THE Rental Property Income Thread (merged)

[JoeW]

I have to learn to stop using the 'back' button on my browser because it keeps giving me double posts.

But on the same subject, I have been looking for individuals (with cash) that live nearby that would consider partnering for real estate investments. If you can go in with cash and avoid the bank loan, you eliminate the risk of foreclosure on the property.

[pip]

I've looked into rental property myself. I live in a ag community with no real bubble either. 3 bedroom/2 baths can be had for 40-50K. However, the rents will range from $400-550/month for a decent house. That will just barely cover the mortgage, taxes and interest. A friend owns several rental properties and says a good rule of thumb is you need two times your monthly payments in rent income to make decent profit. In my area, I would have to offer about 50% of the asking price to make it work. For my investing dollar, I'm buying oil stocks. Guaranteed in my opinion to double in the next few years and no work involved.

[JoeW]

I've thought about buying additional property as well, but it doesn't make sense if you think that prices are going to come down.
I think that prices will eventually come down somewhat, so I am downgrading real estate from "buy" to "hold or sell".

[pstarr]

Tell me, as things stand now, how much rent are you receiving for the missing parts of your personality?

[Yavicleus]

Keep in mind that foreclosure rules can be really nasty. Consider this scenario:

You buy a rental property for $100,000. For now, you are able to rent it out. But in a few years, once there are no jobs around, you can't find any renters. For awhile you can pay the rent yourself, but then you too become unemployed. You try to sell the property, but there aren't any buyers around. You are forced into foreclosure.

But wait...your property, which was valued at $100k when you bought it, is now only worth $80k. So, you loose the property, and you still owe the bank $20 grand.

Welcome to life as a debt slave.

[EnemyCombatant]

I think JoeW has it right.

It is risky to acquire another property now unless you can get owner financing. In the upcoming years, there should be plenty of opportunity for that. As any RE investor knows, that's a definite win.
Also consider sandwich LO. That's sweet too.

[threadbear]

FoxV, Oh. I didn't notice you're from Canada. Sorry. This changes things a bit. I bought a little condo in Victoria, BC, last year, with peak oil in mind. It's in a high demand area where people can walk to work, university town, great public and social services. The price was very good. Even in a worst case scenario, it shouldn't be a problem.

In the West we have oil and natural resources that will provide a buffer in a downturn and keep the govt. coffers from draining altogether. On the prairies they're starting to grow red wheat and manufacture noodles for the Chinese market, rather than just selling them wheat. This alone is enough to keep the prairies going and the govt solvent.

In the event of a depression like downturn, the federal govt should still have the ability, in this country, to assist people who need help. That represents security for landlords.

So I'll change that nay to an aye.--or eh!

[uNkNowN ElEmEnt]

I have to agree that this web site has been a source of valuable information. Just because you don't think something like buying rental property (and I agree with you) doesn' mean you have to slap the person down and shut down discussion.

Why not tell them why, give them the benefit of your experience and share the info you have. That is why we are here. To share what we know and get to know others who think like us (and those who don't think like us).

Yavicleus has totally hit on the main reasons why I would not think that buying a secondary property is a good idea. it used to be that you could get a pretty good return on your investment.

In a town of 40 thou you might not have a lot of squatters but you can and will see a large number of family and friends grouping into the same home when TSHTF. We live appart because we can but there will probably come a time when that will reverse.

It would make more sense as a primary dwelling, but I'm betting we are too close to the crash to really make it profitable. once TSHTF there will be land to buy up (it might take a while) so as long as you have the skills and contacts to make it worthwhile you'll make it after the fact.

[threadbear]

Unknown, Provided we don't have a complete Mad Max scenario, another thing to consider when thinking about investing in Canada via real estate, is that there could be many people fleeing the US for a safer haven. Canada would be the obvious first choice. This is just starting to happen, and I think it's a trend that's going to continue.

Liberals in the US, at this time, are flirting with a position that's comparable to Jews in pre war Europe. It's becoming a very hostile environment for them. I honestly think the Bush govt WANTS them to leave the country, and I think the pressure is going to keep ratcheting up. Most of them will come here.

[uNkNowN ElEmEnt]

Liberals in the US, at this time, are flirting with a position that's comparable to Jews in pre war Europe

I've heard this. A couple of my US friends have made the mistake of taking their kids to a peaceful demonstration when Bush was in town. None of them will make that mistake again.

There is also a web site with a US state with a petition to join Canada. I think it was West Virginia but can't remember now. It started as a joke but some people actually started thinking seriously about it.

Pretty much all of my US relatives support Bush (strong military background) those who don't are to very opposed. its going to start a family fight one day and I could easily see how it could start a civil war.

[Pops]

We have 40 ac., mostly suitable for grass though other crops can be grown on part.

We seem to be heading towards raising dairy calves (Holstein or Gurnsey) to sell as lightweight calves (300#) or feeders (700#). Our capital outlay is modest to this point and we can feed 15 new calves at a time.

Generally bull calves are taken from momma right after birth and raised on a bottle, then grain, then pasture until time to go to the feedlot. There isn’t much to be gained, money wise, feeding them to the higher weight on a small parcel. The labor intensive part is from day one to 300# so we may start doing some serious bottle warming.

Much has been said about subsistence farming, anyone else trying to make money from their land?

[skyemoor]

We have 40 ac., mostly suitable for grass though other crops can be grown on part.

We seem to be heading towards raising dairy calves (Holstein or Gurnsey) to sell as lightweight calves (300#) or feeders (700#). Our capital outlay is modest to this point and we can feed 15 new calves at a time.

