece of information I heard this week is that climatologists expect Oregon’s climate to become sunnier and warmer over the next ten years and rival Northern California. Local wine growers are already changing some of their leading wine grapes from Pinot Noir to Sirah in anticipation. That could make a huge difference in population growth as people move from the hot, arid southwest to the cooler, more watered areras of the Northwest. We are already seeing an increase in population in the Eugene-Springfield region. The area is way overbuilt with too many student apartments near the University of Oregon which is starting to dominate the town thanks-or no-thanks to the wondrous football team.

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retirebyforty May 12, 2014 at 2:57 pm

I think the Bay Area is a special case. Not many places in the country had that crazy gain in the real estate market.
I really don’t think Portland will be the next big thing. We just don’t have the mentality to push it. Seattle on the other hand probably has a much higher chance of a great real estate increase in the next 30 years. I’d be nice to have a little longer summer. :)

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Moon May 12, 2014 at 11:25 am

That is why we chose to build a brand new home as a rental property. We are only having $250 per month of postive cashflow after all expenses paid, but we don’t actually need the rental income at all (not counting on it to help pay bills!). It’s nice just to have the tenants to pay the mortgage and nothing should need repair within the first few years since the whole thing is brand new. No headache either since we got a really good PM company.

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retirebyforty May 12, 2014 at 2:58 pm

I considered a brand new 4 plex, but the number didn’t work out. It was just a bit too expensive. Congratulation on having a good PM. That’s pretty rare. :)

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Brian May 12, 2014 at 12:19 pm

RB40,
If the investment doesn’t meet your objectives and the return is not within the range you expected and likely won’t be for the foreseeable future, move on. Sometimes circumstances change and uncontrollable variables alter the return (ie abnormal tax increases).

If a person doesn’t know how to get out of a subpar investment how are they going to know how to get out of a good one.

Buying average rental properties in average neighborhoods for the sole purpose of property appreciation is a bad idea. On average, over the long run, RE property appreciation slightly exceeds inflation.

If your cap rate was lower than what you could get from a similiar asset class REIT ETF, then you are better off getting the REIT ETF and saving yourself the headache.

Best of luck on the closing and possibly finding something else.

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retirebyforty May 12, 2014 at 3:00 pm

Thanks for your comment. It’s just not the right place for us right now. I don’t have time to support it and it’s a bit too far away. I’ll see if I can find some a place closer or maybe just take a break for a few years.

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Pat May 12, 2014 at 12:58 pm

My husband and I bought a multi-families home back when the market crashed in 2010. We thought that we will be living in an owner unit and rent out other 5 units to help with the mortgage. But life never turn out as you expected, my husband’s job moved us to another state so, we could not live in our dream home.

This house is what we always wanted. It was builded in 1860s, very pretty. But previous owner was neglected it for many years. We have been fixing it ever since. Our mortgage is a 15 years fixed because it’s 6 units we have to take a small business loan. As for rental wise we are doing great 100% rented for the last 4 years and is cover banknote but the home repairs and other stuff is just killing us.

If we put it on the market now we would make 100,000$ it is very temping but we would never be able to own such a beautiful home in this location again. My husband and I wanted to live there when we are retire (he will be 55) the house will generate close to six figure in annual income.

At this point I just hope that the house will not broke us before we could see any cash flow coming in.

Ps: I am planing to be in Thailand for many months a year when we are retired.

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retirebyforty May 12, 2014 at 3:01 pm

Thanks for sharing. Life really doesn’t turn out like you expected. Good luck with your rental. It sounds like you can always take a profit if you run into financial problems. Thailand is a great part time retirement destination. :) I plan to be there extensively as well. :)

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Kenny May 12, 2014 at 1:53 pm

So, if you look at it from a trending perspective, a lot of homes purchased in good areas or not at government sales/auctions rely heavily on capital gains to make its overall ROI. You seem to be in that mode. For a home of your size/price/income, you are almost breakeven to slightly positive/negative with/without management fee.

So, if you agree with that, and know that the trend of the housing it up, and yes, it just started, with Yellen not planning to raise rates until mid-2015, why not keep it for 1 more year. In your case, with the management fee you are slightly negative, but you will get one more year of depreciation in taxes, one more year of someone having paid the mortgage for you on your property and one more year of appreciation in home. Now, if you combine the three and do a bit of forecasting, you will have a good bit of that make a dent into the taxes you will owe if you do not do the tax-swap with another property. IF you do the tax-swap (read below), then you are even better off.

Another completely different strategy is to say IF I find another home as rental (2-4 plex), I will put this one on the market and buy the other one. Of course, with your financial situation, you might have to do some bridge loans with specialized lenders since regular banks might not allow you to buy before selling the existing one.

