Rental Experiment

Sell or rent

When we started building multiple-unit condo buildings my wife suggested we kept one unit per building so we could rent it and get passive income. After giving it some thought we never move forward with the idea as the laws were not favorable for landlords and furthermore the ROI was lower than a bank CD at that time and place, overseas. Finally, we decided to always sell every unit.

When I compare renting to being the bank it is obvious to me that the bank does way less work than the landlords but I can only say this from a one-sided experience, thus, this year we set a goal to acquire or create one rental property to get hands-on experience.

After talking with many landlords big and small, I noticed the following two groups:

Those who passionately hate it and those who are profoundly in love with rental properties. Usually, the ones that hate it self-manage and those who love it deal with a management company.

The biggest risk I can identify are:
1-Tenant can destroy the place
2-Bad property management can try to rip me off with repairs
3-City that is not investor friendly (hello to my friends in University Heights, OH)

The biggest opportunities are:

  1. Depreciation
  2. Equity buildup
  3. Appreciation
  4. Passive income.

For my Rental ROI calculator I am taking into account:

  1. Taxes
  2. Vacancy
  3. Property management
  4. Property maintenance
  5. Insurance
  6. Mortgage payments

 

Email me with your thoughts.

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