Rental only neighborhoods?

[tony67]

"You'll own nothing and you'll be happy"

Personally I feel most of us will never own our homes anyway, since we have to pay the property taxes - at least in most of the US.

If I didn't have low mortgages, I would be sunk. On paper, I should be making money but I have this one house that I keep getting crappy tenants. Right now, the tenant is $9K behind.

Yeah - this a big problem no one wants to address. We have a two family house and we have no plans on renting part of it out - its just not worth the hassle anymore. Id rather use it as storage.

The attitude of the renters and the state is you are some rich person taking advantage of the renter.
Well I have a mortgage, property tax and maintenance to pay for so if your not going to pay your rent I just wont rent it at all anymore. Lets not even get into the guy that poured a bag of cement down the toilet.

 

[tvguy]

If I didn't have low mortgages, I would be sunk. On paper, I should be making money but I have this one house that I keep getting crappy tenants. Right now, the tenant is $9K behind.

And the short term rental is underperforming. The other two are carrying them so I am not too much in the hole.

Yes, the cost of a mortgage and make you or break you as a landlord. I know a couple of people, through different circumstances, own rentals free and clear, and also cater to Section 8 Tenants. They say as long as they keep their rentals up, HUD does most of the work of finding and evicting tenants for them. And usually the guaranteed HUD payment is more than enough to cover all costs, so if a tenant doesn't pay their portion, they are okay financially until HUD evicts them.

 

[tony67]

Yes, the cost of a mortgage and make you or break you as a landlord. I know a couple of people, through different circumstances, own rentals free and clear, and also cater to Section 8 Tenants. They say as long as they keep their rentals up, HUD does most of the work of finding and evicting tenants for them. And usually the guaranteed HUD payment is more than enough to cover all costs, so if a tenant doesn't pay their portion, they are okay financially until HUD evicts them.

Yeah this is pretty common, I know a few folks that do this and a few folks on section 8.
Not something I'd want to deal with.

 

[china mom]

"You'll own nothing and you'll be happy"

Personally I feel most of us will never own our homes anyway, since we have to pay the property taxes - at least in most of the US.


Yeah - this a big problem no one wants to address. We have a two family house and we have no plans on renting part of it out - its just not worth the hassle anymore. Id rather use it as storage.

The attitude of the renters and the state is you are some rich person taking advantage of the renter.
Well I have a mortgage, property tax and maintenance to pay for so if your not going to pay your rent I just wont rent it at all anymore. Lets not even get into the guy that poured a bag of cement down the toilet.

What is a shame is that everyone else rent is higher because of bad tenants. You had to make up the cost of repairing cement toilet guy (if you had continues to rent) and the only way you can do that is to charge higher rent.

 

[tony67]

What is a shame is that everyone else rent is higher because of bad tenants. You had to make up the cost of repairing cement toilet guy (if you had continues to rent) and the only way you can do that is to charge higher rent.

Well luckily the way this is set up I was able to do most of the work myself with some assistance from a plumber friend. But the lost rent money and aggravation I just wont bother renting anymore.
The worst part is this person worked through the entire pandemic - they had the money - they just decided not to pay and save for a down payment.

As for seeking legal help - also not worth it - no one cares about the "rich" unemployed landlord.

 

[china mom]

Yes, the cost of a mortgage and make you or break you as a landlord. I know a couple of people, through different circumstances, own rentals free and clear, and also cater to Section 8 Tenants. They say as long as they keep their rentals up, HUD does most of the work of finding and evicting tenants for them. And usually the guaranteed HUD payment is more than enough to cover all costs, so if a tenant doesn't pay their portion, they are okay financially until HUD evicts them.

Agreed. I am fortunate to have interest rates between 2.5 and 4% and bought before the big market boom. I can't imagine buying a rental right now.

My mother owned two paid off houses and collected $2,000 each every month. Her only expenses were property taxes, maintenance/repairs and the property manager's fee. It was great retirement income.

I will be 85 when my houses re all paid off but based on today's rent, I would be bringing in $100K in rental income. I should have started in this way younger.

 

[dvcgirl67]

Rental only new construction neighborhoods are being built all around Metro Atlanta. It is not a concept I knew about until recently.

Apparently the Metro Atlanta area is one of the largest markets for investment by large corporations in single family rental properties.

I wonder what the impact of this much corporate ownership of single family homes will have on long term values?

I also wonder if the neighborhoods will transition to owner occupied at some point and how that would work?

I read about this in the WSJ a couple of months back. Apparently this is a big growing trend. There are 900 of these neighborhoods around the country now....with an average of 135-150 homes. Wall Street investors were having a tough time buying new houses in bulk, so they just decided to build the neighborhoods themselves. I was surprised to read that 10% of all new housing is "build to rent" in the United States right now. Not sure if this is a good idea or not. But, my house is a big piggy bank that I own....and can tap that investment later in life if I need it.

