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Replies: 28
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Hall of Famer [23422]
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Real estate investing
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Jun 20, 2024, 12:14 PM
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Help me get over the hump of investing in real estate. I want to diversify my investments, but struggle to get deep into real estate.
I'm cool with first and second homes as investments, as well as commercial property.
In general, I'm struggling with companies/people buying a ton of properties that are then converted into AirBnbs, or rental property with crazy rent increases. This limits the supply of available homes for purchase.
People like Grant Cardone who announce rent prices will increase 50% in next decade, then buys up as much property as he can so that people are forced to rent and pay him higher rent prices. But if he weren't doing it, somebody else would be doing the same thing.
So many articles complaining about the prices of homes, yet rewarding companies/people continuing to drive those prices higher.
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Oculus Spirit [83395]
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There needs to be some laws put in place limiting rental ownership
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Jun 20, 2024, 12:21 PM
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I'm not sure how that would work--maybe limit the amount owned per company, but then you just have someone with 100 LLC's owning and renting houses. Double the property taxes on rentals? I dunno..that just affects the renter in the end I guess.
Something needs to change. It's a huge part of the inflation we've experienced in the last 4 years and its not getting any better.
The "great reset" already happened, just not by the communists that the "patriots" said it would be.
Private equity is ruining America.
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Hall of Famer [23422]
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Re: There needs to be some laws put in place limiting rental ownership
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Jun 20, 2024, 12:25 PM
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Buddy of mine recently went thru a divorce and tried to buy a nearby home to his kids. Some investor group bid over list price, then converted that house into a rental charging rent significantly higher than a mortgage would have cost.
I don't understand how people afford things anymore. Like $20 Five Guys or Moes, or stupid rent prices.
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Hall of Famer [21958]
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Rent will always be way higher than a mortgage.
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Jun 20, 2024, 12:33 PM
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See below in regards to the x3 property tax, plus landlord is responsible for maintenance and repairs... trust me, people tend not to care as much about the house if it is not theirs.
My advice would be to just be patient and keep trying. If you are ok with owning a distant property, you will need to try to find the up and coming place before everyone else does. That is why I pretty much got out of looking for LTRs. Everything in Gville area is sky high with not great returns on LTR.
Like previously mentioned, by IE I do believe, large corporations are getting in and they can get by having 5% returns on investment because they can get so many... which in turn, they can be more efficient with repairs and maintenance... thus, getting more than a 5% return that you or I would be able to get.
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Oculus Spirit [83395]
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That wasn't always the case.
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Jun 20, 2024, 12:44 PM
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The house I lived in on IOP, the owner paid $150K for it in like 1998 or something. His taxes were grandfathered in at like $300/year or something crazy low. When I moved in moved in (10/'20) the rent was $3500/month; I couldn't have bought that house AND paid insurance and taxes on it for $3500/month. Taxes would have been close to $7k/year, and HO and flood insurance would have been $15K/year. I left when he upped the rent to $4500/month for no reason other than he could.
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Hall of Famer [21958]
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Well... I cant speak to things being grandfathered in.
Jun 20, 2024, 12:52 PM
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I just know my taxes are usually x3 higher than it is if it was my primary.
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Oculus Spirit [83395]
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Its funny to watch the Airbnb/rental wars on the island.
Jun 20, 2024, 12:59 PM
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It basically boils down to "I don't want YOU to have an AirBNB next door to me...but I should be able rent MY house house out if I want to"
I got in a discussion about STRs with a woman on IOP once. She said her kids couldn't afford to keep her house when she dies if they couldn't airbnb it, and because of the rental ability, it makes the property values go up. I told her to compare the selling amounts between Sullivan's Island and IOP..Sullivan's doesn't allow STRs for the most part and their house values are anywhere from 2-4x the amount IOP's house sell for. I asked her "why do you think that's true? Because noone wants to live next to an STR".
She just walked away with a perplexed look on her face.
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Oculus Spirit [83395]
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When I was looking for a house between 'Jan '21- Oct '22,
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Jun 20, 2024, 12:38 PM
[ in reply to Re: There needs to be some laws put in place limiting rental ownership ] |
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I probably was outbid 30x. Maybe more? I quit counting. Didn't seem to matter how much I bid..I was always outbid by someone.
In Feb-March of '21, if ANY house came up for sale in the old village/old Mt pleasant area of Mt Pleasant, there was a group of investors that would come in and over ask bid on EVERY house that came up for sale, and either buy them all, or buy some of them and dump the scrubs. Then later, they started keeping teh scrubs, too.
Those are all still rental houses now. The most I was personally outbid was $100K on a house in West Nasty. I lost one house in early '21 on IOP by $50K. Owner asked $635K, I bid $655K, someone came in and bid/bought at $685k. Buyer never lived in the house, rented it for $4k-$8k/week until late last year, and sold the house for $1.3 million. They never lived in it, didn't put a coat of paint on it.
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Hall of Famer [21958]
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Property taxes are x3 the amount on a secondary vs primary.
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Jun 20, 2024, 12:28 PM
[ in reply to There needs to be some laws put in place limiting rental ownership ] |
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And... each property is in a different LLC to, you know, get the LL part of an LLC.
