Investment in Real Estate

[Debater Slayer]

I'm not sure that past experience is as useful anymore as it has been. With the world's climate and the economy going off into uncharted waters, who can say what a given piece of property will be worth in ten years? Will you be able to rent it for what you need to make the mortgage if the standard of living around you falls? Do you have any climatological concerns where you are, which I believe you said was Saudi Arabia. Is it getting hotter? Is water an issue? These ought to be huge issues for Americans thinking of investing in the States, but they are contending with wildfires, drought, an increasing need for heating and cooling in the face of rising power costs, hurricanes, tornadoes, floods, and blizzards. That might not be relevant where you live, but if it is, those are things that can devalue your property and even make it uninsurable - things no realtor will broach with you.

No, it's Egypt, not Saudi Arabia. (The latter was where I formerly lived, for almost two decades.)

My city doesn't have any severe climatological projections for the upcoming decade or two, from what I've read, but I'm definitely going to research that aspect more.

There are also some cheaper properties in fairly remote urban areas that are still works in progress, so I'm looking into those to see whether they could be a better investment than something in an already crowded city that might lose value due to the rapidly increasing population density and consequently undesirable living conditions.

Goodluck to you.

Thanks!

 

[Debater Slayer]

Have you looked into Real Estate Investment Trusts(REIT)?
Real Estate Investment Trust (REIT): How They Work and How to Invest

I haven't. I don't know how common those are where I live, so I'll have to research more on that.

Thanks for the info!

 

[Debater Slayer]

Hey @Debater Slayer...
I was a landlord of a 2 bedroom unit for quite a few years (since sold).

A few thoughts;

1) Advice given here needs to be considered in a local context, as the rules, costs, advantages, etc are heavily impacted by local laws.
2) Be clear about why you're getting into this. Is it for long term capital gain, and if so what is the smartest plan around this. Using a simplified local Australian example, that might mean;
- buying in areas of long term capital growth over short term rental need, and being able to service a lower occupancy rate.
- moving into your own rental property for a year or two before trying to realise the capital growth via a sale (that would circumvent capital growth tax here)
3) check out any long term infrastructure planning in the area youre purchasing, particularly transport, which is generally at least under consideration many years in advance.
4)if you get a good renter, look after them and treat it to some degree as a partnership. So much less stress or repair considerations if you get someone in who treats it like their own place.

Lots more I guess, but I'm keeping it very helicopter view, since it will vary from place to place.

Thanks. That all makes sense, especially the fourth one. One of our relatives' friends was renting out his apartment, and he found the whole place in such a poor condition when the tenants left that he suspected intentional vandalism. I imagine the financial damage was quite heavy.

 

[Revoltingest]

One approach could be to only rent to individuals rather than families.

That would be highly illegal here cuz it's
discrimination on the basis of family status.
It's OK where you live?

Loopholes are specific to local laws here. I wouldn't be able to list even a fraction of them in proper detail, but here's an example: some properties entitle you to a piece of the land on which the building is located when you buy them. Sometimes contracts include fine print or elusive language that waives your ownership of any land, however, which is something you have to be aware of beforehand so that you don't get scammed.

We don't call such pitfalls "loopholes" here.
"Loophole" generally refers to some unexpected
or dubious advantage take from complexity.

 

[lewisnotmiller]

That would be highly illegal here cuz it's
discrimination on the basis of family status.
It's OK where you live?

I'm not sure what the rules are here (as a contrast) but we deliberately set the rent just under recommendations from a real estate agent.

We figured we'd have more people apply, which meant more choice, and ability to check references.

It worked out well, though you can never tell if that's through luck or good management

 

[Debater Slayer]

That would be highly illegal here cuz it's
discrimination on the basis of family status.
It's OK where you live?

I'm not certain, but I've seen it done in Saudi Arabia and also in a couple of places here that only rented to students rather than families.

We don't call such pitfalls "loopholes" here.
"Loophole" generally refers to some unexpected
or dubious advantage take from complexity.

To many people unfamiliar with legal jargon, such complexity can arise from fine print and intentionally ambiguous language.

 

[Revoltingest]

I'm not sure what the rules are here (as a contrast) but we deliberately set the rent just under recommendations from a real estate agent.

We figured we'd have more people apply, which meant more choice, and ability to check references.

