The market crash

Respectfully, you are missing the big picture here.

Each year residential rental property depreciates at 1 / 27.5 of it's value [called it's 'cost basis']. Over the course of 27.5 years it's value or cost basis would in theory be zero.

But for the fact that improvements and repairs are needed. Each time, the cost of fixing it back up is added to the cost basis, and that bumps the cost basis back up again. Keeping it's value fairly steady.

If you had an infinite run of 'good' renters, then you would never be putting money back into it to fix things, and after 27.5 years, it's cost basis would be zero. If you sold the property 100% of that sale price would be taxable profit.

If you do lots of maintenance and fix things all the time. Then you are keeping the cost basis up. So if you did ever sale the property, the sale price minus the cost basis gives your 'taxable profit'.

The purpose of residential rental property is to easily provide cash [when you need it] at times; or tax sheltering when you need it; or an easy way to bury profits from other ventures. AND all along it is building equity, which can be cashed out to buy your retirement property [tax free].

Respectfully,
As I said, I've lived the rent business longer than you've been alive. It's a very good business (at times) and at other times, it's a pain in the as* ....

I wish you well and I hope you make more money than you can spend .....

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I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it."
Thomas Jefferson

the good thing about stocks is if you don't sell them you don't lose any money. I like to buy a certain dollar amount each month, that way when the stock is low I get more shares, when it's high I buy less shares but it's less risk. If the company goes bankrupt then I'm screwed but thats the gamble.

Sorry I read the 85 years as what your family had done and not you personally. I did not mean insult.

I seem to be insulting a lot of folks today, I apologize.

My family only got into rentals during the depression.

I personally bought my first one in 1985, so I am fairly new to it all.

Actually of late my parents have been getting into buying mortgage notes. They claim that it is treating them very well.

Have you tried that?

Multi Family Rentals?

My super duper housing/rent ratio chart tells me that you will be collecting some decent rents in the near future, perhaps from all the now homeless ARM defaulters?

Do you prefer an adjustable mortgage to get the payments down and keep them stretched to 30 years?

I've heard that landlords like to do this and over 30 years an adjustable averages out to being the same cost as a fixed.

That attitude is what keeps most people from making any real money in the stock market.

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Society has gotten to the point where everybody has a right, but nobody has a responsibility.

Hmmmmmmmm. I'm not a boomer as I'm only 40. But from what you are saying, as soon as the boomer's retire, they are all going to cash out of their 401(k)s, IRAs, stocks, and bonds.

Seeing that many boomers plan on retiring early or even if they don't and wait until they are 65, I'm guessing they may move some of their money from
stocks into bonds or cash. But anyone who is 65 and would automatically move ALL of their higher risks investments into cash is a fool and chances are will quickly learn that they have outlived their money.

At age 65, many of these boomers are going to live into their 80's, 90's or even into their 100's. Retiring today and cashing out of ALL stocks only to live another 20, 30, or even 40 years is a poor choice.

And even if they don't live that long, and do have all their money invested in cash and money market accounts, once their estate is settled, I don't think their children are going to let their inheritence sit in a money market account.

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Michael W. Smith in North-West Pennsylvania

"Everything happens for a reason."

I do not raise my rent levels during a lease.

What I charge a tenant when he first moves in, is what I charge him five years later.

My Paternal-grandfather set his rent level for each rental house on the year that he built it, and he only changed the rent levels when a unit was empty.

In 1995 he still had one family of tenants who had been continuously living in their unit and paying the same rent level since 1938.

He taught me to raise the rents between tenants not during a rental.

If a tenant has shopped around the neighborhood, moves into a unit, and knows that he is paying just a bit under the average, then you have a 'loyal' tenant, who will stay as long as he can. If you never raise the rent, then that tenant will die in the unit before he moves, and complaints will be very rare.

I do not think that I would ever keep a tenant 50 or 60 years like he did. But like him, I see few vacancies. I seldom have to: advertise a unit, show a unit, interview applicants, and decide which applicant gets it.



I have ARMs, not that I prefer them, but it has been the only type of mortgage that I can get. I would prefer to have fixed-rate mortgages. But since I have never made a down-payment when starting a mortgage this is what I have down.

Folks with big money, can afford to chunk down a few big bucks and get a fixed-rate mortgage. I got my first tri-plex while I was a college student, supporting my family on the GI-bill and attending college full-time. So I took what I was offered. No money down, and I borrowed the closing costs / escrow fees.

I did that again, with each of the properties that I have owned.

Investment vehicles are best when you only use other folk's money, to build your investment.

I am 47.

I retired at 42 and took my pension starting then.

I do not see retirees cashing out their investments either. We 'retirees' need our investments to continue giving us money.

I agree with you.

I can only imagine that retirees would be thinking about shifting from 'high-risk' investments toward 'low-risk', but otherwise there is no purpose in cashing out.



I agree.

Putting this in the context of 'market crashes'; during the last market crash both of my grandfathers' banks' closed. So they both lost all of their savings. Within months both of their farm mortgages were being foreclosed.

After losing their savings, after losing their farms, neither of them ever again used a bank. Neither of them ever mortgaged a home.

They each worked on dairies and lived on dairies, or in tents or out of cars, until they could each buy land "cash in fist".

They both built their families new homes.

George built his family a home and a dairy, which the county took from him via 'eminent domain' to build a hydroelectric reservoir. George then built another home and dairy and then attached onto the back of his home George built one-room apartment's for hired hands and elderly housing. They went on to house many elderly.

Homer built his family a home in a small town. Homer then bought another lot and built another home and rented it out. and then another, and another. Homer went on to have finally built 28 rental houses.

Neither of these men, ever had another bank account. Neither of them had a mortgage after 1930.

So if anyone is looking at 'market crashes', or thinking about 'market crashes', or anticipating 'market crashes'; beware of your dealings with banks and consider whether you truly need a mortgage on your farmhouse.