Do you know anyone who owns 100+ SFH rental houses?

[motivatedceo]

Do you know anyone who owns 100+ SFH rental houses?
 
I've heard of several people who have done this, but I don't know any of these people personally. Specifically...

- About a year ago I read an article in a business magazine about a guy [around Denver I think?] who has over 1000 houses. He has investors in his business, though.
- I read an article on here about someone who supposedly has 85+ homes he purchased through the HUD/VA foreclosure process; thats not quite 100, but pretty close
- John W. Schaub [a real real estate guru, not someone like Robert Allen, Carleton Sheets, etc] mentions in his book "Building Wealth One House at a Time: Making it Big on Little Deals" about how some of his students have purchased just a few houses, while some have purchased hundreds

I'd like to hear of any other SFH success stories from you guys out there...anyone you know? Or know of? Or did you do it yourself?

Thanks!

[joker]

i have 100 homes in monopoly

[TimWieneke]

Yep.  A very good friend of mine has over 100.  He has been very disciplined about buying only positively cashflowing property.  The more he buys, the more what he buys allows him to continue buying.

[propertymanager]

Tim,

Since you seem to be in the business of selling long distance rentals, why not post the numbers of some properties that you are currently offering.  I'm interested in Purchase Price, Gross Rents, Operating Expenses, and Cash Flow.

If this can be done turnkey and all I have to do is sit back and collect the rent, I'll take 50  or maybe 100!  Let's see the numbers.  I'd also like to know about your experience managing long distance rentals.

Mike

[PaulBroni]

http://www.magnumrei.com/454-456%20Polk.htm

Here is one:

YEARLY:
Rental Income:
Unit-1: $6,000
Unit-2:$6,000
Gross Operating Income: $12,000
Mortgage Payment: $4,699
RE Taxes: $1,392
Property Insurance: $1,000
Property Management: $1,200
Total Expenses: $8,291
Cash Flow: $3,709
Cash On Cash Return: 23.90%

This assumes a purchse price of $70K and 20% down.

Not a whole lot left over for vacany, repairs, etc.

[propertymanager]

Here's the way I see this deal with the real world expenses:

Gross rents:  $1,000
Operating Expenses (in the real world):  $500
NOI:  $500

Mortgage payment ($70,000, 30 yr. 7.3%): $480

Cash Flow:  $20 per month or $10 per unit per month  OUCH!

However, this is one UGLY property and almost certainly needs a rehab.  If I'm reading this form right, the units are vacant and listed as fair condition.  So, by the time you rehab these units, this would really be a negative cash flow property.  OUCH!

So much for turnkey long distance investing, at least on this deal!!!

Mike

[petemfa]

I think the main reason investors DO NOT own 100 single family homes is with that kind of portfolio it would be 100 times easier to just move into commercial properties with triple net leases.  Think about it....

Even with professional management the cost of owning, renting, and maintaining 100 single family homes would be substantially more work than consolidating that real estate into a few commercial buildings at triple net.  With the triple net lease the leasee pays.....

The lease
The property taxes
The maintanance
and in some cases the insurance

Consolidated into 3 or 4 buildings in one geographical area like say a office park, your on the golf course, beach, boat, where ever you want to be. 

Even with professional management you're still getting called to OK repairs on those 100 houses.  No thanks.  I've done both. (not even close to 100)  I'll take the triple net commercial anyday.

[Roger J]

petemfa,

There is no reason why you could not do a triple net lease with a residential tenant as well.

Raj

[propertymanager]

My first question is, am I on the right track so far???

Raj,

I disagree with that.  State laws in many states (including Ohio) require the owner to do certain things including maintaining the property to a certain standard.  Commercial leases are different because the tenant is considered by the law to be more sophistocated.

Mike   

[Roger J]

That's true, Mike, but the law only says that it's the owner's responsiblity to insure that the property is maintained.  It does NOT stipulate that the owner must incur the expenses to do so.

Even if you wanted to keep all/part of the maintenance expenses to yourself, you could still net lease out the rest, if desired.

Raj

[petemfa]

Legally there is absolutely no comparison as far as aggravation goes when comparing commercial to residential property.

When your renting or leasing a "home" to someone the rights they have FAR, FAR out weigh the rights commercial renters have.  In my state there is no way to triple net a residential home.  I've rented both, believe me, my commercial buildings are the easiest leases I have EVER had.  These are businesses, established businesses, THEY PAY!  They pay because the location is great!  If they don't, their out and I literally have a waiting list.

[allagash]

In my state there is no way to triple net a residential home.

What do you mean by triple net?  Never heard this term before.

Thanks,
-Mike

[Rich_in_CT]

In my state there is no way to triple net a residential home.

What do you mean by triple net?  Never heard this term before.

Thanks,
-Mike

From the glossary on this site:

Triple Net Lease - lease in which the tenant is to pay all operating expenses of the property so that the landlord receives net rent, frequently used to mean tenant pays taxes, insurance, and maintenance in addition to normal operating expenses

[propertymanager]

That's true, Mike, but the law only says that it's the owner's responsiblity to insure that the property is maintained.  It does NOT stipulate that the owner must incur the expenses to do so.

Raj,

This is the text from the Ohio tenant landlord law:

The landlord shall:

"(2) Make all repairs and do whatever is reasonably necessary to put and keep the premises in a fit and habitable condition;"

That doesn't seem ambigious to me.

Mike

[petemfa]

Yea OK,

I can just hear your 100 tenants glee when you explain that not only do they pay rent, they're also responsible for ALL maintainance and repairs, oh, and when the real estate taxes come due? yep, you pay that too.  And just to be fair why don't you pick up the tab on that pesky insurance.  And last but not least YOU OWN NOTHING!!!!!!!!

Raj,  you find me some people willing to rent single family homes under those conditions, I'll pay you a finders fee that will blow your mind.

It ain't happening, that's why it isn't done.  Who in their right mind who agree to it.  The only reason it's done in commercial real estate is for tax reasons.  The business can write down those costs.  Renters, unless their growing something funny in your basement,  are not using the property to generate business or income.