Real estate thread

Coja Petrus Uscan

Crow
Orthodox Inquirer
Gold Member
Dubai would be a very specialized market. Not sure what will happen there. They build like crazy and eventually will run out of land/water yet they have accomplished some amazing feats.

Many of the older properties have reputations for having been built poorly. Many are not connected to sewers so they truck their waste out to the desert. But the older properties are probably better located, e.g. next to the sea, Dubai marina, etc.

Demand is strong for apartments targeted to entry level white collar workers, but softens in the summer with the heat obviously.

Many landlords require rent to be paid in an annual or quarterly payments; montly rent is the exception.

Supposedly you can finance a property there with a mortgage, but I'm not sure how that works with Sharia law.

Mostly Dubai has been managed well, e.g. no lockdowns, but things can change very suddenly there. War could break out in the Gulf, pandemic might impose travel restrictions, they import most of their food, they import most of their labor, etc. Many more wild cards there.

Still, I think Dubai is relatively undiscovered by North Americans and to a lesser extent wealthy Asians.

I've also heard about poor construction, but haven't seen any sign of it in buildings I've been in. The newer buildings seem to be a lot better quality than older ones. But I think that's just a combination of ageing and better materials. Haven't seen anything new that doesn't look nice.

Entry level for Dubai w/ gym and pool in the building is $57K, (a bit cheaper without):



Those are out of the way. The entry level for a main area is about $120K (studio).

dubai.jpg

There is lots more space for expansion, though much of the coastline is built on, about half of if (yellow area) is old town, from the 1960s onwards. Much of the main road (big yellow road closest to the sea does not have any skyscrappers. There are plenty of areas that can eventually make way. And from where they have built next to the main road, they can go further back.

And they are likely to put features into areas to make them more appealing, e.g the artificial lakes in Jumeriah Lake Towers:

jlt-hero.jpg


The red areas are high-value areas that are undeveloped or being developed now. It's probably going to take 10-20 years for them to be built, at which point there may be an appreciation in the higher-value areas.

Black area is industrial.

About the sewage trucks. It's old information. I can't find an exact number online, but all or most places now have normal sewage rather than trucks. I think about 50% had normal sewage in around 2010.

I don't know what the situation with Sharia and mortgages. I can't see any information, but all places that list property have a mortgage calculator.

The strange thing about food is that I have seen zero price inflation in over one year of being here. I don't know if that's about to change. But as examples - 1kg of avocados = $2.75, 1kg of dates = $1, 300g of stuffed vine leaves = $3. My electricity bill has also been unchanged. There is quite a lot of food that is grown out in the desert, which is relatively cheap and organic - tomatoes, cucumbers and dates in particular. From what I've read they want to dramatically increase that.
 

Coja Petrus Uscan

Crow
Orthodox Inquirer
Gold Member
What are property taxes like in Dubai?

There aren't any. Each building charges owners/tenants a yearly service fee. The prices are listed here by development - https://dubailand.gov.ae/en/eservices/service-charge-index-overview/service-charge-index/#/

This is to pay for things like cleaners, maintenance, security, window cleaning etc. Average is $1-15 per sq. ft. So this will end up costing quite a bit. A brief overview - https://www.luxuryproperty.com/dubai-service-charge-index-for-2020 - This will be about 3-5% of the property value.

You will pay about 6% in tax and agent fees to buy, see - https://www.mortgagefinder.ae/blog/dubai-property-fees/

I don't know what insurance may cost. Insurance for vacation rentals is $130, i.e. to cover guests.

Electricity and water is metered. My bill is about $22 / month, which includes intermittent air conditioning and a home office.

Internet was really expensive. It's the only thing I'd say that is really costly. The cheapest is $80 per month (after the 1st year deal)! Speed will be 5-7 megabytes per second.

There is another region called Ras-Al-Khalimah. I think the tax and agent fees here are about 3%. This area will be less lucrative in terms of any possible appreciation, but I think rental yields are quite stable around 7%.

