Again: Get out of rental properties in retirement

[rcjordan]

The problem is that elected officials will resort to rent control-ish agendas because it plays to the voting public.  It won't fix the high-rent problem and might make it worse over the long haul.

[rcjordan]

^{But do govs freeze ownership costs, too?  No.}

Berlin Freezes Rents for 5 Years in a Bid to Slow Gentrification
https://www.nytimes.com/2020/01/31/world/europe/berlin-gentrification-rent.html

[ergophobe]

The flip side is, do ownership costs go up as quickly as rents? Depends on your market obviously.

I'm not disputing that you should get out of rental properties in retirement, but in Berkeley, our landlord was sitting on units purchased by his parents in the 1960s. He was allowed to raise rent to market value when a tenant left, which meant that when we left, we were paying $700/mo and all of our neighbors were paying $1200 to $1400/month.

For a building with no mortgage and minimal upkeep costs, $20,000/month was a nice retirement income for our landlord. I would guess today, based on friends who still rent in Berkeley, that building is bringing in $30,000/mo.

But of course, he wasn't "free" like he would be with an annuity or something like that. Always headache, finding renters, dealing with problems, damage, etc, etc, etc.

In fact, I thought he would be itching to get rid of us and pull in an extra $700/mo. When we left, he was so sad - he said having me work from home was like having free on-site management and he worried a lot less than he had in the past and now would have to worry more again.

[rcjordan]

Based on my commercial experience, I'd guess that insurance, taxes, and maintenance run 10-15% of rents and have an annualized inflation rate of 2-3%. Around here (and CA), insurance rates probably exceed 3% annually, but maybe other areas are impacted less.

[Drastic]

A few years ago when I was deciding what to do first, I sat down with a guy with probably 3 dozen rentals in our area. He focused on lower income but still had solid numbers to work from with different styles and layouts (duplexes, singles, multis), with a few years of history. We were assuming owning the properties outright and figured the repairs, maintenance, admin, vacancies, marketing, taxes and we basically worked out all overhead at one meeting.

It came down to about half of gross was true net. Nicer and better properties would see less damage and other benefits so this was a conservative estimate for me, so a sort of guaranteed baseline.

[rcjordan]

Yet again. Get out, starting the process at age 58.

Pandemic eviction crisis leads to greater tenant protections | The Fresno Bee
https://www.fresnobee.com/news/article253179028.html#storylink=mainstage

[ergophobe]

>>starting the process at age 58.

And how did you pick that age?

[rcjordan]

Over the years, I've noticed that at/near age 58 is when medical issues start to crop up in a number of family members and friends.

[ergophobe]

I have crested that wondrous threshold as of a this summer.