So, depending on your long term strategy, you definitely do NOT want to be in a situation where the rental income is not there at all, even with a slight negative cash flow, since the ROI computation with the capital gains is still part of the equation. To explain that further, your $50K in gains over 3 years is still a $1388.88 per month in real income, even though you do not get it monthly. Not having a rental AT ALL for a period of time is going to put a dent in your style.

We have 2 full time jobs, 7 properties, day-trading income and soon going to have one of the two in part time retirement. And hence a LOT of strategies, and planning are in the works since my equation is complex. The only positive aspect of my situation that makes things a bit easier is that I have no debt, no mortgage and good amount of cash flow from each property (16% to 29% ROI without considering capital gains per property). Eventually, you want to get to this situation, and one only gets there by paying off the loans as quickly as possible.

Not sure if my jibberish makes sense, but the above is what I would do if I were you.

Good luck, and thanks SO MUCH for sharing.

Kenny

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retirebyforty May 13, 2014 at 5:19 pm

You guys sound really busy. :)
We’ll probably roll everything into another rental property at some point. It’ll be closer and in better shape so I can manage it myself. Even if I don’t reinvest the money into a property, I’ll invest it in something else. It’s not going to sit in a saving account.

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jim May 12, 2014 at 2:59 pm

What work are you having to do to manage that property? I’d think the property manager should be doing most of the work especially if you have decent tenants and low turnover. Was it mostly decision making the manager couldn’t do?

I think $50k profit it great for a couple year investment. I’d probably hang on to it myself for the long term though.

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retirebyforty May 13, 2014 at 5:21 pm

They just can’t keep a close eye on it. One tenant built a tree house in the back for example. The place is also a bit older and everything is getting worn down. It will cost a lot of money to renovate everything. I’ll search for something closer so I can at least keep an eye on it or just manage it myself.

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Dan May 12, 2014 at 4:05 pm

My mindset is buy and hold when it comes to real estate, I think our country is set up to benefit the long term property holder. But I could definitely see where the quick $50k and relief from the hassle that comes from real estate holding.

Tough decision!

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Chris@ChattanoogaCheapster May 12, 2014 at 9:24 pm

It’s a lifestyle decision. Sure, you could make more money if you held on longer, but couldn’t you say the same thing about your old job?

I think a lot about turning my current home into a rental. The market for rentals is great in my neighborhood. I think I would probably pass because my time is so valuable and limited. I have a young daughter and another on the way. I don’t want to miss any time with them that I don’t have to, even if it is a good financial decision.

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retirebyforty May 13, 2014 at 5:22 pm

Exactly! Once I have more time, I would be able to do more. It’s just too much hassle right now because it’s 30 minutes away.

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mike May 12, 2014 at 10:09 pm

Hi:

I was a bit confused. if you are paying $4300 in “management fee”, why aren’t the property managers interacting with the tenants , sending out notices, and doing any repairs(they would bill you of course.)

Or is the $4300 in management something else entirely.

this would help my understand!

thanks,

M.

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retirebyforty May 13, 2014 at 5:24 pm

They are doing all that, but they don’t take care of it like you take care of your house. There are many items that get overlooked. One family built a tree house and that’s a big liability issue. One stove is missing a heating element. There is a leak in the bathroom, etc… All these issues are hidden until we did an inspection…

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Holly@ClubThrifty May 13, 2014 at 5:28 am

It sounds like you are over being a landlord. If that’s the case, I would definitely sell! a 40-50K profit is nothing to sneeze at and I’m sure you could grow that money elsewhere.

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retirebyforty May 13, 2014 at 5:26 pm

Actually, we’ll still be a landlord, but on easier properties. :)

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Ty May 13, 2014 at 6:47 am

I don’t see the tax write offs in your calculation?? They alone should have put you in positove territory. That is where I make my money every year. May want to look at a different property managment arrangement. Agree with your assessment of Seattle over Portland… although Portland is signifigantly more liveable. You may want to look at moving to Vancouver to get over on Oregons income tax and Portlands high propety taxes.

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No Nonsense Landlord May 13, 2014 at 12:17 pm

Never count appreciation, or tax write-offs on a RE investment. They should stand on their own.

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retirebyforty May 13, 2014 at 5:28 pm

The tax write off was nice in 2013, but previously we couldn’t take advantage of it because we made too much money. We’ll have to pay back the depreciation when you sell anyway, so I don’t think it’s a huge deal. Is it?

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jim May 14, 2014 at 11:55 am

Joe, you say you couldn’t take advantage of the write off because you made too much. Did you carry forward losses? If your income is too high to take a passive loss from real estate then you can carry forward the losses into future years and then take them when your income is lower.

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retirebyforty May 15, 2014 at 11:31 am

We finally were able to take advantage of the tax write off for 2013. There are still a little left to carry forward, but not much.

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Trevor May 13, 2014 at 6:59 am

What repairs did you do? $15k in two years is a lot of money for repairs. You need to get out of that property, or figure out how to make it cash flow.