Here's the article...it's behind a paywall, but anyone with a WSJ subscription can see it.

https://www.wsj.com/finance/investing/welcome-to-the-neighborhood-wall-street-designed-it-70562612

 

[amcnj]

I am not aware of this in my area, but perhaps because most places were built out long ago. I have read about lots of existing houses around the country being purchased by corporations.

What I see happening here is the construction of multi-dwelling rentals. They are labeled as “luxury apartments” and seem to fill up in no time. The next stage is building them in mall parking lot areas.

 

[tvguy]

I am not aware of this in my area, but perhaps because most places were built out long ago. I have read about lots of existing houses around the country being purchased by corporations.

What I see happening here is the construction of multi-dwelling rentals. They are labeled as “luxury apartments” and seem to fill up in no time. The next stage is building them in mall parking lot areas.

They want to build housing in a mall parking lot here too.

https://www.kcra.com/article/citrus-heights-approves-redevelopment-plan-sunrise-mall/38246971

 

[MillauFr]

They want to build housing in a mall parking lot here too.

https://www.kcra.com/article/citrus-heights-approves-redevelopment-plan-sunrise-mall/38246971

Good. Mall parking lots are such a complete waste of space.

 

[_19disnA]

Wonder if this might end badly like back in 2008 when banks were selling mortgage based investment products as the next "can't lose" big thing since they assumed the price of real estate would always go up.........until the air went out of that balloon. Owning a lot of rental properties sounds good on paper, but over time you will have to pay for big ticket repairs like a new roof or HVAC systems. I would assume general maintenance costs are higher since people who rent homes tend to not be as careful about how they take care of things. If many end up being vacant when the population stops growing in some area or perhaps a downturn in the economy, I see the owners left holding the bag.

 

[NYCgrrl]

They say as long as they keep their rentals up, HUD does most of the work of finding and evicting tenants for them

Must be a clause written into your local lease agreements. Section 8, whether administered by HUD, NYCHA, or NYS, does not vet or evict voucher recipients on this end; that’s the landlord’s sole responsibility and right.


I read the WSJ article a bit back; also some trade papers. I suspect as long as a community has strong building and housing codes, the overall value of the surrounding properties will hold to a certain extent. Homeowners with higher values by dint of high demand may see some downward market movement as it adjusts overtime.

 

[loves to dive]

I can see that in Atlanta easy, housing costs are high there and a lot of people can't afford to buy or afford to live a little further out where it is less but the commute sucks. We live in Athens, north of Atlanta and it would never work here. There is a lot of rental property here but it caters to the college students (go Dawgs) so is more apartments then houses. I know a lot of people live here or a tad closer to Atlanta down 85 and work in Atlanta because housing is less here and income higher there. I know when I was working I looked at salaries in Atlanta and I could get the same job I had here making twice as much. I live about 15 miles away from 85 so the commute wouldn't have been horrible but there isn't enough money in the world to make me go that close to Atlanta every day. I'm from Georgia, 3 of my brother's were born at Grady (back in the 50s) so I've been going there just about my entire life.

On a side note, I worked for a real estate company that leased duplexes and apartments and I would never own rental property. We had a pretty good lease, it didn't show the amount monthly but yearly instead (broken out in monthly payments) and also had a term for the lease. You could get out of it but you still had to pay the total amount until we found someone else to rent the place. I was always very careful to point that out and also point out we only leased to one person, not room mates. If you wanted them, that was fine but you were responsible for the rent. We also didn't allow sublets. Even with all that, we had people claim they paid their portion of the rent it wasn't their fault their room mate didn't, sorry not sorry you owe it. We did the lawn maintenance and the big ticket upkeep like painting outside and inside when someone moved, or repairing the septic tank when it backed up, etc. Never forget getting woken up in the middle of the night because we had a bad storm and a tree fell smack dab on the roof and down into the living room. Not much I could do in the middle of the night in the pouring rain but call and get a hotel and pay for it. Good times.

 

[TippyThomas]

Another reason I'm happy to live in the middle of nowhere.

 

[White Cat]

I read about this in the WSJ a couple of months back. Apparently this is a big growing trend. There are 900 of these neighborhoods around the country now....with an average of 135-150 homes. Wall Street investors were having a tough time buying new houses in bulk, so they just decided to build the neighborhoods themselves. I was surprised to read that 10% of all new housing is "build to rent" in the United States right now. Not sure if this is a good idea or not. But, my house is a big piggy bank that I own....and can tap that investment later in life if I need it.

