Ollin Magnetic Digiscoping System

High Rental Market and what to do about it.

I have a rental that I rent for $1895. Going rent for a place like this is $2250-2400. Its a great house with big yard in fantastic neighborhood. The reason I charge less:

Great renter: Pays direct deposit always on 1st
Never nickels and dimes me on little maintenance stuff. Will try and fix herself first ( minor stuff)
since I am out of town owner she works with my landscaper or other subs I use.
the house looks exactly like it did when she moved in 2 years ago. Even pays to clean carpets herself ( didn't even know this). Paid for bug guy to come out and spray for seasonal bugs/ants.

its all about the type of renter you are. If you treat it like its your own property you'll get a better deal. My renter will live there as long as she wants without a rent increase other than any property tax increase I get.
As someone else who owns rentals, this is EXACTLY how my business model is, good tenants = no increase.
Also, house hacking... living in one of the units of a multi unit dwelling. As @belshawelk mentioned, primary resident financing applies but still get $$ for rent. It's how a lot of people get into real estate or their first house.
 
As much as it sucks, you don't get a pass on math regardless of where you live. If your going to spend more than 25-30% of your take home pay on housing, you will struggle. I faced this last year, and had to relocate. As much as I miss my mountains, the financial freedom I have is awesome.

I really feel for the younger generations though. I got a cousin and brother who are in their late 20's and everytime we talk I can hear the frustration in their voice. One's a firefighter in the phoenix metro, the other a welder in Reno. Home ownership for them is not even a reality anymore. Rent without roommates isn't even sustainable. Furthermore, how in the hell are they supposed to save for a down payment on a home with costs so high? It really is a shitty situation.

2Rocky, to answer your question regarding creative ideas, what I tell them is they got to embrace the suck and do something out of the norm to get their cash flow up and, more importantly, their expenses down. If I was a single guy, I would scrape $5-10K together and buy a camper and try and rent a spot for it where I can get hookups. I would then save every penny I had and buy land within an hour of a metro where you can make good money. Then move the camper to the land and cash flow a build. It would probably take 5-10 years, but you'd end up with a place that's paid for, close to where you can make money.
I lived in Los Angeles making decent white-collar early-career stage money and every year I was further from having the needed down payment for a home with under a 1 hour commute to my office. So, we rented with a roommate for 5 years. Not fun. But, rent was cut in half, cable in half, heating and cooling in half, etc. I went to grad school and soon after graduation when riots burned part of the city is when we moved out of SoCal for the NW.

Immediately we had more than the needed 20% down payment for a home in one of the best school districts in the state. I traded a world-class city with diverse options for food, entertainment and blue skies for a nice city that was affordable and had rain 7 months of the year. I noticed this right away and had regrets. Then, I realized my commute fell from 10 hours a week to 2. The air was cleaner. The neighbors friendlier. No graffiti. No gang shootings. People even left bikes in the front yard overnight. No family nearby, though. Lots of trade-offs but worked out great for us to take the risk of moving to a new city and both changing jobs. Never got used to the rain so bought a home in the SW 20 years after moved to the NW and now split time between the homes.

My advice to someone just starting out in life is to focus less on how hard things are for you compared to the prior generation and focus on how to succeed with the new rules in place. Life is very unfair between generations and within a generation. We all start at different points from the finish line. How we navigate the journey to that finish line is on us and the reward is not always that we even reach that finish line but what we learn about ourselves along the way.

For example, Phoenix is insane for housing. 100% cash buyers are not unheard of now with 10 or more offers per house which hits the market. That will not change for the better part of a decade with the market forces at play. Inflation is heating up so people are buying real estate for investment rather than as a primary residence and until loan rates approach 6% the risk is low a buyer will get upside down on cash flows. If you are not a homeowner, and lack a trust fund then you either get lots of roommates, live with family or find a way to earn $200K a year as a household then aggressively save towards a down payment. Or, move out of that region to a place where your household earnings will allow you quickly to have a path to home ownership: Cleveland, Toledo, Memphis, Little Rock, Milwaukee, Montgomery.
 
There are some places in the rust belt where they will literally give you a house if you only occupy it. There are places all over the country where you can buy a home on land for less than $20,000. Unfortunately everyone is not entitled to live in an idyllic mountain town with great amenities, good schools, low crime, access to outdoor recreation right out the back door. Move to acquire career skills and money and then maybe move back in some years. It’s better than never getting ahead.
 
