[spear]

Just wondering if anyone out there with income property and their short or long term plans. If you would prefer to discuss this off forum please PM me.

[seahorse]

Hey Spear,

I have some rental properties (3, nothing major though). They are paid for, so my plan is to continue on as is. What about you?

[spear]

I´ll drop you a note later in the day seahorse.I dont know what the plan is yet, but its something to stay on top of..Im still trying to weigh things out.

[JBinKC]

One problem about income property is it is more difficult to find a high quality tenant. Since it is easier than ever for to obtain home ownership now you will have to deal with a fringe society which is high risk. If you do such a thing it may be wise to condiser a location where there are responsible people but are always on the move so like near a teaching hospital or a military base. You have a much higher chance of getting responsible people there.
Hope that helps.

[Possum]

We have 5 rentals, and have decided to sell them off, since learning of PO. (and the shape of US and related world economy. )
They were our pension fund.

As they are interest only loans, we cannot fix the rate and when inflation gets out of control (it happened here in the late 80's), say, doubling the interest rate, we would be in trouble. Sure, rents would increase, but my theory is, less people out there renting. I moved back in with my parents in th 80's, when interest rates were up, so I could pay off my car and credit card faster.

My other concern, in our situation, is that we have to travel considerable distances to our properties, and this will become increasingly difficult as PO develops.

What we have done to 'replace' our rental income, is to build 2 flats on our property, which we can rent now for $, and which would be highly prized in future when we are one of few with solar power. After the slow shit sliding off the fan, we may be innundated by friends/family who will end up living there. It beats living with my mother in law, under the same roof.

That's where I'm at
Time for a nap
Possum

[seahorse2]

If your rentals are paid off consider keeping them and if people can't pay rent or if cash is worthless you can always barter the space for food or whatever.

[Yavicleus]

I have one rental with some great tennants in it right now. I basically plan on holding onto it until they leave, then sell it because I'm too nervous about Peak Oil to hold onto it.

I had originally bought the place to live in, got it with a sweet 5.25% 30 year loan, but I ended up having to move like 150 miles away after the first year for a new job. I did manage to find some renters for it. My girlfriend thinks that I should just hold onto it as long as I have good renters in it, but part of me wants to take the money and run.

The good thing is that even if I lost my renters, I'd still be able to afford the mortgage on it until I could sell or rent it out again.

Still though, it makes me nervous.

[threadbear]

Commercia/residential, loftspace, Lake Union waterfront, Seattle. It's jointly held with 2 other parties and paid off. We lost a major tenant about 4 months ago, so our income has dropped by 40%. Seeing as it's right in the heart of town, it's not a bad bet peak oil wise. But I'm prepared to go through periods where we're getting no income from it. Then it's time to sell the house and live on a boat.

I read real estate forums in awe at the number of people who are being suckered into buying expensive places, for investment or primary residence, right now.

[Kingcoal]

It hasen't been easy times for landlords lately. I've had the same problem mentioned above (risky tenants.) This is caused by super easy credit, which if you follow the theory here, should disapear completely and be replaced with difficult credit. The other part of the PO theory is that there will be increasing numbers of unemployed and under employed. The early days of peak oil might be good for landlords as plenty of new tenants will be created as their houses and condos are foreclosed on. However, I have no use for a tenant that can't pay rent!

However, if the economy holds out for the next couple of years, the fading away of easy credit might finally make it worth it again to be a landlord.

[threadbear]

Kingcoal, Your assessments seem pretty accurate. What I'm thinking will happen is an inflationary depression. Costs of everything will go up, except for housing, whether it's renting or owning. Americans and Canadians are vastly, vastly overhoused. There are so many couples living in 2,000 sq ft. homes, and families living in places twice that size. Mcmansions that presently house 4 people will have entire extended families of 12 or 15 or more moving in. There will be so muchoffice space and residential property sitting vacant it'll boggle the mind.

[FoxV]

My wife and I were thinking of getting a rental property (while we still have jobs) to suplement our incomes, and to provide a bit of Post Peak security.

fortunately the economy of my home town is pathetic (small scale industries that are PO Doomed) so we don't have to pay Housing Boom prices. However because of a doomed employment base there will be massive unemployment (walmart distribution center is the largest private employer, Paper mill was first but is now second )

So there will be lots of forclosure's and available tenants, however the only income these people will have will probably be social services (which is good as long as the governement can afford its social service program).

So Does anybody have any particular opinion/advice about how the rental market will be when the economy tanks in this town?

[EnemyCombatant]

I'm glad you asked. I already have a rental and I have been pondering this.

IMO, I expect lots of foreclosures. I also would assume that most of these people would prefer renting a house versus an apartment. Most have kids and besides, they can plant a garden. In addition, during uncertain times people will not want to invest in buying a home.

Since this isn't your primary residence, you will not be able to get the best interest rate. I think the most important thing to consider is the monthly expense. Including maintenance, vacancy and marketing. Do you have this amount of cash in 6 months reserve?

I also expect market rents to go down and more properties becoming available for rent. Instead of foreclosure, some may choose to move in with mom and dad and to rent their property.

On the upside, this is obviously a great opportunity for a RE investor. That's if you have the guts and are willing to take the risk. If there is a recovery, you will become a billionaire.

I have decided to hold onto my rental despite the knowledge that property values are going to decrease. I have hope that I will be able to always rent the property since it's in a good location. If we go into a depression and I am forced to sale, then I will loose.