Here's the article...it's behind a paywall, but anyone with a WSJ subscription can see it.

https://www.wsj.com/finance/investing/welcome-to-the-neighborhood-wall-street-designed-it-70562612

It is a good idea, for now.
The investors that are doing this know what they are doing. They build in a way to reduce future mantanance costs. For example less roof penetrations. Also more than usual insulation, many times the electric is in the company name and passed on to the renter. Simple designs with often 5 bedrooms allowing extended families in, can charge higher rent. Of course the idea is to dump the houses down the road and hopfully out pace inflation. Also they act as their own builder so they get these homes at costs. Individuals hire their own builder and beat them up on cost with volume. Say like 75 to100 homes. What you don’t want to do is be an investor in this with people looking to borrow money to make it happen. But that’s just me.

 

[LuvOrlando]

Maybe if towns and cities start cracking down on this business that circumvents controls things might normalize, in small amounts Air B & B is fine but too much supports speculation.

https://ktla.com/news/california/pa...n-free-fall-after-city-cracks-down-on-airbnb/

Saw this story and think it is driving up costs and killing US cities.

Stopping this now might prevent another housing crisis... although this time the only people hurt would be more well heeled investors instead of everyday people but still I'm not a fan in people getting fleeced.

https://therealdeal.com/la/2024/01/25/palm-springs-home-market-choked-by-airbnb-rules/

 

[dvcgirl67]

It is a good idea, for now.
The investors that are doing this know what they are doing. They build in a way to reduce future mantanance costs. For example less roof penetrations. Also more than usual insulation, many times the electric is in the company name and passed on to the renter. Simple designs with often 5 bedrooms allowing extended families in, can charge higher rent. Of course the idea is to dump the houses down the road and hopfully out pace inflation. Also they act as their own builder so they get these homes at costs. Individuals hire their own builder and beat them up on cost with volume. Say like 75 to100 homes. What you don’t want to do is be an investor in this with people looking to borrow money to make it happen. But that’s just me.

Oh, I can totally see the sense of this from an investor standpoint. Especially now with home prices and interest rates so high. I do wonder how they'll far if interest rates drop down where they were for over a decade. But I'm not sure that will happen.

 

[mousefan73]

The first thing I thought of was who does the maintenance - inside, outside? People who rent often (and understandably) do not take care of the property the same as owners. I'm thinking gutters cleaned out, mulching, tree maintenance, yard maintenance, flower beds, cleaning windows and siding. These all affect the look and attraction of the entire neighborhood. Then inside - cleaning out dryer vents, carpet cleaning, painting, etc.

Do the builders/developers hire all that done?

I disagree with the notion that renters don’t take care of the property as owners will. I think it really depends on the rental class, etc.

I know many homeowners that let things go simply because between mortgage, property, taxes, and what not they don’t have the money to maintain upkeep. I know bad financial situation, but that is fact. We once had two neighbors down the road that had a horrific garage door that was literally falling apart, and he simply put plywood to shut the holes and it was a big eyesore. he simply didn’t have the money to fix it and he was an owner. Renters on the other hand. If there’s a problem will call the landlord and most cases right away to get something fixed or something and there’s always a threat of not getting your deposit back if you trash a place.

I think the benefit of having corporations invest and rent these you’re basically kind of guaranteeing maintenance as it’s their interest. On the other hand, if these companies are getting incentives from the state or county, then there also needs to be some control on what rents they are charging to make it affordable as I believe that’s the whole point. I think there’s a balance between ensuring affordable housing and maintaining it with a profit Versus disrupting a market due to outside investment. You hear horror stories in other cities where you have corporations come in simply to make a huge profit, distort the rental market.

 

[mousefan73]

I am not aware of this in my area, but perhaps because most places were built out long ago. I have read about lots of existing houses around the country being purchased by corporations.

What I see happening here is the construction of multi-dwelling rentals. They are labeled as “luxury apartments” and seem to fill up in no time. The next stage is building them in mall parking lot areas.

That’s what my mall as a kid is turning into. One of the anchor stores was Sears and they tore that down and now they’re building apartments. For me, it’s horrific because you couldn’t pay me to live there. I guess these units are nice and everything but you were literally surrounded by concrete and highways and strip malls. These malls were built in the 70s 80s and then development simply spread outwards of the mall surrounded by highways and strip malls and restaurants spoking outwards.

 

[tvguy]

Must be a clause written into your local lease agreements. Section 8, whether administered by HUD, NYCHA, or NYS, does not vet or evict voucher recipients on this end; that’s the landlord’s sole responsibility and right.


I read the WSJ article a bit back; also some trade papers. I suspect as long as a community has strong building and housing codes, the overall value of the surrounding properties will hold to a certain extent. Homeowners with higher values by dint of high demand may see some downward market movement as it adjusts overtime.

Just know what I have been told by the property owners.