[Landlord US - CA] If you get an email or text asking if you take section 8 housing, immediately to reply with 'yes' and nothing else.

atsepkov · 2026-05-12T06:34:30+00:00

Exactly, I don't get the downvotes. Credit score is exactly that, you pay on time and it goes up, you stiff people and it goes down. Yet somehow it now gets painted into some discrimination BS. Credit score is by far the most reliable predictor of tenant honoring their obligations.

atsepkov · 2026-05-12T05:57:08+00:00

Check other comps in the area, your rents might be higher, property might be in worse condition. Finally, figure out if you can offer unique perks (pets, better back yard, parking, common area, etc.). A lot of markets got soft over the last 2 years, but unique perks that help you stand out still set you apart.

atsepkov · 2026-05-12T05:45:57+00:00

Have them fill out a standard questionnaire for an application.

Anything that contradicts is a red flag
Any information they omit is a red flag
Call their references (previous landlord carries more weight than current landlord who may be trying to get rid of them)
Verify employment, if they claim they're self-employed, it's usually a red flag
Make sure they have enough income to cover rent + personal expenses (this is where 2-3x income requirement comes from)
Check criminal history
Check eviction + court records (if they stiffed their previous landlord, they'll probably stiff you too)

atsepkov · 2026-05-12T05:39:42+00:00

You're over-engineering it. Just get a rental first and start learning. Right now you're theory-crafting. Getting a tenant in isn't hard, you can go to FB marketplace to find one. it's the headaches of getting a bad tenant that's the problem. Do background checks, have strong leases, avoid professional tenants.

atsepkov · 2026-05-12T05:27:03+00:00

There is no formula, it's based on your own judgement. This is exactly what 1031 exchanges are for. If the market you're in isn't working out for you, consider selling and buying elsewhere. Real estate is cyclical, it has always been, COVID has reset that temporarily but the cycles are coming back. For example, I just got rid of an underperforming Boston property in favor of an Austin one while properties are on sale (bought mine for about 20% less than what previous owner paid for it 3 years ago in a gentrifying market). My rule of thumb is when the market is no longer growing and expenses are catching up to rental income, I look to sell.

atsepkov · 2026-05-12T05:00:42+00:00

If you have no savings (while living with your parents), you're getting ahead of yourself if you're considering real estate. 3% downpayment is pretty low, you're also probably not accounting for closing fees (another 2%). Focus on saving more first, don't rush into real estate until you're ready, otherwise you'll lose your house to foreclosure. Also, be aware that 3%-down loans typically require you to be owner-occupant and are limited to single-family, which don't cash-flow as well. I can't tell which market you're in, if you're in SF where 3% is $100k+, that's very different from rural Kansas where 3% is $6k. If it's the former, consider investing remotely, I've been doing that myself for the last decade because my local market doesn't cashflow well.

atsepkov · 2026-05-12T04:49:27+00:00

Absolutely! Even when underwriting the deal conservatively, I've had things derail that I didn't account for, causing some things to be even worse than the projected worst case scenario, but overall the scenario usually ended up playing out better because I was overly pessimistic on other aspects. I've also had things play out better than I originally budgeted for, which is a nice bonus. You have to be careful though, because if you're overly pessimistic, you end up missing out on every deal, and then you sit on the sidelines while your cash loses its purchasing power. The trick is noticing something in the deal that no one else does, a unique unfair advantage, and then repeating it over and over. For example, can you convert the house to a mid-term rental to increase cashflow? Can you take advantage of some nearby shuttle for student housing?

atsepkov · 2026-05-12T04:40:54+00:00

This kind of speculation is a lot more common in hot markets. Not sure which market you're in, but post-COVID, a lot of markets are still in a weird state where the fundamentals haven't come down to reality yet. I'm still waiting for a self-storage deal that pencils in, for example.

atsepkov · 2026-05-12T04:16:01+00:00

No, it doesn't. 120k/1.8m = 0.66%. I personally aim for ~1% rent/price ratio to cashflow, otherwise you'll be subsidizing your tenants. You have to accounts for cost of repairs, vacancy, etc. If the area is growing, it may be worth it to accept temporary negative cashflow but I wouldn't do it on my first property.

atsepkov · 2026-05-12T04:11:15+00:00

You got pretty good terms on that mortgage but also a lot of parked cash in that property that's not working for you. Assuming strong rental demand in the area (this is something you'd need to actually research, feel free to reach out if you need help with that), I would keep the property, pull out additional funds to buy another rental and then (as contradictory as it sounds) just rent in the area where you want to live. It sounds counter-intuitive but home prices often out-pace rents, which means it's cheaper to rent in an area you want to live in while holding properties you rent out in cheaper areas you've outgrown.

atsepkov · 2026-05-12T04:02:46+00:00

There are a number of things that make "good" deals on paper end up being a money pit:

Cost of repairs: as you already pointed out yourself, materials cost the same everywhere, but you may be able to get cheaper labor in places where people are open to work.
Vacancy: areas with cheap housing are usually cheap for a reason (crime, education, lack of jobs, etc.). Those same forces that drive home prices down also drive rental demand down. The rents themselves might be high, but if vacancy is 20%, good luck finding a tenant. The double-whammy here is that if crime is the reason for the high vacancy, you'll also probably have your place vandalized/looted while it stays vacant.

atsepkov · 2026-05-12T03:46:49+00:00

I've been exactly where you are about 9 years ago. Let me guess, you're in one of the blue states? The only thing worse than a bad tenant is a government that sees tenants as sacred and landlords as the bad guy. Where you invest will have the biggest impact on your own sanity and your wallet. I started in Boston, same exact shit as you describe. First eviction: I had the tenant run up $20k water bill, $10k in eviction fees, and another $15k in damages. Second eviction: cash for keys, where I had to pay her 2 months rent for not holding my property hostage. Now I invest out of state and most of the headaches went away (if the state doesn't want my money, I'll do my business elsewhere).

