Should We Buy a Rental Property?
So we live in Boulder and I’ve been a landlord for just about 10 years now. I mean I’ve been the type of landlord who lives with my tenants because there is no way in hell I could own my home without roommates to help me make mortgage.
It’s worked out pretty well really. And since I have access to low prices on architectural salvage materials I’m able to do a ton of fixes and updates on the cheap. I’ve always liked the investment of land because it seems so much more tangible and useful then investments into other things. Even if it may not be as liquid or have the returns that something like cryptos have.
We’ve been looking to buy acreage for a few years now but finding the best balance of price and location is a challenge. We’ve pretty much narrowed it to Colorado. We just love it here. But Boulder is so expensive we can’t get what we want. So I started looking South on a tip from somebody at work and find the little town of Walsenburg.
Okay so it’s kinda one of those towns that has had a mass exodous of the youth and there are only about 1300 people there. But there is a decent infrastructure already built and the opportunity still to keep the beauty of the place entact. But economically the town seems like a dud. It does have some shinning points though. It’s about 45 minutes from Pueblo, a decent sized city. The town is big enough to have a safeway, has a cute downtown, and has a progressive city council. It’s the county seat and has a vetrans hospital as it’s main industry. And as you go south along the front range it is the first pocket of low prices you come upon.
This house we are super interested in is over 100 years old, 4 bedroom, 3 bath on a decent sized lot, walking distance to downtown and they are asking $74k… that’s pretty dope if you ask me.
Did I mention Walsenburg is the only town in the state that has legalized tiny houses?
Anyways we figure with a little fixing up we could rent it out for $700 or so a month and be making a pretty good income… if everything goes right. And there are not many places you can pay that little for a house. It’s a pretty nice house compared to what we’ve had the chance to see before it.
Old wood floors that need some work but are certainly doable for a rental.
A nice wood burning stove and a newer plumbing system with a boiler that is much newer than our own!
The kitchen needs the most work… get rid of the drop ceiling and replace all the cabinets with some nice set that comes in at the salvage yard I work at. That and pick up some nice appliances from there too! This kitchen could look good.
The yard isn’t so nice… but fixing up a yard is my favorite part.
And some windows will need replacing… I don’t know how hard that is but I know I can source some good ones from work.
And it looks like the electrical has been redone too! Nice!
Nice old tub…
So have you had any experience buying an old house doing some repairs and renting it out? What are your thoughts? I’d love to hear.
Man, if I bought that house and put all the work into fixing it up, I don't think I'd be able to not live in it! Such a cool old house!
Also, I'd be worried about owning a rental in an economically depressed area with all the young people moving out. Most older people in small towns own their homes. That's my reasoning, anyway, but admittedly I don't know much about it.
I'm with you. Such a cute house. But your also right about the worry about the economic lull in the area. It'd certainly be a risky decision. But it has the possibility to produce a pretty good outcome. My dad's advising against it... and I usually listen to what my dad says... I've learned by now that he's usually right. He wasn't right about Bitcoin though (;
I say go for it! ever since i read the book rich dad poor dad, i've had it in the back of my mind to have a rental. generating passive income (as long as the house is stable and doesn't require too much maintenance or expensive fixes and you can get good tenants) in this way just makes so much sense! good luck with your decision :)
Yeah that book and my experiences as a landlord/roommate in my home now make me feel like it would be such a good idea. But I also worry about the fact that it's 3 hours away and I won't be close enough to keep an eye on it all the time. I think the house itself is a really good buy but I'm not sure about renting it out solidly without worrying about the tenants.
It looks like a beautiful home with a lot of potential. If you don't pay cash the only ones that make money is the bank and the government. My guess is that by the time you renovate the home you will not make any money for 5-6 years. Older homes can be a real money pit. I would advise against it.
Good advice. I certainly agree that we wouldn't have any ROI until 7 years (at least that's what I calculated). My dad said the same thing about the money pit thing. Your both probably right. But those old homes seem to pull on your <3 strings.
I know I have bought a few. I have made a lot of money in real estate and lost some. The thing I always hated was the capital gains tax when I sold it.
Housing market is above 2006 levels! We are due for a correction. I’d wait... then again if u can lock in low rate and not get adjustable rate abs can put down a good amount then maybe jump in. Just know housing is in a bubble again and it won’t last without a crash or correction as rates rise
I missed the price first read. $74,000
Is not to bad. As long as your putting a good chunk down and property taxes are not insane there I would be more open to it given the 74K price...
We figure we'd pay cash in full... unless it makes more sense to leverage the debt... Which I hear is a thing. $700 a year for property tax.
But i certainly agree about the correction thing...
Paying cash in full, do it 👍
Jay Jay!!
HAHA nice! Get on it Cesar!