30 responses

  1. Lee
    April 23, 2014

    What changes to this model will I have to make if I do not purchase the first property all cash?

  2. Eric
    October 6, 2012

    Are your rental properties in your name, or have you set up an LLC?

    • URFinanceSimple
      October 6, 2012

      I have them setup in my name and covered by an umbrella policy

  3. Shilpan
    April 27, 2012

    Have you ever given thought to offer lease purchase option to your tenant? With that, you get all the benefits of property owner without any headaches. It's even safer process since if tenant decides to not exercise his or her option then you keep the cash and the property. I always invested in commercial properties — mainly hotels and shopping centers — so I don't have much experience with rental properties. Thanks for sharing.

    • YFS
      April 27, 2012

      I thought of doing this process, but it would limit my customer base significantly. Only a certain type of tenant can do a lease purchase option, none of the people I rent too can afford to buy a home. They rely on public assistance to rent from me.

  4. Elise @ Black Freela
    February 3, 2012

    I wish I could "get into" real estate investing. Heck, I can't even buy a home for myself, so I've got a LONG way to go before I will ever be able to go there…

    • YFS
      February 4, 2012

      Elise,

      I'm sure you can find a real estate market which would work for the amount of money you would like to spend on your investment property. Also, you can buy a rental unit before you buy a primary residence. From a pure financial standpoint the rental property trumps the primary residence. Heck, my primary residence is a money pit compared to my rentals. All though my home isn't underwater I've made changes to my primary residence that were for stylish reasons over financial reasons.

  5. Dollar D @ The Dolla
    January 31, 2012

    This is nice write-up on how passive rental properties can be. Like all businesses, the landlording business has plenty of opportunities to outsource as much or as little of it as you want: repairs, leasing, management, etc

  6. Catwoman
    January 24, 2012

    I totally agree, real estates are the best investments in this unstable economical situation nowadays. The only sad thing is, that even in these insecure financial times, the most people doesn't have the money to invest in real estates. And I don't need to explain why it doesn't work from credit.

    • YFS
      January 24, 2012

      What do you mean "it doesn't work from credit"? Can you explain?

  7. Miss T @ Prairie Eco
    January 24, 2012

    This is also a timely post for me. We have been thinking about expanding into real estate as well. We are waiting until we own a bit more of our principle residence first though. We want to be in good shape before we take on more.

    • YFS
      January 24, 2012

      How do you plan on acquiring your rental until? Will you use my method of buy the first one cash then pull the equity or will you finance from the start? When you say "own a bit more of our principle residence first" are you considering pulling equity from your home to finance the rental property deal?

  8. Shaun @ Money Cactus
    January 24, 2012

    Nice work on the positive cash flow. I have two rentals, one is positive, the other isn't but they help each other out and I have to contribute very little overall. Got them on auto pilot with property managers and direct debits, no stress!

    • YFS
      January 24, 2012

      No stress is worth the 10% I pay to my property manager. Real estate definitely doesn't have to be hard. Why isn't your other rental cash flow positive?

      • Shaun @ Money Cactus
        January 26, 2012

        Positive cash flow properties are pretty hard to come by in Australia (not impossible though). I'm looking at capital gains over the long term for this one, but I'll be looking at different models to try as well.

      • YFS
        January 26, 2012

        Ahh… so you're going for appreciation / dividends (kinda of like a growth stock). I going for income / low appreciation (Just like a dividend). It's amazing how things are related :-)

  9. World of Finance
    January 23, 2012

    I've heard some horrible landlord stories, but this article could sell anyone on becoming a landlord ;)

    • YFS
      January 23, 2012

      I think it comes down to thinking of real estate as a business and willing to get the right team in place before buying your first property. So many people get caught up in all the catch phrases about real estate that they forget that it's really hard work.

  10. 20's Finances
    January 23, 2012

    Great stuff. I like the system you have in place. If only I had enough money to buy the first property out right. Eventually I will get there and start building an empire. :)

    • YFS
      January 23, 2012

      You could always take your time and save up :-) or go for cheaper properties.

  11. Eric J. Nisall – Dol
    January 23, 2012

    Now that is true passive income. 30 minutes a month doesn't mean squat in the grand scheme of things. Plus, having the property manager means you free up all of that time for other income earning ventures.

    I'm usually on the other side of the equation, doing the accounting and taxes on rentals, and I have to say some of my clients are the complete opposite. I think it's because they refuse to pay an outside party to handle the business for them, even though it would be much smoother and pore profitable for them.

    • YFS
      January 23, 2012

      30 minutes and it's scalable meaning I would never spend more than 30 minutes a month. I can't wait to get to 10 properties! The only slow down in my process is the buying and HELOC process those two things eat up a lot of time.

  12. Marie at FamilyMoney
    January 23, 2012

    This is a very timely post for me as I am researching real estate at the moment. Interesting that you use a home equity line of credit. Are you planning to eventually pay off the credit lines or just keep rolling them into new rentals?

    • YFS
      January 23, 2012

      My HELOC are only on 12 year terms so I plan to pay them all off by year 11. I plan to get as many HELOC as I can pay them off at year 11 then start the process all over again. I'm using leverage to get the most bang for my buck. The trick is to buy the first one out right so you can start the process.

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