It worked out well, though you can never tell if that's through luck or good management

I don't think that charging less rent results in better
tenants. But I'd risk a discrimination charge if I
selected the best from a pool of applicants.
Instead, I rent to the 1st who's qualified.
But with an existing great tenant I really want to
renew, I'll sometimes charge a little less, if that's
what keeps them. No legal risks with that.

 

[Revoltingest]

I'm not certain, but I've seen it done in Saudi Arabia and also in a couple of places here that only rented to students rather than families.

In Ann Arbor, educational affiliation is a protected
group. Can't discriminate for or against students
of any school at any level.
But I no longer have property within city limits.

It sounds like you might discriminate in a manner
that we find really objectionable here. Interesting.

To many people unfamiliar with legal jargon, such complexity can arise from fine print and intentionally ambiguous language.

Just don't call it a "loophole", unless it's some
tricky application of a legal technicality for one's
own benefit.
BTW, the size of our text is regulated, & the size
varies with the type of notice required. My leases
have no fine print. And I eschew jargon in
residential leases. Commercial tenants are more
sophisticated, but my jargon is common & clear.

 

[Debater Slayer]

In Ann Arbor, educational affiliation is a protected
group. Can't discriminate for or against students
of any school at any level.
But I no longer have property within city limits.

It sounds like you might discriminate in a manner
that we find really objectionable here. Interesting.

I would have an extremely difficult time even considering the possibility of evicting a family, so yes, I could resort to only renting out to individuals in order to avoid that.

 

[Revoltingest]

I would have an extremely difficult time even considering the possibility of evicting a family, so yes, I could resort to only renting out to individuals in order to avoid that.

Discriminating against families, eh.
Greedy capitalist pig!
<snicker>
This is a reason I want you to be successful,
& to join us....landlording is a real eye opener.

 

[Debater Slayer]

Discriminating against families, eh.
Greedy capitalist pig!
<snicker>
This is a reason I want you to be successful,
& to join us....landlording is a real eye opener.

The chaos of the real world sometimes upends any idealistic expectations or even renders them a worse option than other approaches. I learned that the most when I was in the military.

This is even more true in third-world countries, which play by different rules than highly organized, developed ones.

 

[lewisnotmiller]

I don't think that charging less rent results in better
tenants. But I'd risk a discrimination charge if I
selected the best from a pool of applicants.
Instead, I rent to the 1st who's qualified.
But with an existing great tenant I really want to
renew, I'll sometimes charge a little less, if that's
what keeps them. No legal risks with that.

I haven't landlorded here in over ten years, and the rules have definitely changed.
Back then it was almost like a job application process. So the (slightly) lower rent was absolutely no guarantee of a better rentor. We were just trying to ensure a range of applicants.

We could also ban pets at the time (and did) which is no longer possible. One of the things we did to encourage our good tennant to stay was around ensuring their rental term would be honoured if we sold the place, and waiving the pet ban so she could get a cat. We also upgraded the heating/cooling, rather than just repairing it.

That's the kind of stuff I meant by 'partnership'. Our rents were always reasonable, and perhaps just a touch below market rate, but it was a financial investment, and whilst we wanted to be fair, we treated it as such.

 

[Revoltingest]

I haven't landlorded here in over ten years, and the rules have definitely changed.
Back then it was almost like a job application process. So the (slightly) lower rent was absolutely no guarantee of a better rentor. We were just trying to ensure a range of applicants.

Getting good applicants means charging not
to little & not too much. The Goldilocks zone.

We could also ban pets at the time (and did) which is no longer possible. One of the things we did to encourage our good tennant to stay was around ensuring their rental term would be honoured if we sold the place, and waiving the pet ban so she could get a cat. We also upgraded the heating/cooling, rather than just repairing it.

That's the kind of stuff I meant by 'partnership'. Our rents were always reasonable, and perhaps just a touch below market rate, but it was a financial investment, and whilst we wanted to be fair, we treated it as such.

Being fair is useful.

 

[lewisnotmiller]

Getting good applicants means charging not
to little & not too much. The Goldilocks zone.

That's a very important refinement of what I said, yep.
One could take what I wrote as meaning 'undersell' and that's not what I meant at all. Your description is clearer and simpler. Dammit.

Being fair is useful.

It's funny. Being fair helps me sleep at night. But...as you say...it also holds a more pragmatic utility.