Moving every 12 months for five years, what actually breaks?

One item for your list that's free and that people get wrong: the calendar. If you close in the fall and move out twelve months later, you're marketing a vacant house in November, when my market goes dead for six weeks. Time your purchase so the conversion lands in spring if you can. It's a scheduling decision that costs nothing and can save you a month of vacancy on every property in the chain.

Cost list, roughly, and every number varies by market so treat these as ranges to check locally.

Property management usually runs 8 to 10 percent of collected rent, plus a leasing fee when they place a tenant that's commonly half a month to a full month's rent, and sometimes a renewal fee. Many people self manage the first one or two, especially while they still live nearby, and hire out once the driving gets long.

Software is cheap. Stessa has a free tier for tracking income and expenses per property. TurboTenant and RentRedi sit in roughly the $10 to $30 a month range depending on plan, and handle listings, applications and rent collection. Tenant screening reports are usually $35 to $55 and are often paid by the applicant.

Insurance changes when you stop living there. You move from a homeowner's policy to a landlord policy, often called a DP-3, which covers the building and your liability and drops coverage for your personal belongings. It commonly costs somewhat more than the owner-occupied policy. Tell your insurer before the tenant moves in.

On registration: plenty of cities and some states require rental registration, a rental license, or a pre-tenancy inspection, and the rules and fees differ by city and state. Look up your specific municipality's ordinance rather than assuming. Owning and renting your own property generally doesn't require a real estate license, though managing property for other people does in most states.

The cost that doesn't appear on any of those lists is your own moving expense every twelve months, plus the utility and lawn care on a house nobody's living in yet.

Add reserves for the things that don't happen every year but happen. I underwrite 5 percent vacancy, 8 percent of rent for maintenance, and a separate capital line based on remaining life of roof, HVAC and water heater. On a $1,900 rent that's $95 vacancy, $152 maintenance, and whatever capex works out to, often another $150. Most people running this strategy count the mortgage, taxes, insurance and management and call the rest profit. It isn't.

What does DP-3 mean? I've read this thread twice and I still don't know if that's an insurance company product or an industry term.

juniper, it's a form name. Insurance policies come in standardized forms and DP-3 is the dwelling policy form commonly used for rentals, the same way HO-3 is the usual homeowner form. Your agent will know it by that name.

pike, on screening, budget for the report cost but also for the time. I'm working through my own criteria in writing before the first listing goes up, because deciding standards while looking at an actual applicant is how people get themselves in trouble with fair housing rules.

What breaks for me isn't any single cost, it's the count of things. Five properties means five insurance renewal dates, five tax bills, five sets of utility accounts to switch at turnover, and if they're in different municipalities, different registration cycles and inspection rules. Nothing on that list is hard. All of it is a deadline you can miss, and a missed rental registration in some cities means you can't legally collect rent until it's cured.

The converted primary is a specific kind of listing. Owners pick finishes for themselves, so you get white carpet in a hallway, a fancy range with an induction top nobody knows how to clean, and landscaping that needs weekly attention. Tenants don't maintain any of it the way you did. When I take over a former owner-occupied house I budget a higher first-year maintenance number than for a purpose-built rental, usually double.

Also the first tenant in your old house tends to call you about things you lived with happily for a year.

The year you live there is the cheapest labor you'll ever get on that property. You're on site, you can do the fixes yourself on weekends, and you learn where the water goes when it rains. I'd spend that year replacing anything with less than five years left rather than decorating.

Appliances are the trap. Whatever's in there when you leave is what a tender will destroy, and a builder-grade dishwasher installed by a contractor is $600 to $900 all in.

Read the HOA documents before you buy, every time. Rental caps are common, some associations run a waitlist that's years long, and some require a minimum twelve month lease with the association approving the tenant. I've seen declarations that permit rentals only after the owner has held title for two years, which would break your twelve month cycle completely. That document is public and it takes an hour.

The pace is what would kill me. One property a year, at retail pricing, because you're shopping as a homeowner rather than hunting distress. Five years gets you five doors. I'd rather find two mispriced properties in a year and put more cash in.

Though I'll concede the financing edge is real and I can't get it. 3.5 or 5 percent down versus 25 is not a small gap, and you keep that rate for thirty years.

Basic question I've been embarrassed to ask. When the house stops being your residence and becomes a rental, does the loan change? Rate, term, anything? I've been reading about notes and I can't tell whether the lender reprices it.

vellum, no. The note terms are fixed at closing. Occupancy affects whether you qualified, not what you owe afterward.

girder is right about using the live-in year for repairs, with one warning from my side of the business. Every project you start while living there grows. You open a bathroom wall to fix a valve and find the subfloor. Set a scope and a budget for the year and stop when you hit it, or you'll be moving out of a half-finished house on a deadline.

The wall you'll hit isn't in this thread's cost list, it's debt to income around property three or four. There's another thread on it here. Every rental you keep adds its full payment against you, and rent counts at 75 percent at best and sometimes at zero until you have tax history. Plan the fourth purchase before you make the first, because the first three are easy and then it stops.

I showed up here pretty sold on this strategy and I'm leaving less sure. Five moves, five turns, five registration regimes, and the payoff is five doors that may not cash flow much for a few years. The financing advantage is obviously real. I just don't know yet whether I'm the kind of person who can move house every twelve months without hating it by year three...