Generally bull calves are taken from momma right after birth and raised on a bottle, then grain, then pasture until time to go to the feedlot. There isn’t much to be gained, money wise, feeding them to the higher weight on a small parcel. The labor intensive part is from day one to 300# so we may start doing some serious bottle warming.

Much has been said about subsistence farming, anyone else trying to make money from their land?

At the current time, we have 10 acres and are raising sheep. We raise about 32 lambs/year, and prices vary, though if all goes well we usually get about $100 each. So I have a long way to go before quitting my day job.

We also have a garden, though small right now (20x30), that reduces our grocery bill. And there is also the raspberries, blueberries, apples, pears, and grapes. Each of these will be expanded significantly this fall.

We plan to have draft horses, and look to foal about 1 every year or so.

We have an English Shepherd female, that we plan to breed once every other year or so. English Shepherds are excellent herding/guarding/hunting dogs, otherwise known as 'the old scotch collie'.

We may return to running a couple of steers on our property, as they do well with sheep on the same pasture (eat different plants), so the output of the land can be increased.

We plan to offer to plant neighbors fields if the economy hits hard times, so that would augment our income flexibly.

[Ludi]

I'm planning to make a tiny income from selling fruit and vegetables, eggs, possibly chicks, wool items, maybe milk and cheese, possibly olive oil, herbs.

This is all a few years in the future. My current main goal is to reduce the need to earn by getting out of debt and scaling down energy use and other expenses.

[papalegba]

I might be jaded from growing up in an area where farming was the mainstay of the local economy, but I just can't see the sense in trying to make money from farming. It might be good practice for the completely different economic situation we are likely to see in the next few years, but at the moment, trying to raise food to sell for money is a losing proposition.

I have a largish garden and small orchard on my six acres, and I see it as a means of reducing my dependence on distant sources of food and reducing my costs. Food is relatively expensive if you're buying it, but very cheap if your selling it. If you are doing it with the idea of getting the infrastructure and know-how in place for a time when people are willing to pay a lot more for their food, it makes some sense, otherwise I think you'd be better off trying to make your money in other ways.

[pip]

I raised 7 holstein calves a few years ago, and I raised quite a few when I was a kid. There is some nice money to be made there. The lack of a will to live is the only thing I don't like about those darn dairy calves. It's a stressful job trying to keep them alive.

I have a Holstein cow due to calve in a few weeks. I plan to put two calves on her at a time, weaning them every two months and then getting a couple more baby calves. I hope she can raise 6 or 8 calves per year. My wife is planning to make butter and cheese and maybe sell some to friends. We have no experience here so plans are all subject to change.

[backstop]

I would urge all smallholders to look to adding value to produce rather than trying to increase the volume sold and so pushing themselves and their land to exhaustion.

Numerous options are coming over the horizon, particularly through Farmers Markets, that I gather are doing as well in the US as they are here in EU.

I'm looking to smoked meats ("Smokies" are a Carribean delicacy and are a whole sheep lightly smoked with the head left on !)

Also Fleeces layed shingle fashion and folded in, pressed and rolled, will predictably compete with fibreglass roof insulation as oil prices rise.

Bottled rabbit stew may need some more market research . . .

Regards,

Backstop

[Pops]

Thanks for the replies so far. It seems the best way to get out of the buyers market, which most ag is, is to get into a specialty niche. There are folks who will pay big money for something different – at least today.

We came here thinking of basically subsistence in the worst case, a hobby farm in the best. The thing is that if you go with the flow, doors open. Ours was the older neighbor with a dairy, he and I hit it off and I think he feels he has a stake in helping us get along. That is better than gold.

Hence our falling into baby dairy calves. As Papa says, there isn’t much money in small scale ag. except the experience gained. My experience with cattle was the cow/calf Hereford place I grew up on till about 10. I got a feeling for how animals were making it but my parents did all the serious stuff – and a lot has changed since then.

Perhaps after a little experience with these (10 head around 650#, 3 at 3mos, 3 brand new and 12 more on the way) and a few next spring we may think about doing some specialty breed. Maybe start with a small milker like a Jersey, or maybe something more exotic for a year and feel out the market for the Escalade commuting ranchers.

There are lots of kennels around here but my folks also had dogs and I can’t stand the yapping – but I bet you could make some money with a popular breed.

Anyway, anyone else out there who can share their experience?


P.S just saw your post b. and you are exactly right, if you can make $60 feeding a pig and selling to the slaughter house, you can probably make $260 selling sausage.

[pea-jay]

Maybe the way to go is to participate in a CSA and only sell direct. Cut the middleman right out of the picture. Utilize high labor strategies instead of mechinization methods. Sell only to nearby places to cut transportation.

I am impressed by this group near Arcata that sells organic produce to the nearby town delivered by pedal powered carts. Now that's low energy food production.

Given that the 10 fossil fuel calorie to one food calorie ratio is subject to imminent renegotiation, pedal powered organic produce sold direct doesnt sound like a half bad strategy...

[clueless]

Someone please tell me who the "Boomers" are going to sell these houses to they are going to retire on ??? College kids coming out of college can't afford to rent a shante these days...


http://www.usatoday.com/money/economy/h ... usat_x.htm

In ten years heating, Electric and Fuel will be the largest portion of income...

Art these people smoking crack ? Or just having LSD flashbacks.

For all Boomers - I am on the cusp (born in 64) so I guess I am one of you.....

[FoxV]

I think they're planing to sell them to all the illegals which are about to be nationalized

One of the bright sides of the housing bubble is all the condo developements going up in the downtown cores (which will never be sold or rented for a profit) will be perfect for the high density urban living required to survive Post Peak.

Thanks to all the Granite and Stainless steel upgrades they're throwing into them these days, the appliances will be able to take the wear and tear that three families squatting in a single unit will put on them

Thank the lord for flippers