You must be logged in to reply to this topic.
-
If you had to cut your incoming rents or mortgage payments in half to keep your properties rented could you survive?
Would you be able to make the underlying mortgage payment?
I was talking to Peter Fortunato today and he says that is what he has to do on some of his properties to keep them rented.
The problem is that it takes 4 months of “regular” rent just to pay the taxes and insurance in Tampa so there’s not much meat left on the bone.
So, with reduced rents, it takes 8 months of rents just to cover taxes and insurance.
In Alabama & Colorado it takes about 1 month of regular rent to cover taxes and insurance.
In Texas, it takes about 2 months of regular rent to cover annual taxes and insurance.
What about your state?
If you are surviving now on a small monthly cash flow on your properties you could be in real trouble in the coming years if we have inflation. You won’t be able to reduce your rents and still afford the underlying debt or lease.
So, it is more important that ever to get some of your real estate free and clear. A quick way to do that is take on a financial partner and give up 1/2 of the equity and 1/2 of the cash flow in exchange for NO DEBT service.
Lonnie Deals are another way to have no underlying debt but still get cash flow.
As more and more money is pumped in to the economy, there’s a bigger chance we will see inflation and that means your tenants/buyers will be able to afford less rent.
The more you know now, the better you can be prepared later.
The best thing to do is to position yourself for success no matter what happens.
We can all wish for the best and think that the economy won’t get worse. That’s what I hope for too. but you also need to be prepared for … just in case and have some of your real estate free and clear.
I received a message from a tenant yesterday stating they could no longer afford the rent and were moving. I also received a phone call from another landlord last week asking about their rental history. So, I knew they were shopping for another place to live. The husband is working in Florida thus the family is paying rent on two residences. They pay on time and take care of the house.
Today I offered to lower their rent by $200 for 3 months, through February, to entice them to stay, rather than have a vacancy in this slow part of the year. Also told them we would only increase the rent from March through May by $100, then back to thier current rent thereafter. This may give me a vacancy June 1 but it’s much easier to re-rent at that time of year than any other.
We have several houses free and clear that enable us to do this. Good advice.
You must be logged in to reply to this topic.
