Anyone own rentals?

[Gym]

I owned rental properties for 22 years and it was a reasonably good experrience. My 3 buildings (8 appartments) were located in Salem, MA. where the laws definately favor the tennants. During those 22 years I was in court only 3 times. Two of those times was to evict a tennant that the previous owner put in during the last few months of his ownership as he didn't want any vacancys while trying to sell so he obviously didn't screen those.

In the long run though the rental income paid the mortgage on all my properties including my personal residence, paid my daughter's tuition for private high school and college and gave us a pretty good nest egg for retirement when we sold those properties.

I was pretty good at reading people so rarely had any problems there. My rents were below market value so people tended to stay and keep the places in good shape. I migrated away from leases for a couple of reasons. 1) if a person wants to leave, ie: job loss, job relocation, financial problems or whatever, making them stay will not make for a happy or cooperative tennant. They may decide to make you throw them out by causing trouble or stopping rent payments. 2) If I wanted a tennant to leave, for a non lease related reason, I to would be bound by the terms of lease. I found a tennancy at will (month to month) worked best for both parties.

I would say go for it @Speedling. Your first time being a landlord is a little nerve racking but you seem to be on the right track with your thought process and asking the right questions. If you decide it works well for you then duplicate that success with another property.

 

[jetboater4life]

I migrated away from leases for a couple of reasons. 1) if a person wants to leave, ie: job loss, job relocation, financial problems or whatever, making them stay will not make for a happy or cooperative tennant. They may decide to make you throw them out by causing trouble or stopping rent payments. 2) If I wanted a tennant to leave, for a non lease related reason, I to would be bound by the terms of lease. I found a tennancy at will (month to month) worked best for both parties.

@Gym This is a very good topic. I like to do 1 year leases but at the same time I provide a provision for the tenant to get out of the lease if something in their life drastically changes, or they become very unhappy staying there for whatever the reasons may be. I have clauses in the lease to say that if they have stayed at least 6 months then they are only on the hook for one additional month of rent in the event I cannot get it rented immediately after their departure. If less than 6 months then I'm little stricter. In the end like you say, if they aren't happy then they aren't going to take care of your place so I always work with them to figure out the best solution.

 

[Julian]

I think @007 is also in the renting game. These are all great topics! I've been dabbling with buying a property and getting into this....

@Magic Why did the renters of the mountain property over pay their rent???

 

[Magic]

@Magic Why did the renters of the mountain property over pay their rent???

@Julian I'm not sure what you mean by "overpay" . We index the rent to the Zillow rent equivalent. I know its not the most accurate way to judge what rent to charge, but the renters feel like Zillow is an authority and a 3rd party they can check to verify and see if they are overpaying. We take the Zillow number and round down to the nearest hundred. Before the recession we were getting $500.00 more than the mortgage, during the recession we were getting a few hundred less than the mortgage, now we are just slightly above the mortgage. The mortgage stays constant, but the rent is tied to the market. Does that help?

 

[JC6275]

I think @007 is also in the renting game. These are all great topics! I've been dabbling with buying a property and getting into this....

@Magic Why did the renters of the mountain property over pay their rent???

I think @Magic meant the rent they pay covers his mortgage payment and there is a little extra above the mortgage..

 

[Magic]

I think @Magic meant the rent they pay covers his mortgage payment and there is a little extra above the mortgage..

Yep, thanks for the translation @JC6275 !

 

[Gym]

It sounds like your lease is pretty flexable @jetboater4life. Like you, I always tried to work with someone that was having some trouble. I never got burned doing so either.

 

[Speedling]

Well, wasn't able to meet with the banker Saturday, but the renter I was working with came by today and said he would only do a 2 year contract if the price per month went down to 1600. I just told him I have to talk to the banker and see where our numbers lie. In all reality, I don't know if I want to do this with MY home, but if the numbers work, then great. I would basically be telling him it's 1740 as my bottom number (my realtor of 40 years experience came up with that number for me) and a 2 year or he can find another one.
If the banker tells me I'm nuts, then it's all done and I am putting the house up for sale.
My realtor says I'm better off building a house and selling every few years in my case because I work construction anyways. Makes sense, but I like the idea of "free" money where once a renter is in there it isn't much work other than calling someone in to do repairs or whatever.
I may actually have an "investor" that would be looking to build a couple duplexes with me mainly out of brick and block - simple designs etc. and then rent them. He's got the cash to do it, and I have the construction know-how and ties to get it done. I really don't like partnerships, but I like information and research.
And so the saga continues, lol

 

[Speedling]

Well, after talking to the banker and the insurance guy the renting isn't happening. We will be putting the house up for sale.
hopefully my two friends that are realtors will help out! Neighbor has their house about $40k too high so we can attract a higher price without seeming real high.