There are lots of temporary solutions for the individual, but the best long-term solution may be to relocate.

Right here^

I had 5 roommates in a very small 3-bed house for several years after college, and then it whittled down to 2 roommates in that same house once we had better jobs. Eventually we all found nice girls and got married, and all ended up moving out of that city. None of us will go back, it's insanely unaffordable.
 
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Try this.
Stuff like this always makes me mad. You mean to tell me his housing costs (rent/mortgage, utilities, etc) were +/- $7,900/month? Give me a break.

It's like those stupid Dave Ramsey stories like, "This couple paid off $300k in debt in 3 years following my methods!" No. They paid off that debt by living in a family home debt free, making $100K+ each, finally paying attention to their budget for once in their life, and following your rules. You can't pay off $100K in debt annually unless you have excess cash flow of $100K annually. And if you have that, you should be able to climb out of debt any number of ways. Sorry, pet peeve, lol.
 
Stuff like this always makes me mad. You mean to tell me his housing costs (rent/mortgage, utilities, etc) were +/- $7,900/month? Give me a break.

It's like those stupid Dave Ramsey stories like, "This couple paid off $300k in debt in 3 years following my methods!" No. They paid off that debt by living in a family home debt free, making $100K+ each, finally paying attention to their budget for once in their life, and following your rules. You can't pay off $100K in debt annually unless you have excess cash flow of $100K annually. And if you have that, you should be able to climb out of debt any number of ways. Sorry, pet peeve, lol.
Could not agree more... while we are beating on Ramsey.

Expense escalation. Different careers require different hours/lifestyle etc..

A lot of high salary jobs require a lot more hours and you just half to outsource a lot of things in your life to have even a fraction of the time off of other careers.

I lived in Los Angeles making decent white-collar early-career stage money and every year I was further from having the needed down payment for a home with under a 1 hour commute to my office. So, we rented with a roommate for 5 years. Not fun. But, rent was cut in half, cable in half, heating and cooling in half, etc. I went to grad school and soon after graduation when riots burned part of the city is when we moved out of SoCal for the NW.

Immediately we had more than the needed 20% down payment for a home in one of the best school districts in the state. I traded a world-class city with diverse options for food, entertainment and blue skies for a nice city that was affordable and had rain 7 months of the year. I noticed this right away and had regrets. Then, I realized my commute fell from 10 hours a week to 2. The air was cleaner. The neighbors friendlier. No graffiti. No gang shootings. People even left bikes in the front yard overnight. No family nearby, though. Lots of trade-offs but worked out great for us to take the risk of moving to a new city and both changing jobs. Never got used to the rain so bought a home in the SW 20 years after moved to the NW and now split time between the homes.

My advice to someone just starting out in life is to focus less on how hard things are for you compared to the prior generation and focus on how to succeed with the new rules in place. Life is very unfair between generations and within a generation. We all start at different points from the finish line. How we navigate the journey to that finish line is on us and the reward is not always that we even reach that finish line but what we learn about ourselves along the way.

For example, Phoenix is insane for housing. 100% cash buyers are not unheard of now with 10 or more offers per house which hits the market. That will not change for the better part of a decade with the market forces at play. Inflation is heating up so people are buying real estate for investment rather than as a primary residence and until loan rates approach 6% the risk is low a buyer will get upside down on cash flows. If you are not a homeowner, and lack a trust fund then you either get lots of roommates, live with family or find a way to earn $200K a year as a household then aggressively save towards a down payment. Or, move out of that region to a place where your household earnings will allow you quickly to have a path to home ownership: Cleveland, Toledo, Memphis, Little Rock, Milwaukee, Montgomery.
Great point. One thing I would add is the "well millennials (or now Gen-Z) broke X, or are making Y shitty decision". No, to your point, we navigate a journey differently and started at different points, and the realities of different generations lead them to make different choices, and value different things.

If you came at age during the great depression, you tended to have X outlook, 70s Y outlook, 2008 Z outlook.

I'm of the opinion that if you took all of genZ and had those individuals born in 1915 they would make similar decisions to that generation. Nature v. Nurture.


