So there is a growing trend among some landlords that will forego rent hikes if they have an excellent tenat. In other words a good tenat may not be worth running off from a rent increase.

 

Again, the exception does not disprove the rule. Rents will go up over time, especially in the current market.

 

slumlord out here… my friend doesn’t raise prices on his tenants. He would rather keep a good tenant than be on the hunt every year to try and get more $$.. and rent prices went down in Austin, TX..

 

High housing costs go beyond low interest rates and investment dollars. Impact fees and government red tape stifle new construction. Local utilities that can't provide power and water further slow new construction. Municipalities will fast track projects that generate sales tax because they generate revenue with limited increase in city services. Housing, especially single family housing gets slow rolled because it increases demand for schools. The Econ101 supply and demand curve functions well and is keeping prices high.
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They went down after soaring to new records. If your friend never raises prices rising costs will force him out of the business.

 

I don't disagree with your words, but keep in mind that some people don't view it as a business. Eventually they'll raise it as their mortgage raises and/or they sit down one day, calculate their costs and actaully look at their ROI. Some could take years to come to that realization. Some are accidental landlords (something I think we're seeing much more of today) and are happy to just cover the mortgage and mx items because it's a "long-term" investment. I'd wager that you see more of these types who how a single, SFH.

 

SFH owner management of rentals is a time investment. If you aren't compensated for your time, you are losing time and money. Annual or 2 year leases are designed to stay at market rates. If you let someone occupy at below market rates you are losing money and artificially suppressing the market. That's not runnning a business or investing.

I got out because my time was more valuable and the return on the capital was about the same as a diversifed large cap equity fund. I'm no longer responsible for or have to manage anything. I made the worst real estate buy ever... a hangar. I have one tenant and they barely cover the insurance. The best part is that I know it's not an investment and don't try to justify it as one. If you don't run it as a business, it's not an investment. Would you go to any advisor for investments and walk out of the office saying "this is great, I can get my principle back in 30 years and probably break even and all I have to do is find trustworthy people, manage thier payments, fix things at a moments notice any time of the day or night, pay interest, taxes, and insurance annually, hope for no cataclysms, and repeat as neccesary every 2-5 years." Nope, hard pass. That's not saying it's not doable, just not long term on a large scale. Eventually you're time constrained and off load the management duties. If that off load then makes you a passive investor, the investment class no longer matters.

 

This is a quality post. SFH rental is a loser unless you’re in to get big, which is essentially a second job. You either need to use sweat equity, which will soak up all of your time, or use hired management, which will eat away at cash flow. Spikes in insurance or taxes will wreck you because your time frame to recover is long, and the market may not even support it.

There is no profit in it unless you are playing the equity game, which is a very long term play (and by no means guaranteed), or tax harvesting, which pre-supposes you have other income to shelter. I watched game players get absolutely wrecked in the collapse in 2008. Ive seen other people get wrecked with changes in local ordinances prohibiting AirB&B type short term rentals, which collapsed the local market.

That’s not to say there’s no “money” in rental, there is, but you need to be ready to play the long game, play the tax game, and that can be more hassle than you expect and is always subject to change.

 

It depends. There is also a cost to having to find new tenats because the rates increased and the previous tenats left because of the rate hikes. Not to mention the time and energy that goes into that process of screening new tenats.



This is very true. Real estate, if done right, has slightly better returns than market rates, but it's higher risk. Also it's more work (not really passive) and requires a downpayment usually. Not to mention it's not very liquid. But the advantage is of course that it can be leveraged if you're willing to take the risk, AND, ultimately someone else is funding it.

 

I find that well meaning comparisons of real estate to stock market returns vary based on personal experience more than careful analysis. Just as stock market investors can have wide variance in return, so do real estate investors.
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​​​​​​I've run into very few naysayers who have made >$1 million in real estate. The answer isn't to walk away from rental property because you had or heard about a poor experience. Find someone making bank in a way that suits you and mimic what they are doing. SFH are a convenient entry point into rental property, but there are multiple other options with different time and capital requirements. You can find one that works for you and adapt along the way. I've gone from personally rehabbing SFH, to directing a team of experts. The latter takes less time and pays far better, but takes time to establish. My wife and I have been paid market rate salaies from our real estate company to account for the time and the returns after wages still CRUSH our 401k returns. It's all in how you run it.