Here is a transcript of the video :
The widely watched S&P/Case-Shiller index showed home prices in the Chicago area fell in April to levels not seen since 2000. At such low prices and with current low interest rates, would today be a perfect time to buy? One real estate investor says no.
John Twombly :Insurance costs are there, property taxes are there, repairs maintenance… yes the mortgage payment is important, but there is a lot more to it than that.
When John Twombly rented his first apartment years ago, he felt the landlord was cheating him. He decided to become a real estate investor himself. Today, he owns 98 apartments and two stores along with his partner.
Twombly : One thing I would encourage people to do :Buy a three-flat and rent out the other two, that’s how I got started.
Here are some steps that Twombly recommends for new investors:
- Have some knowledge of the local market to know if the current owner is getting a low or high rent.
- Evaluate all your future costs such as real estate taxes, utility bills, maintenance and, of course, the mortgage payment.
- Finally, do some soul-searching about whether you’re cut out to be a landlord.
Twombly : If you have low tolerance for phone calls at the middle of the night, if you don’t want to receive calls when you are at a movie, then maybe that’s not for you.
Twombly says what real estate management books don’t teach you is how to deal with people.
Twombly : I’ve been lucky, knock on wood, I’ve had people who never paid and I’ve never got violent. They’ve never destroyed the property. I’ve head stories. It’s nothing personal if you can’t pay the rent, we can’t afford you to have you.
Twombly thinks overall Chicago is a wonderful rental market. Still, property taxes in Cook County, where he owns his units, are constantly increasing.
Twombly : I wish that I could pick up my apartment buildings, put them on wheels and move them another location but I can’t. Hopefully I’ve identified strong areas that are strong and that are going to remain strong.