[FoxV]

thanks for your feed back Enemy'. I especially like your thoughts on houses over apartments. Many displaced home owners would definately try to avoid apartments if they can (although I would always buy multiple unit dwellings to spread the risk)

I'm actually starting to think that it might be better to wait. The economy of my town has been in steady decline since the late 80's (if you can believe it). So it means that this town will experience PO hardships before most other (and probably before the crash). Which gives me a bit of a financial upper hand as my job will probably be good for a year or so after the crash, and my wife is a teacher (although with very low seniority)

So perhaps I should hold off till the foreclosure's start. I feel guilty just saying that, but I feel its a better PO strategy then stock piling food and hoarding weapons

[gego]

One observation; you do not have a clue.

Invest in rental property assumes that the oil bonanza continues. Say good buy to you little grubstake, sucker.

[uNkNowN ElEmEnt]

One observation: you aren't a very sociable type are you. don't win many personality contests do you.

[gego]

No, not the sociable type, and quite content with the rewards of my lifestyle.

And do not feel apologetic for pointing out a poor investment.

What are the odds of an acceptable return on the investment? The location of the property is in loserville, the future of loserville by the assesment of the investor is bleak.

What kind of idiot would put his money in an investment he, himself thinks is poor? He should lose his limited wealth, since the rules of the free market system say that capital is moved from the hands of the inept into the hands of the stealthy.

Why should anyone encourage an idiot to be an idiot?

Plus, anyone who is seeking investment advice from this or any website is displaying a prima faca case of being a jerk supreme.

[threadbear]

Fox V, You're thinking of getting a rental property in an area that's seen little appreciation in value, at a time when even optimists are wondering if there is a bubble ? Is this because interest rates are low, and a renter could cover your mortgage payments? It's very tempting to leave money parked in the bank, when you could be acquiring property, true. But that money maker down the street is going to be an albatross around your neck in a couple of years, if you go ahead now.

There will be so much vacant property, as people will move in with their parents, friends, live in motor homes, etc...Imagine this scenario. Every other person with property, doubles up with someone else with property. How many homes would that leave just sitting? Suburbs could look like ghost towns. Small single industry towns (WalMart doesn't qualify as an industry) are not the best bets in good times. In tough times. Whoo Boy.

Peak oil doesn't have to happen for the economy to come unglued. It's going to happen anyway. I'd definitely wait it out.

Gego, Interesting thoughts on free markets, idiots and the stealthy. Tell me, as things stand now, how much rent are you receiving for the missing parts of your personality?

[Anjorni]

Well, my take on this would be to not purchase the property. If the town is in decline NOW - just imagine what it's going to be like when gas hits $5 a gallon? Say bye bye to the Walmart distribution center... There goes everyone's bread and butter (most everyone) and they will either leave town, or squat in one of the many abandoned buildings in the area.

If anything - use that money to invest in securities - like today would be oil or prescious metals... Even tools, or renewable power generation... I'd say these are more useful investments.

This is coming from a young buck who owns a rental property in Los Angeles... one of the 'hottest' markets out there. Unfortunately where I own, I will probably get shot in one of the many riots that will spring up there when times get rough.

So I'm in a red-hot market, and considering getting out - if you're in a cool market, I'd say park your money somewhere else (hell - even Euros are a good choice at the moment)

[FoxV]

Just to address some things:

I believe this website is a invaluable source of advice at least in these preliminary stages. All mainstream advisers will simply say Mutual funds wieghted heavily in American energy and Tech stocks. I do have personal sources of advice, but none of them will even hear peak oil let alone provide advice on it.

As for the soundness of the investment, Landlording has always been a solid business practice since the first permanent human villages were built. Rents have more flexibility to follow inflation/deflation trends then other investments. The relative value of a rent tends to be a constant when compared to the local economy. As for a return from property appreciation, I assume the property value will drop incredible (or not appreciate with an incredible rise in inflation). All in all, as long as the mortgate is maintaned my losses stand to be at most my initial 20% payment minus inflation

And just to shed some light on the economics of this CANADIAN Loserville, welfare recipients are actually a reliable source of income for Landlords. Their money is stable and as solid as the government. We also have rules here that if a welfare recipient is late on rent payment we can recieve our rent straight from the welfare office (I would not get into landlording otherwise). Also Welfare recipients DO NOT move back in with their parents. Welfare around here is the primary tool kids use to leave their parents (A disgusting practice I know, but it keeps the vacancy rate low around here).

The other benefit this town has is it is extremely localized so lends itself well to incoming people from the outskirts and country side (especially those going on welfare)

So my primary concern about the validity of owning a rental property is:
A) Will Canada's welfare system collapse (not as likely as it seems considering the majority of voters may be welfare recipients)
B) Will squating of abandoned homes destroy the vacancy rates (I don't think this city (40K) is big enough to have a squating problem)
C) Can rents be made to match the increase to mortgage interest in times of hyper inflation (I would only get fixed term mortgages from a large bank so I think hyper inflation can be kept in check)
D) How significant will the emptying of the rural areas to the cities be (no suburbs here)

As for investing in other prospects, I am currently looking into a few, but would like to stick with rental properties for the purpose of this topic.

In the end, as far as buying a property now, I think from what I've read so far, the best bet is to "wait and seen". This may cause me to take a hit with future interest rates, but I maybe able to make up for that with buying devalued properties

(my apologies for the long post)

[JoeW]

I've thought about buying additional property as well, but it doesn't make sense if you think that prices are going to come down.
I think that prices will eventually come down somewhat, so I am downgrading real estate from "buy" to "hold or sell".