Thoughts on new venture

[Ky hills]

We've been talking for a few years about selling our properties here and relocating.
Met with some realtors a few months ago to try to get a feel for what the value might be. It was getting pretty close what would be hard to pass up if anybody really wants to sell.
Our thinking is now, to relocate to a smaller acreage, that I could run a few cows mainly to raise our own beef and still have some cattle to mess with.
We are currently running a short term rental on property in the main house.
I am thinking that we may be able to find a smaller more rural property for us to live on, and then invest in another house off property to do a short term rental, and then maybe have a couple conventional rental houses too, along with hopefully still having a sizable amount to draw interest on.
My thinking is that the rentals would be paid for and the income could pay our expenses and hopefully would be able to build some equity up instead of needing to put everything back into the farm as I have always done.
We know that rental property is not always smooth as we've had a tenant burn a house down and before that we've had to evict a few people for not paying rent, and we've all kinds of unwanted adventures with the short term rental.
I've known several people that have done well with rental properties in spite of all the headaches.
It seems like it is going to be dependent on what we could get for our current property and what we have to pay for other or properties on the other end, but it just seems like it might make financial sense and set us up better for when we can't physically or financially take care of the current farm.
On a personal note it's not like I'm thinking of selling out totally with no remorse or regard for farming like a lot of folks have done.

 

[mwj]

The things that would concern me the most would be zoning and insurance. The first can dictate your uses for the property. The insurance risk is the chance of insurers dropping you and not being able to get replacement.

 

[Dave]

I knew a dairy farmer who did real well on rentals. He said he always bought upper end houses. He said when the rent is higher you typically get better renters. Low end rentals attract poor people who have poor ways was his way of thinking.

 

[Ky hills]

The things that would concern me the most would be zoning and insurance. The first can dictate your uses for the property. The insurance risk is the chance of insurers dropping you and not being able to get replacement.

Where we are considering going, there is little if any zoning. That can be a pro and a con as we've found out by looking at properties.

 

[Ky hills]

I knew a dairy farmer who did real well on rentals. He said he always bought upper end houses. He said when the rent is higher you typically get better renters. Low end rentals attract poor people who have poor ways was his way of thinking.

Yeah, around here there are a lot of low end rentals and people have made money on them, but it's a mess and high turnover rates. Takes a certain kind of person to deal with that.
Out there where we are probably going there's a lot of that too, so we'd want to be dealing with some better property.

 

[MurraysMutts]

Investment property around here is absolutely crazy right now.
I was talking with a few folks about buying a property a while back. Lower income area.
We basically came to the consensus that if it has 4 walls and a roof it's worth 40k. And that sure won't get ya much.
I looked at a few places. Even in the not so great parts of town. 100k and up.
Real estate is nutz right now.

 

[Ky hills]

Investment property around here is absolutely crazy right now.
I was talking with a few folks about buying a property a while back. Lower income area.
We basically came to the consensus that if it has 4 walls and a roof it's worth 40k. And that sure won't get ya much.
I looked at a few places. Even in the not so great parts of town. 100k and up.
Real estate is nutz right now.

Yeah it is. $30-$40k used to could get you a low end rental house here with maybe $10k to get it in decent shape.
Now I'd say you'd have $150,000 in the same by the time you did a little maintenance on it.
We are probably going to be coming south east of you when we make the move. We've been looking around there and things are pretty high.

 

[chevytaHOE5674]

I knew a dairy farmer who did real well on rentals. He said he always bought upper end houses. He said when the rent is higher you typically get better renters. Low end rentals attract poor people who have poor ways was his way of thinking.

I can tell you from personal experience having a higher end rental house with a high price doesn't mean you always get better renters.

I've had terrible "high end renters" and amazing "low end renters".

Roll the dice and do your due diligence on potential renters but at the end of the day it's a crap shoot.

 

[CowboyRam]

If you end up in a different state you might want to check on the laws of that state for evicting renters. In a most states the tenant has more rights than than the landlord.

 

[Ky hills]

I can tell you from personal experience having a higher end rental house with a high price doesn't mean you always get better renters.

I've had terrible "high end renters" and amazing "low end renters".

Roll the dice and do your due diligence on potential renters but at the end of the day it's a crap shoot.

That's true even with the best due diligence it is still a major gamble.
One thing I've always thought about higher end rentals at least in this area is that if they can afford the rent they are going to be buying a house soon themselves and it's probably going to be harder to keep it rented. That may have changed some in recent times with the economy and prices.

 

[Ky hills]

If you end up in a different state you might want to check on the laws of that state for evicting renters. In a most states the tenant has more rights than than the landlord.

That's a good suggestion for sure, definitely want to look into the state and local laws. We are looking at Oklahoma or Arkansas most likely.

 

[mwj]

What are you seeing for insurance rates. A lot of areas seeing huge rate increases and trouble finding coverage.

 

[Named'em Tamed'em]

Lot's of Navel facilities around here and the Navy has strict rules about sailors doing harm to a rental. A quick call to the CO and things get dealt with right away.

 

[CowboyRam]

You might be ok if you can rent to like temporary medical professionals. Not that the professional types can't tear things up, but I would think they would be less likely to. I have a cousin that does that in Montrose Colorado, and they so far have had pretty good luck with those types.

 

[Dave]

I don't think you can find a place here and certainly not where I lived in Washington for $150,000. More like $250,000 for a little starter place. The new 1,700 ft sq house on 7 acres that I sold for $355,000 in 2017 my son says is now worth $700,000. And the people have done zero to upgrade the place. I went on real estate sites for both areas. The lowest price I could find in my old part of WA was $330,000 for 1300 sq ft 3 bed 1 bath. Baker City OR had some in the low $200,000 but nothing under that.

 

[Ouachita]

That's a good suggestion for sure, definitely want to look into the state and local laws. We are looking at Oklahoma or Arkansas most likely.

You'll love it.

 

[Brute 23]

Tough time for rentals. Housing prices, taxes, maintenance all up and rent is not able to keep especially if there is a down turn in the economy.

A lot of rentals are getting sold right now due to owners not being able to pass on cashing out, like you with your current property.

 

[4hfarms]

We bought for $2000ac+/- from 2005 until about 2020.

Most is $5-7k/ac

It's running $10-12k/ac in the nicer area/ some places.

 

[chevytaHOE5674]

Only reason I put up with the cost and headache of rentals anymore is mine are all attached to farms I've bought up. And if I divide off the houses and sell them I lose my easy access to power and well water at those locations.

 

[Ky hills]

Only reason I put up with the cost and headache of rentals anymore is mine are all attached to farms I've bought up. And if I divide off the houses and sell them I lose my easy access to power and well water at those locations.

That's been the way I have rentals too.
We have a situation with two houses right in front of one another, we live in one and doing a short term rental out of the other. We're doing that so we don't have to have a full time renter right in our front yard.