Any of you a Landlord? Need Advise.

[FATCAT]

My wife and I have been looking into purchasing some rental property (duplex or 2-3 appt. building), and would like to get some of you folks perspectives on this endever.



Since the stock market has is heading into its 3rd loosing year, I have always regaurded land/property as a solid investment. We have some friends who have been doing this for sometime and they love the extra income and some of the tax advantages, but my worries have been with the legal and tenant side of the endever.



What stories/advise would you folks have for someone looking into this type of investment?

 

[Pat_in_Utah]

I have 1 rental

Too much advise to list here, so I'll be quick:



- smaller houses seem easier to rent than large ones (due to lower rent)

- "investment" properties cost more to finance - I paid . 5% higher for my loan

- area is better than the house (holding value-wise)

- screen tenants with references (not current landlord), credit checks... In some states, it's hard to get people out of your house.

- no verbal agreements, get a good contract, move-in check lists... (I can email you some)

- don't rent to family or friends - they're VERY hard to boot!





I agree with you, property has always appreciated. They make your mortgage payment, and after it's paid off - YOU get the house back! How sweet is that! Yes, it's some upkeep, but I try to do all my own repairs (plus a brother that knows everything helps! He's a HVAC tech now) I can write off dagn near everything for the rental on taxes. I purposely rent for lower than the market so I can be picky on who I let in.



Good luck,

Pat

 

[NVR FNSH]

My sister & I 'inherited' three condos in Texas - 2 in Austin, 1 in College Station (both parents are Aggies) - from our parents. We continued to go thru the property management co the folks used and things worked okay for a few years. The monthly income was nice but it never amounted to much ~$150/month for each of us after expenses. There were plenty of months where there was no income. The rental market wouldn't support higher rents unfortunately. After having to deal with tenants moving too many times and the associated management fees we decided to bail out and sold the places. We also got screwed by one tenant - $4K in damages and the security deposit was only $750. 00 It's rather difficult to go after somebody from half way across the country.



The only way I would do the rental property thing again is if it was local property so I could manage/maintain it. Then again that may be a royal PITA. A co-worker of mine has local rental property and he ended up dumping $20K due to damages - unfortunately, he was unable to collect any money from the tenant.



My advice is be very, very careful with what property you buy - monthly rent will be dependant on desirability - and who you rent to.



Brian

 

[BarryG]

Ditto what Pat said. Screen very carefully and check past landlords / references not current ones if they are a bad tenant the current landlord wants to get rid of them and many times will say they were good. The longer the lease the better for you as that means less times people moving in and out 1yr as opposed to 6 months. Check out your local eviction laws it is amazing how long someone can stay in your house for free while you rack up the attorney fees trying to get them out. Getting reimbursed from them is usually not going to happen because if they had the money to begin with they would have paid the rent. You also are usually better off managing the property yourself as management fees can be a chunk. Also would be a good idea to find out local vacancy rates to see if the market is strong or weak in your area for rentals. We had a rental for 20 years, the vast majority of tenants were good but it only takes a couple bad ones to make it a losing proposition for out of pocket expenses but don't forget that they are paying your mortgage and the tax breaks darn near everything related to the property is deductible even mileage going to check on it, except your personal labor. Also in many states 1 or 2 rentals gives you lots of leeway in who you rent to (not that I am advocating discrimination but you will find there is a certain profile you will prefer as tenants ie no kids, no pets) 3 or more and you start having to adopt the fair housing rules if I recall correctly. Also be leary of large amounts of cash up front as nice as it seems those were our worst tenants. One last thing first and last months rent and as big a security deposit as you think you can get away with and extra deposit for pets if you will allow them. Also keep all the accounting totally seperate from your personal stuff makes tax preparation time a whole lot easier. One last thing if you can befriend a neighbor of the property they can keep an eye on it and let you know if anything funny is going on. We had the local fire chief live across the street from our property and it was great his occasional call saved us lots of money and we would buy them dinner or something in appreciation. Sorry for the short book.

In the long run it is hard to lose on rentals if you can keep them rented.

 

[FATCAT]

Keep the advise coming ... thanks!

Thankyou folks, lots of valuable experience we have on the TDR I can see.



Pat, my email is -- email address removed --



That check-list would be very helpfull.



Thanks again.

 

[Ethdee]

There's a movie called Pacific Heights that should be required viewing.



Jim

 

[Koa Man]

Originally posted by Pat_in_Utah





- smaller houses seem easier to rent than large ones (due to lower rent)



- don't rent to family or friends - they're VERY hard to boot!

I do quite a bit of work for a property manager here that tells me she does not have enough houses in the $5000-7000 a month price range. She has 6 and they are always rented. At one showing she had 12 people apply for a $7000 a month house. On the other hand... . she says she has a hard time finding renters for houses in the $1500-2000 range. In another exclusive townhouse area that I do work at, a guy paid the $5500 a month rent for 1 year in advance. Resident manager told me he moved in with 3 girls. Then noticed unusual amount of different vehicles visiting for about 1 to 2 hours, usually at night. They got evicted after about two months... the guy was running a call girl operation.



I am currently renting a large 1 bedroom cottage (900 sf) to my daughter and son-in-law, who works for me. If no rent payment, no paycheck at end of week. :-laf



Rentals can be good income, but they can also bring a lot of problems. Main thing is to screen renters carefully and always run a credit check. That will tell you how responsible that person is and whether or not you can count on getting paid. As was mentioned above, it can take awhile to evict a bad renter.

 

[Deezul1]

I had 2 rentals, 1 was a cheapo 1bdrm and the other a very nice almost new 3 bedroom that rented for top dollar for the area. The cheapo should have had a revolving door so many moved in and out in short time. They always left damage to be repaired. The nice house was always rented and in 4 years was painted inside once and then didnt really need it and the rents were always on time, no damage or problems. I believe that higher rent property will attract a more responsible person because it takes a good income to pay the rent and losers dont make good money.

 

[NVR FNSH]

Regarding credit checks: I tried to report the crappy tenants that left $4K worth of damage but I was unable to since I was not a 'member'. It was cost prohibitive to be a member for us. My point is that you may not get all the info you need/want on a credit check.



Brian