 

[007]

I've not been into rentals for as long as Gym, but been at it awhile @Speedling and would be happy to speak with you offline if you venture back into this line of thought. It's been a long week and I kind skimmed this thread, so I may be repeating what others have said.

In general my experience in my city (may not back accurate in yours):

1. You can rent your own home but never expect anyone else to take as good of care of it as you do.
2. Always trust your gut
3. You need margin. I try for 25% or better over fixed cost. One blown AC unit eats a lot of reserves in a heart beat (and see #1 above).
4. I do leases. Scare the crap out of them with a strong lease and late fees that are allowable, but steep enough to hurt. Its a business... if they don't understand that, they will try and walk all over you. You still have to pay the mortgage even if they don't pay the rent!
5. Never rehab a property to rent as nice as you would rehab it to sell.
6. Self managing and self maintaining saves money and generally allows you to keep better tabs on the properties and tenant issues, but may hurt you if someone makes an insurance claim against your property siting a hazard (say for spraining an ankle in a car tire rut)
7. The mayor will find your cell# if that cute little family with one child who just rented your freshly rehabbed ONE BEDROOM appt. is hiding the fact that they really have 4 kids. They get busted when they register the kids for school
8. I know enough Spanish to be dangerous...but body language is pretty universal
9. Forget the guys on TV. You can make money in rentals...but its a long run game that is made or broken when you buy and when you lease.
10. Nothing beats driving the neighborhood and calling on your competitors signs to see what you are up against. You might be surprised at what others ask for rent (high or low)

 

[Speedling]

I hope to the rental thing someday. My good friend would too so we thought about doing some sort of partnership. As a mason I wantto build block wall duplexes and rent them. That way it is much harder to punch holes in the walls and as soon as a tenant is out, prpressure wash and done!

 

[billyb]

Be prepared for some neighbor backlash as well. I am currently living next to a stripper renting the house next to me. Real class, let me tell you.

So far, I have only been able to increase the subdivision dues by 4x to try and keep this trash out.

 

[Murf'n'surf]

Be prepared for some neighbor backlash as well. I am currently living next to a stripper renting the house next to me. Real class, let me tell you.

So far, I have only been able to increase the subdivision dues by 4x to try and keep this trash out.

Sad part is.....that stripper is bringing home 6 figures most likely. But, she will stumble and you will have a new neighbor and new problems. Sometimes I worry about my rental neighbors and think back about previous renters and wish they never left.

 

[Speedling]

My neighbor is a stripper and she has the biggest house in the subdivision.
Paid for $20k of landscaping cash.
She's getting her second divorce and moving to Texas. You guys go one incoming!

 

[Gym]

My neighbor is a stripper and she has the biggest house in the subdivision.
Paid for $20k of landscaping cash.
She's getting her second divorce and moving to Texas. You guys go one incoming!

Was it in one dollar bills?

 

[Lspeedss]

Lol good one

 

[007]

Was it in one dollar bills?

They all had a crease down the center and smelled like baby powder and cheap perfume!

 

[Speedling]

Was about to post a question but basically we are looking at doing a rental instead of part of my house project!
The cost of putting on a ...large 3rd bay on the garage is the same cost it would be to buy a small house and some of the rehab of it and then rent it out.

Basically, my wife and I thought it would be cool if we found a property with a nice big garage, or no garage at all and build it and then rent the house out while I use the garage as storage for the boat.
I would assume a problem would be splitting electric.
Ideas or concerns on this one?
I have a financial plan or goal to have 3 small rentals before I retire. I figure the first one should be this boat storage deal!
Another question - would you take out a loan for 50% of the house your will be renting in order to purchase it or is it cash only or don't do it?
@007 I know you said you do this stuff and @Gym
So advice on going this route? Good or bad idea to steal the garage for my boat?

 

[djetok]

I just sold my last rent house (close Sept 4 th). If it's the only thing your doing it's not as bad. My main business I deal with a lot of landlords. They do well with it, I don't have the time to do it. With just one rental it will not be bad. I was trying to make a profit. We just flip now, no rentals.

 

[djetok]

Was about to post a question but basically we are looking at doing a rental instead of part of my house project!
The cost of putting on a ...large 3rd bay on the garage is the same cost it would be to buy a small house and some of the rehab of it and then rent it out.

Basically, my wife and I thought it would be cool if we found a property with a nice big garage, or no garage at all and build it and then rent the house out while I use the garage as storage for the boat.
I would assume a problem would be splitting electric.
Ideas or concerns on this one?
I have a financial plan or goal to have 3 small rentals before I retire. I figure the first one should be this boat storage deal!
Another question - would you take out a loan for 50% of the house your will be renting in order to purchase it or is it cash only or don't do it?
@007 I know you said you do this stuff and @Gym
So advice on going this route? Good or bad idea to steal the garage for my boat?

What do you think storage fees would cost? How's the rental market. If I was going to pay storage fees and a rental could offset that. Absolutely!