I'm not sure how many of these units are still on offer, but there are some where you can get a 12 year visa and 12 year business licence, which would normally cost about $15-20K, other than this is the only way you can get it. The cheapest unit you could get that on was for about $80K, but I think they might all have gone - https://international-adviser.com/emirati-property-investment-firm-unveils-12-year-visa/

You can get a residence visa by buying something over $200K in Dubai - https://www.alphamanagement.ae/minimum-investment-for-property-visa-reduced-to-750000-aed/

For a one bedroom you are looking at $4,500-6,000 / year in fees for all of the above.
 

Pointy Elbows

Kingfisher
Orthodox
I understand the upside, but can one practice his Christian faith openly in Dubai?

Side note - Be careful about coupling with a European or western woman that has been to Dubai outside of your sphere of influence. Lots of old stories about such female visitors there.
 

Coja Petrus Uscan

Crow
Orthodox Inquirer
Gold Member
I understand the upside, but can one practice his Christian faith openly in Dubai?

Side note - Be careful about coupling with a European or western woman that has been to Dubai outside of your sphere of influence. Lots of old stories about such female visitors there.

I think there's about 80 churches, including three Eastern Orthodox - Greek (I think) in Abu Dhabi, Antioch in Dubai and Russian in Sharjah. Probably 10-20 Oriental Orthodox.

You can even come to the synagogue, fren.


 

Hypno

Crow
Side note - Be careful about coupling with a European or western woman that has been to Dubai outside of your sphere of influence. Lots of old stories about such female visitors there.

There are a lot of English and other Europeans, men and women, who move to Dubai to work tax free. There can be opportunities for people earlier in their careers to assume more responsibility.

I think you are thinking of American "models" who vacation there but are not employed in a regular job.
 

Max Roscoe

Ostrich
Orthodox Inquirer
I also try to explain that as an "investor" it's your job to provide the capital, and make the decisions. That's it. The second you pick up a hammer, you're a contractor employed by your rental holding co or whatever, and a purist would account for it. If you're screening tenants, fixing toilets at midnight, and dealing with the tenancy board, well then you're not an investor,
In theory, If you do real estate investing right, you put down a small amount of down payment, then the property can rent with positive cash flow after paying for mortgage, maintenance, and property management.

The trick is to get into the property in a way that starts off with a positive cash flow from the start.

Unless you're getting an incredible bargain, those two things are at odds with each other -- putting little down means monthly debt payments to the bank are high, and it will be difficult for the rental to generate positive cash flow (and in times of vacancy it will not).

As for the investing angle, I've done it both ways and unless you are actively managing your property, you are going to get screwed by EVERYONE in the process, from the tenant to the maintenance worker to the management company to the tax man.

I had a property that earned me $200 annually when my management company *quit* and soon it was generating me over $1,000 per month.

Beyond that, if you just want to be an investor ie own something but not be involved in the business, that is what something like Real Estate Investment Trusts are for.

(Philosophically, a healthy society should not value someone who is just contributing capital, and has zero interest in the running of the business, but we are far from that and that's off topic.)

My advice, coming from someone who has lost and made a lot of money in real estate, as well as closely watching and learning from those who went bankrupt in the 2007 crash, is:

1) Put at least 20% down on whatever you buy
2) Buy locally (within 30 minutes of you)
3) Be actively involved in management (there are also incredible tax benefits only available if you are doing this)
4) Don't be greedy (both in your purchase price and your asking rental rates)
5) Don't be nice
I’ve been reading about for the imminent burst of Canada’s housing bubble for the last 15 years. It hasn’t happened yet and it’s hard to see it happening since I just read an article this morning saying Ontario needs to double the amount of houses being built each year for the next ten years, in order to satisfy demand.
This is a Hegelian problem created so that we are forced to accept the solution of mass immigration. The US is already majority nonwhite below a certain age, and will be so overall within my lifetime. No one is going to accept the decline in real estate values if we ended immigration and of course it's much more than real estate values, but also per capita tax deficits as well as the general debt based economy which *requires* constant growth or else it collapses. We *have* to import more immigrants every year unless we change our system, which will not happen.
 