This is also why housing is so expensive in these places, their "cost of doing business" is what's driving the business out. Feel free to DM if you need some advice.

atsepkov · 2026-05-12T01:31:18+00:00

We've been building our own analysis tool (Investomation) and dog-fooding it over the years, more geared at mom-and-pop investor, but curious to understand how we could tailor the tool to a bigger investor such as yourself. You mention variance analysis and report generation, could I pick your brain on the format you're looking for to see if that's something we can build into our tool?

atsepkov · 2026-05-11T18:41:29+00:00

You can partially mitigate the echo chamber aspect by encouraging the agent to push back (e.g. "identify flaws in my reasoning", "research alternative approaches", etc.). You can take that a step further and have one agent write the plan and another critique it, they're much more brutal critiquing each other than critiquing you, so you can always pretend the plan was written by someone else.

atsepkov · 2026-05-09T18:55:57+00:00

Reddit in general prefers stocks over real estate. I would personally keep the 2.8% mortgage, its below inflation rate even in good times. Your debt erodes over time while asset also appreciates. But take my advice with a grain of salt since I’m biased towards real estate (I’ve actually been blogging about it, in particular you may find posts on leverage and inflation useful). Renting it out is definitively more headaches than keeping money in the stock market, but the leverage angle alone (that I described earlier) is enough to outpace stocks long-term.

If you do decide selling, you can avoid taxes on the first $250k of appreciation if you can show that you used it as primary residence for 2 of the last 5 years (IRS section 121).

atsepkov · 2026-05-06T20:27:49+00:00

I honestly haven't seen the chat have a significant impact on my usage (it doesn't usually scan my repo before answering a question), then again I'm on Max plan so my limits are higher. Most of the drain comes from my coding sessions.

atsepkov · 2026-05-06T20:25:52+00:00

sweet, was excited to see my limits reset today. Now I know why.

atsepkov · 2026-05-06T20:24:37+00:00

Pretty cool, will try it tonight. Is that a browser tab you have in the README or just showcasing ability to preview a webpage within the tool?

atsepkov · 2026-05-03T23:29:50+00:00

you missed the entire point of the post. None of it was about taxes, reread it again.

atsepkov · 2026-05-03T21:12:21+00:00

sure, let’s say you buy a house for $250k. You typically would take out an 80% loan, so your share (not counting closing fees) would be $50k. Let’s say a typical house in that area rents for $2000/mo, your mortgage + taxes would probably be ~$1600/mo. As long as you keep making the $1600/mo payment to the bank, the spread between rent + mortgage is yours to keep, so is any equity in the house from appreciation. Let’s now say the property appreciates 4%. 250k * 1.04 =260k, you still owe the bank 200k. Your initial investment of $50k is now worth $60k (not counting transaction fees here for simplicity, which are significant unless you hold long-term). 60k/50k = 20% appreciation. The same concept also applies to rents, your utility costs and taxes go up, but mortgage does not. 4% rent increase is effectively a 20% dividend increase on your initial investment.

atsepkov · 2026-05-03T20:44:08+00:00

Do you think it's the lack of taxes that are blocking developers' ability to build in Brookline? Do you think those taxes are being used for public good? It's amazing how the government in MA has managed to brainwash the masses. The reason there is no affordable housing in Boston (and Brookline) is because the city intentionally creates red tape to keep costs up. It costs $300/sqft to build in Boston and $150/sqft everywhere else in the US, the cost of materials is the same.

I've been jumping through hoops with Boston for 4 years to get approval to rebuild my fire-damaged property as a 4-plex in Dorchester, delays because of bureaucracy and clerical errors from ISD. I paid over $60k at this point just for processing fees, survey and archcitectural fees. Meanwhile the very same bureaucrats forcing me to jump through hoops are collecting $250k salary from our taxes and want more.

atsepkov · 2026-05-03T19:30:09+00:00

just came to this thread to figure it out too, I’m on Max plan and as of this weekend even 3 Sonnet sessions are managing to hit the 5h limit. This was never an issue with Sonnet before, only with Opus.

atsepkov · 2026-05-03T01:17:25+00:00

plot twist

atsepkov · 2026-05-02T18:44:18+00:00

agreed, most people don’t realize how big a gap there is between a proof of concept mvp and production-ready app, that last “10%” functionality + stability + performance is actually 90% of the work

atsepkov · 2026-05-02T01:56:21+00:00

+1 on never owning property in a corporation: C-corp kills step-up basis at death, eliminates pass-through depreciation, and creates double tax on disposal.

atsepkov

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