Investment Properties: who's got them?

It's work. It's profitable if done correctly, but make no mistake, it's work.

i was nervous at first, but like all things you will get used to it over time.

I have one that I just bought a few months ago. It's worked great so far. I looked for several years around Nashville before finally deciding to do something at a certain price and location. I got a condo with very low HOA dues (this way I don't have to worry about the outside at all). I was very nervous after I first did it but it has been pretty smooth. I've learned a lot already in the process. Biggest personal recommendations that I have is to get a property close to your house or to your work. You are going to show it, go make repairs, or meet service people than it better be convenient to you, otherwise it makes it a bigger pain the A$$. Also, I finally decided on something that rents out in the $1200-1300 range and was strict on the tenant income level and credit check and with rent in that range, I feel that I am just above the problem tenant line. I know anybody can be late on rent but this range seems to be people who have degrees and professional jobs vs something with lower rent and maybe not so stable jobs. The people I rent to are recent college grads and I have had no issues yet.

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Biggest personal recommendations that I have is to get a property close to your house or to your work. You are going to show it, go make repairs, or meet service people than it better be convenient to you, otherwise it makes it a bigger pain the A$$

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this is key. if my two properties weren't right next door to me, I wouldn't mess with investment properties.

but that's if you go small. if you buy enough properties to make it worth it, like 30 properties, you can get a management company and avoid the hassle.

Just did a lease purchase on my first one today--I bought it for $90,000; lease purchase for $132,500. 12 month option that is renewable, $150 a month of the $1,150 rent goes towards principal amount of property. My tenants are responsible for all maintenance and all improvements on the property. After 12 months if they can't get traditional financing, we can terminate and they walk with nothing or we can re-up for another 12 months. I feel really good about my first one here!

How have others dealt with the phase out of rental losses once your MAGI exceeds $150,000?

My wife and I have a townhouse in Metairie and a condo in the warehouse district that rent for $2,500 and $2,300 respectively, and now we cannot use our $25,000 in annual rental losses to offset our our income from our regular jobs. Annual losses are about $40,000 each year once you count depreciation and net income is about $10,000 from both properties. I'm getting a little disappointed with no immediate tax benefits beyond the accumulated suspended losses to carry forward until resale at some point in the future.

We probably only spend 150 hours a year managing both properties, nowhere near the IRS 750 hours per year and 50%+ of all annual hours worked test required to be a real estate professional and claim unlimited losses. The properties are high end, well maintained with good tenants and we have good contractors to address any issues.

Can we start an LLC property management company to create more hours spent on paper? This still wouldn't meet the test because we both have professional jobs that entail 2,000+ hours per year.

I've had them for about seven years. Usually have very good tenants and not much maintainace. I think I've replaced one stove top, one fence, one hot water heater and an A/C unit in the seven years that I have been doing this. I'm not handy at all so Ive hired people to do all the work. No problem at all.

One of my tenants moved out this week and the house is in terrible condition. Needs a deep cleaning, some new carpet/flooring, paint/wall paper, yard needs re sodding (must have had a dog), landscaping etc. probably cost me at least six months rent to get the house back in shape to list it ... I may just put it up for sale after the work is done. I'm not sure yet.

1) I've just put a sign in the yard and I've had great success. This is the first vacant house I've had in about three years. If I decide to list again, I will probably use craigslist as well.

2) I'm not really sure why you would form a LLC. I don't see the need to do so.

3) I put down 25% on my first one and 20% on each one after.

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If you are doing any section 8 leasing, have someone familiar with the leasing go over it

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If you do Section 8, make sure you have it independently inspected before any scheduled HUD inspection. I just had a customer fail for a "broken oven door". He failed inspection and contract was to be revoked over this because it counted as a faulty oven. What was stupid about it was the bottom drawer is just for pot and pan storage and it wasn't broken it just had something underneath it that kept it from sliding back.

It's just crazy how easily they can fail you.

My dad has quite a few and has done fairly well with them. The key to success is obviously getting the right property. He has only bought houses in relatively low income areas. The reason why is in those areas pretty much everyone is renting and you can get the houses for pretty cheap. We usually have to put a little work into them. With so many applicants, you get the pick of the litter, which is usually a small family one or no kids with a good credit report.