GoneSoLong

Chicken
Trad Catholic
I'm renting a property on airbnb, and I prefer it exactly because I fear problems with regular renters. I have heard of airbnb guests trashing a house, but I haven't ever heard of them stopping rent payments, refusing to move out for months with court protection, then trashing the place when they finally do leave.

I had a question about this, since I'm thinking of buying rental property (apartment/condo unit) to earn some passive income. I was wondering what the best way was to rent out to tenants: through Airbnb (or a similar rental site), or independently?

My biggest concern is the ability to choose (or deny) which tenants can move in to the property. Can you decide which tenants to accept, especially with rental laws that might force you to accept tenants you would deem to be unacceptable?
 
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Thomas More

Crow
Protestant
I had a question about this, since I'm thinking of buying rental property (apartment/condo unit) to earn some passive income. I was wondering what the best way was to rent out to tenants: through Airbnb (or a similar rental site), or independently?

My biggest concern is the ability to choose (or deny) which tenants can move in to the property. Can you decide which tenants to accept, especially with rental laws that might force you to accept tenants you would deem to be unacceptable?
I have a property manager that handles the rentals, for 20% of the rent. Considering that doing Airbnb takes a lot more hands on management than a typical long term lease, it's well worth it to me. He has people texting him multiple times a day at all hours.

That being said, it's airbnb, so there are definitely all kinds staying there. I bought the place for this purpose, so I accept that. So far, I've had only normal wear and tear, a few scratches here and there over a year.

I like the airbnb approach much more than regular long term renters.
 

Coja Petrus Uscan

Crow
Orthodox Inquirer
Gold Member
I had a question about this, since I'm thinking of buying rental property (apartment/condo unit) to earn some passive income. I was wondering what the best way was to rent out to tenants: through Airbnb (or a similar rental site), or independently?

My biggest concern is the ability to choose (or deny) which tenants can move in to the property. Can you decide which tenants to accept, especially with rental laws that might force you to accept tenants you would deem to be unacceptable?

If you want to find the best managers, you should be able to find them from searching - site:booking.com [name of company + location]

You should be able to find profiles for most of them. Some have it setup so you can't see a broad footprint. But you can trawl up enough of their properties to get an idea of what guests think of them. I saw quite a lot of properties with properties with ratings of about 5/10, with a few reviews, at which point I imagine it's difficult to resuscitate it.

This company is global and appears to have a good reputation - https://www.guestready.com/

If you live in a small city, you probably won't find a specialist manager and will need to look for a normal realtor, who might be willing to deal with it.
 

inthefade

Woodpecker
Orthodox Inquirer
I have a property manager that handles the rentals, for 20% of the rent. Considering that doing Airbnb takes a lot more hands on management than a typical long term lease, it's well worth it to me. He has people texting him multiple times a day at all hours.
Does he handle the garbage as well as laundry? Completely hands off on your end?
 

Thomas More

Crow
Protestant
Does he handle the garbage as well as laundry? Completely hands off on your end?
Yes, it's completely hands off for me while it's being rented.

He has a cleaning service that goes in after every guest leaves, and cleans it out. I have a washer and dryer in the unit. They do leave things in the washer and dryer between tenants, so the washer and dryer are not available to guests, unless the guests take the stuff out, in which case they're asked to put it back when they're done. The trash goes out to the alley, and either guests or cleaners take it out.

He has taken care of some property maintenance, like when one of the mounts for the stair railing got loose from the wall and he remounted it. However, I do have a few maintenance tasks I will have to take care of when I get back to town in a few weeks. I'm living in it now when I don't travel for work, but soon I am planning to get another place, and list this for airbnb full time.
 

GoneSoLong

Chicken
Trad Catholic
Yes, it's completely hands off for me while it's being rented.

He has a cleaning service that goes in after every guest leaves, and cleans it out. I have a washer and dryer in the unit. They do leave things in the washer and dryer between tenants, so the washer and dryer are not available to guests, unless the guests take the stuff out, in which case they're asked to put it back when they're done. The trash goes out to the alley, and either guests or cleaners take it out.