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retirebyforty May 13, 2014 at 5:28 pm

Repairs – drainage, chimney, fireplace, crawlspace, appliances, sliding door, and a ton of other stuff. It’s just an older place.

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arip May 13, 2014 at 11:43 am

I have similar situation like you. I will take the profit, keep it in some moderate investment fund which can give 6.5-8% per annum, and after few years withdraw all and use the fund to pay off house debt. By doing this, i dont have to manage the rental unit, less stress and have more time doing other thing.

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No Nonsense Landlord May 13, 2014 at 12:16 pm

The management fee is 12%, that is too much. Expenses should be ~45% of rents. Repairs are also sky high. maybe you are over improving, or fixing deferred maintenance?

I have several 4-plexes too. Email me and I can share what I am doing. I am cash flowing over $20K per 4-plex, assuming I am 100% full and manage it myself.

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Tram July 15, 2014 at 6:42 pm

Hi, the mortgage company requires insurance. What kind of insurance do you buy for your 4-plex? I’m having difficulty finding one that’s less than 2800 for a 4-plex that worth less than 390k. Any advice would be helpful to me as the closing date is approaching.

Thanks,
Tram

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Max May 14, 2014 at 10:03 am

On raising Section 8 rent – I would advise you to check on the rules on this. Where I live I can increase the rent once per year to be in line with what is considered market rate – which in my area’s case often times would be much more than the standard allowed rate. This will not impact your tenant too much either as the bulk will be covered by the government subsidy.

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retirebyforty May 15, 2014 at 11:26 am

We checked last September and we couldn’t raise the rent at all. Maybe this September.

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Lamar Buys Houses May 14, 2014 at 6:27 pm

You don’t have to pay back the depreciation on the sale if you use a 1031 exchange.

Have you thought about holding the property in an LLC. You should be able to depreciate it in the LLC and pay yourself a dividend through a K1. It sounds like you might want to talk with a CPA that knows real estate.

At this point the stock market doesn’t interest me and good cash flow properties are getting difficult to find. I’m stacking reserves at the moment and waiting for a better buying opportunity.

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William @ Drop Dead Money May 15, 2014 at 8:08 am

I would take the $50K, and keep it in an old-fashioned savings account. Then buy another rental property in the next recession. That, incidentally, is not too far away: since WW2 we’ve had recession bottoms every 7-10 years, like clockwork. It’s been 5 years since the last one.

I think you’re being very smart. :)

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retirebyforty May 15, 2014 at 11:41 am

I’m kind of afraid of the next recession….

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spence May 19, 2014 at 9:40 pm

I think you are doing the right thing to sell and take some profit. You could always repurchase if you want to jump back in. Comparing your numbers to mine, I think owning a rental might not be as good a deal in your area. I get about the same rents in my 4plex but my prop tax bill is 1/2 yours. I only pay about 170/mo in utilities too. I give a tenant a rent discount for some management work and I do the rest. These things make a big difference over time. Property values have gone up here (mountain west) as well in the last couple of years–I have thought about selling too but don’t know where I would park the cash. Best of luck!

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Justken May 27, 2014 at 2:22 pm

Hi,

I think you should sell and buy in a better neighborhood. My wife and I rent the townhouse I lived in before I met her. Total rent is $26k. After mortgage, taxes and HOA dues we still clear $8k annually. We can do this because the place is 10 minutes from microsoft…Positive cash flow always helps you sleep at night!

Ken

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retirebyforty May 28, 2014 at 1:39 pm

We’re looking in a better neighborhood, but the inventory is so low. We might have to wait for a down cycle to purchase another rental.

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Tram July 15, 2014 at 2:35 pm

Hi,
I read that your insurance is only 1300$ For the 4-plex. I’m struggling to find a company that cover 4-plex. Then when I find one they quote upward 2800$. Would you please tell me which company and what type of policy, deductible? Thanks you so much.

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retirebyforty July 15, 2014 at 10:20 pm

We used Country Financial. Give them a call. I think it might be due to location. I would keep trying different companies. Or maybe ask other 4 plex owners where they get their insurance. $2800 is pretty steep.

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Tram July 16, 2014 at 3:10 am

Thank you for the response, I’ll check them out. What kind of policy so you get? State Farm won’t let me carry rental insurance, making me buy apartment insurance and extra coverage. I’m in virginia.

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retirebyforty July 16, 2014 at 11:37 pm

It was an apartment policy. Good luck!

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Ricky August 9, 2014 at 5:01 pm

You have a negative ROI right now (excluding equity gained) but man I wouldn’t of sold at all! You would be positive in no time…

Those repair costs are pretty killer but they will likely not be that high again. I don’t think there is anything better you could do with $50,000 than leaving it where it’s at. (I know I’m too late but eh…)

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