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Comment by jliptzin | Hacker News Reader

Around $2k / month from real estate rentals after expenses. It'd be a little less if I hired a property manager to make it fully passive, but I actually enjoy doing the property management myself as it gets me away from the computer and exposes me to things I would never otherwise be involved with.

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What's the yield on those properties, and how much capital did you invest? Did you use any debt? Also, what city/cities are the properties in?

Done the same over the years. Although slum lords can do better, I prefer the higher end, where appreciation is part of the equation. Property management headaches typically go down at the high end because there's more $ per unit, and the things that break tend to be per unit/person. You also have more $ to fix things and can do it "right". Finally, you can enjoy the places yourself.

Typically, I shoot for ~5% rent to value ratio, e.g. $100k/yr income on $2mm worth of property. With appreciation, I can see why old people do this.

I used the time to bootstrap a company to 40 employees, and profitability-- boy, that wad hard work.

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Sort of similar questions I asked the OP:

How much capital did you invest, and how much debt did you use?

Sorry, this is confidential. :-(

Also, the capital equation is something you can compute: if you want $x in income, then how much capital cost is there etc

Keep in mind, we're in a low interest rate environment.

Absolutely. :P

Was just curious how you would run something like that, by raising equity, instead of putting up all of your own money. I know it's possible in some cases, but often, it doesn't make a lot of sense.

Do you have a normal full-time job also? I sold my rental property partly because it was taking up too much time on top of mine.

I have some properties while working a full-time job. If I didn't have a manager, I wouldn't have the time for them, full stop. Sure, hiring someone will eat into your margins. But it's worth it unless you're willing to make real estate your full-time gig. I tried to do it without help once, for about half a year or so. It was painful.

That's about what I figured. Mine didn't take up all that much time in the absolute sense, the trouble is that most of the time spent was for meeting repair people and the like, which mostly had to be during business hours. Doing that more than once in a while tends to get tough with a full-time job, especially considering the other personal tasks you'll need to do during business hours sometimes.

How do you find good tenants? Do your tenants tend to stay for long periods or do you have a lot of turn over? Thanks!

how many units do you manage? what would you guess you spend, time wise, managing the property per month?

2 properties, currently looking for a third. Probably about 3 hours / month right now max.

Edit: It's so low because I buy properties that are in good shape. I have a full time job so I wouldn't have time to focus on doing repairs and improvements.

Any advice for someone looking to get into real estate investment?

Feel free to email me for advice

been looking into real estate investment lately, what do you consider a good roi?

Rule of thumb is that the monthly rent should be at least 1% of the purchase price.

More specific ROI calculations are good, but people typically forget a lot of expenses (repairs, vacancy, time spent managing, etc) and end up calculating an unrealistic ROI. After accounting for all that stuff, at least 8% cash-on-cash, plus more in debt repayment.

Is that a hard number to hit? It seems like it could be, without getting great deals on auctions, where it might be hard to predict necessary repairs.

First of all, I know very little about RE. However, this seems quite high, no? Is this for a property you need to do some redevelopment on yourself (i.e. put in a new kitchen and/or bathroom, and do some painting), or for something that is in an acceptable state to rent out?

It is a high number, but it's also just a rule of thumb. You can find a lot of debate about "the 1% rule" if you look.

wow... that rule of thumb makes it virtually impossible to buy-to-let in my neighbourhood. a "Cheap" 2-bed apartment is £150,000 and MAX rent for that kind of place here would peg somewhere about £600, but definitely nowhere near £1500. Even at a liquidation auction or lowballing a desperate seller, there's no way to buy anything habitable for under 60K

To be specific, it's a rule of thumb in the US. I would not be at all surprised if UK real estate works differently. But yeah, in some markets you just won't find things that reach that return. Then you'd have to decide if it's worth buying those properties, or buying in a different market, or just doing something totally different with your money (stocks, bonds, startups, whatever).

It pretty much confirms my suspicions that it's too late to get into RE (here) unless you already have some. (we almost got a place where the numbers worked very well about 8 years ago, but various delays meant we missed out and got married instead...

I do BTL in the UK. For our market, look at 1% of the mortgage. So, if you put down a 50% deposit on a £150k place, you'd want rent of £750.

Actually, it depends very much on your circumstances, attitude to risk, how much you're happy to pay in agency fees etc.

Also, in the UK, we don't tend to have 30 year mortgages, which makes predicting a stable price very tricky.

The UK also has vastly different tax rates - and a changing rental culture - which may also affect the price you want to charge.

Huh, that seems like an odd rule-of-thumb. That would guide you to put more money into deals with lower absolute returns, which would lead you to really low ROIs. eg, if you were willing to put down 66% on that property (£100k down, £50k mortgaged), then a £500 rent would be ok. Or am I reading that wrong?

I am completely ignorant about UK real estate, so I might be missing something obvious.

It's about the minimum you need in order to cover your costs & start making an ROI. Obviously if you can charge more, you'll start making more.

OK, those numbers are a little more favourable. Good to know if i'm ever in that position again.

How much would you make if you hired a property manager?

That'd probably shave off $200-300 / month

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