He has taken care of some property maintenance, like when one of the mounts for the stair railing got loose from the wall and he remounted it. However, I do have a few maintenance tasks I will have to take care of when I get back to town in a few weeks. I'm living in it now when I don't travel for work, but soon I am planning to get another place, and list this for airbnb full time.

How would renting out your place be different if you had gone to a normal realtor, instead of listing it for airbnb?
 

Carolus

Sparrow
Protestant
How would renting out your place be different if you had gone to a normal realtor, instead of listing it for airbnb?

Vacation rentals have much higher rent. A place that would rent for $1,500 a month normally can easily make $100-150 a night thus bringing in $3,000 or more per month. This is offset by the fact that occupancy is lower, management requires daily attention, and operating costs are higher (broken furniture and appliances being one example).

A good way to frame it is this: Owning an airBnB/vacation rental is like owning a small bed and breakfast or hotel. Which is a small business. Owning a normal rental is closer to passive income. One is not better than the other, they are significantly different.
 

Coja Petrus Uscan

Crow
Orthodox Inquirer
Gold Member
Vacation rentals have much higher rent. A place that would rent for $1,500 a month normally can easily make $100-150 a night thus bringing in $3,000 or more per month. This is offset by the fact that occupancy is lower, management requires daily attention, and operating costs are higher (broken furniture and appliances being one example).

A good way to frame it is this: Owning an airBnB/vacation rental is like owning a small bed and breakfast or hotel. Which is a small business. Owning a normal rental is closer to passive income. One is not better than the other, they are significantly different.

After quite a lot of research it seem that short-term rentals will return about an extra 20-30%. That could be higher if you have something that is a major tourist-pull.

I've decided to give it a miss. This is the third time I've set about buying a property. Due to a number of factors I was in indecision. One is that a lot of the apartments need upgrading. To get something that is a good price, that is mostly ready to let and has a good view is quite a challenge. I don't really see the point in buying something if all you can see is other buildings and roads. There was one that I really liked,



But you may notice the guy is a bit shy of showing the lovely shoreline, owing to it being right next to an industrial zone.

So I thought I'd get something cheaper. But it seems the agent was probably in the process of selling that. So while I've been waiting, time has run down. Today I was in the moment of making a decision whether to get somewhere, when the phone rung. It was another agent, who'd obviously been sold my details, as I didn't know who they were and the email address they had for me was the one I'd given to the other agent; and that email had never been used before (catch all). I will take that as a sign, not to buy and forget about it for a bit.

Right now I've switched to having most funds loaned out in stablecoins at 12-20% and PAX Gold at 5.2%. Hopefully that should keep ahead of the Bidet price hike.

I can't see much that says 'buy' right now. It's increasingly looking like there could be serious turbulence in the economy in the coming 1-2 years. Maybe that will provide a better window to real estate purchases. Stocks, likewise.
 

Thomas More

Crow
Protestant
To be honest, I would not want to be forced to accept renters I don't approve of. Do you still get final say on who stays there?
My property manager handles all of that. I am copied on the emails from guests arranging to stay there. I frequently look at them, but really don't need to, and often don't. Most of the guests appear to be in the 25-35 year old range, the kind of trendy people who can afford an airbnb, and would want a townhouse in a gentrifying historic neighborhood near downtown. Many of them seem pretty decent from their pictures, and from things they say in their messages with the property manager, but I'm sure some of them are liberals of a type I wouldn't like.

Practically speaking, you can't invest in real estate without accepting that you'll rent to whoever wants your place, so long as they will treat the place decently. Airbnb has had some issues with parties, but my place is small, so it's not suited to large parties. Generally, people on airbnb are more likely to be on the upper half of the income spectrum, and are much less likely to be destructive or cause trouble.
 

Arado

Pelican
Gold Member
Looking on redfin it seems like there are parts of the country like Ohio, Western Pennsylvania, West Virginia, upstate NY that don't seem to have gone through home price bubbles. Why have Western markets like Arizona, Utah, Idaho, (apart from the obvious rich places like California and Seattle) getting so many buyers but other cities are relatively ignored?

If someone can work remotely and wants to buy a cheap house it still seems there are plenty of markets where you can get a huge single family home for <250K with a good chunk of land as well.
 
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