So yeah because of student loan debt/ housing costs/ etc. I don't give a shit about bespoke furniture and my grandmas silver collection. I lived my 20s and will my 30s in apartments and don't have room for that chit, I'm buying Ikea and if you give me that stuff it's going on ebay within hours, flip side I can totally see thinking it was cool if like my parents I was able to buy a 4 bed 2 bed house at age 27 for $85k. 🤷‍♂️


So basically; "focus how to succeed with the new rules in place" we are doing exactly that, and it drives boomers nuts because they aren't acknowledging that rules have changed and we have to live our lives according to these new rules.

TLDR: Living in your parents basement during your 20s is a great wealth building strategy given the current reality. You're parents will hate it but whatever ;)
 
There's a homeless lady who lives in her truck across the street from my house. Made it through two Laramie winters so far, but her life does seem absolutely miserable.
 
I lived in a trailer without running water. Rent was free. My dad owned it; what a guy ;)
 
I see many people make the mistake of taking a low paying job out of college because of location. Then they can never get ahead.

I was a lot better off taking my first job for a big company in Dallas, TX and working my ass off. I was miserable and lasted 4.5 years, but in those four years I learned a hell of a lot and was able to pick and choose where I got to live and make a lot more money than if I had stayed in Montana after graduating college. Twenty five years later I'm still picking up contract work from people I worked with there. 4.5 years is nothing.
 
I lived in a trailer without running water. Rent was free. My dad owned it; what a guy ;)
I did the same thing in grad school. A local homeless shelter needed someone to work as onsite on call staff at night. They gave me space on their campus in an old school trailer to live in. I used the restroom in the building across the lot and showered at the gym at my grad school. I lived there throughout school in exchange for the occasional issue in the middle of the night. Not a bad gig. Given the market today, I would buy a couple acres and park a trailer on it, save some cash, and wait for the market to implode. If I was young, I would join the military.
 
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I have a rental that I rent for $1895. Going rent for a place like this is $2250-2400. Its a great house with big yard in fantastic neighborhood. The reason I charge less:

Great renter: Pays direct deposit always on 1st
Never nickels and dimes me on little maintenance stuff. Will try and fix herself first ( minor stuff)
since I am out of town owner she works with my landscaper or other subs I use.
the house looks exactly like it did when she moved in 2 years ago. Even pays to clean carpets herself ( didn't even know this). Paid for bug guy to come out and spray for seasonal bugs/ants.

its all about the type of renter you are. If you treat it like its your own property you'll get a better deal. My renter will live there as long as she wants without a rent increase other than any property tax increase I get.

We did something similar with our rental townhome with the first tenants. They were friends of friends we knew would be responsible so we kept rent a little cheaper to keep em. Once we had to find new tenants this summer we were advised to go the opposite direction, price it high. The thought was that the market is competitive and you’d attract tenants in a better financial position. Not sure if it’s true but is working for my two best friends who own a bunch of rental properties.

We went from $1750/month to $2200/month. I don’t hate the extra $450 coming in.

Per the topic of this thread: My last year of college I rented a room from a friend from the retriever training club who was a little older than me for peanuts.

My first house was in a grimey first ring suburb because the desirable locations were out of my price range. I rented a room to a friend. He went from $1800/month for a 1br apt to $800/month to live in my house.
 
I would buy a couple acres and park a trailer on it, save some cash
This isn't as easy to do as it would seem. Many have tried, many have been kicked off by county/regional authorities. Own the land or not some places don't consider a travel trailer as a livable residence. The places you can get away with it goes to shit so fast it will make your head spin. Got a guy just down the street with a 60k 5th wheel and a bunch of old pallets and shit for a deck and wind break...super classy. Oh, the straw bales for skirting class it up though.
 
We have three rentals in Kalispell and fortunately we have had good tenants, and I haven’t increased their rent. I consider them friends and my previous renters we still talk too. I built these properties myself over a 7 year period while working part time construction in the energy field. We never could have did it if I didn’t have the skills to build, the cost would have been too much for our budget. The rate of return on rentals if you own them out right (no mortgage) is around 10-12 %. We charge around a $1 per sq/ft. I worked my ass in the falls/winter trying to get them completed before my next field project.
When I travel for work I’m normally in the field for a months or throughput the construction season (5-6 months) I live in my Davis wall tent. Space rental is around $300-$400 per month and it’s a peaceful way to live, and allows me to save a majority of my per-diem.
For those considering moving to western Montana, don’t be surprised if your landlord wants to evict you next spring so they can vrbo their property. No are no rentals available and the builders can keep up, plus you will be paying through the nose compared to 10 years ago.
 
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