However, each property is still tied to me through the LLC ownership, so that would not be hard to trace.
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All-In [41135]
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tax man is exploiting
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Jun 20, 2024, 12:35 PM
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The misconception that rental owners will care. The dont they pass on the additional cost. Two many folks are in favor of increasing someone elses taxes because they think their taxes go down. But that is never the case.
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Lot o points [167698]
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Taxation without representation. I pay Georgetown property tax
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Jun 20, 2024, 12:40 PM
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which is significantly higher for me vs. my neighbor because my house is not my primary house. It is not a rental.
I do not get to vote on the people who set my taxes at this rate. Every time you hear about a prop tax increase, they will not increase tax for primary residence and if they do, it will be 1/3rd of the rate for others.
I want a Georgetown tea party revolt.
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All-In [47825]
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SIL also pays GC taxes. Her river house taxes were over 6k***
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Jun 20, 2024, 12:45 PM
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Lot o points [167698]
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Prop tax and insurance combined have doubled in about five years
Jun 20, 2024, 1:00 PM
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sucks.
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110%er [6966]
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Lot o points [167698]
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Only for eating or events downtown.
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Jun 20, 2024, 12:59 PM
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saw where Frank's opened a new restaurant downtown, I will definitely give that a try.
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110%er [6966]
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Re: Only for eating or events downtown.
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Jun 20, 2024, 1:10 PM
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I believe in downtown Gtown Front Street.
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All-In [34868]
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Oculus Spirit [78219]
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For sure. In SC a second home is double the taxes.
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Jun 20, 2024, 12:50 PM
[ in reply to Taxation without representation. I pay Georgetown property tax ] |
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Lake house is crazy high taxes, which is why we did consider buying on the Georgia side of the lake but that added a lot more time to get there and there isn’t much on the GA side as far as restaurants, grocery etc.
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Oculus Spirit [78219]
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If they doubled the tax it would just increase the rent.
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Jun 20, 2024, 12:41 PM
[ in reply to There needs to be some laws put in place limiting rental ownership ] |
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Part of why renting is so #### expensive is the taxes the homeowner pays and of course repairs. I pay almost 4k taxes on my rental townhome and it rents for $1750, so that’s over two months on rent just to pay the taxes. Then I gotta pay the handy man to fix things, and it needed a new roof this year so I have to pay the insurance deductible for that.
Granted it has appreciated 35k since I bought it 2 plus years ago and I bought it w cash so no mortgage. Definitely A great investment but if I had just bought bitcoin then at 15k and held my 200k would now be 866k now.
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Oculus Spirit [83395]
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What did I say?***
Jun 20, 2024, 12:44 PM
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Oculus Spirit [78219]
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IDK, I didnt really read your post.
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Jun 20, 2024, 1:02 PM
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I just interjected my own thoughts
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110%er [6966]
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Re: What did I say?***
Jun 20, 2024, 1:19 PM
[ in reply to What did I say?*** ] |
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So where would you put your money now?
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Oculus Spirit [78219]
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Buying rentals is the safest thing to do w cash.
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Jun 20, 2024, 1:27 PM
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You could just buy S&P500 ETF as well if you are gonna hold for years.
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110%er [6966]
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Re: Real estate investing
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Jun 20, 2024, 12:37 PM
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I think buy all of the tral estate you can buy if you can play cash. Haha...Yeah I know it isn't that simple.
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Oculus Spirit [83395]
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Had I known.....
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Jun 20, 2024, 12:39 PM
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I'd have bought everything with a front door that was for sale in 2020.
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110%er [6966]
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All-In [30411]
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Private equity is being scapegoated for the fact that we haven't built much in
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Jun 20, 2024, 12:41 PM
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decades. Are they a problem? Sure. Can we fix supply without touching them? Absolutely.
Austin not only slowed but dropped housing/rent prices by being a national leader in eliminating zoning restrictions that choked new housing.
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Oculus Spirit [83395]
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PE isn't only a problem for renting.
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Jun 20, 2024, 12:46 PM
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They are a problem for everything they touch, including most employment in America.
THAT'S why they are ruining America.
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Oculus Spirit [99675]
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Institutional investing is going nowhere any time soon
Jun 20, 2024, 2:37 PM
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The money that used to be lent to home buyers in a mortgage, which paid out a certain amount in 30/15 whatever years, the return on that, in today's market and economy, is far less than buying the property, owning it yourself, renting it, and then selling it at a huge profit as the market climbs. There is more demand from institutional investors to buy, rent, then sell property for a higher profit, rather than financing it long term for much lower returns, so someone else can own it and sell it.
This is because there is a housing shortage. And this trend where renting is cheaper than owning, I think that will flip in a big way as landlords/ownership changes and properties are purchased at higher amounts, with higher interest rates. It will take several years, but renting is cheaper (now) because many landlords are/were locked into sub 3% rates. As soon as they sell, that new owner will be faced with debt payments 3X higher, and rents will climb. This will take time.
All this assumes there's no real fix to the shortage we have.
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Replies: 28
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