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Post by Deleted on May 21, 2011 0:33:58 GMT -5
when being a landlord is just not for you?
A co-worker is selling his rental home because he just hate and I mean hate being a landlord. He said it was the biggest mistake he made and he cannot wait to get out of it.
He hated every minute of it: - dealing with tenants - upkeep - etc.
And that made me wonder... I want to eventually be able to own some rental properties but what if I like him find out I hate it or it's just not for me. What to do?
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❤ mollymouser ❤
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Post by ❤ mollymouser ❤ on May 21, 2011 0:41:25 GMT -5
Don't buy more than one rental property until you see how you like it?
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Post by Deleted on May 21, 2011 0:52:45 GMT -5
Don't buy more than one rental property until you see how you like it? Definitely! But what to do if I found out I don't like it?
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Peace Of Mind
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Post by Peace Of Mind on May 21, 2011 1:03:29 GMT -5
Sell the property or hire a management company to deal with it. I would never do it either. I prefer buying vacant land in areas I predict will boom. I've been pretty lucky so far.
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❤ mollymouser ❤
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Post by ❤ mollymouser ❤ on May 21, 2011 1:45:31 GMT -5
Hire a property management company. Sell the property. Tough it out and get over "not liking it."
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qofcc
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Post by qofcc on May 21, 2011 6:20:53 GMT -5
One of my DH's friends is constantly bitching to him about how much of a pain it is being a landlord and all the ways his tenants annoy him and it's really irritating me because I want to own rental property in the near future and he's going to make that difficult for me. But most of the problems this guy has is because his property is not set up to be a good rental. It was a SFH and they just blocked off the entrance from the front hall into the house so tenants have the upstairs and he lives downstairs. If you don't want to hear other people's headboard banging against the wall above your head then don't rent an apartment with a bedroom above yours. If you don't like to hear them walking or talking you should have insulated the ceiling. If you don't like that their cars are in your way all the time then get rid of some of the back yard and add more parking. And really, even with all of those minor annoyances, he's still getting over $600/month rent for a part of his house that is paid for and he wasn't using anyway.
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8 Bit WWBG
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Post by 8 Bit WWBG on May 21, 2011 7:08:33 GMT -5
I think on this board we get a very disproportionate view of rentals as some kind of foolproof guarantee to building wealth. I believe that they can, but high reward = high risk.
Ever hear how Trump told his kids to stand to the side of the door when coming to collect rent so you don't get stabbed or shot? That is absolutely true. I have a cousin who was in real estate and actually got stabbed collecting rent. He made lots of money over the years, but you know... stabbings suck.
There have been plenty of tenant hell stories here. bonnap has some doozies. Some tenants are judgment proof. Others are amoral. Some fall on hard times and do desperate and terrible things.
Could you elaborate on the reasons for your friend hating his rental? Dealing with tenants, and upkeep is very vague. My family has rented out property before, and we had some bad tenants and some good tenants.
Did your friend actually make money? Was it good money?
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Post by Savoir Faire-Demogague in NJ on May 21, 2011 7:20:53 GMT -5
I owned a five unit rental way back in the early 80s. I had these delusions of grandeur about how wealthy I would be getting, and planned to own numerous properties. What a major hassle. I could not wait to get rid of the darn thing. Hiring a property manager, while an option, eats up all your profits. The only way I would do this again would be to buy a two family or a duplex.
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Post by Deleted on May 21, 2011 7:25:20 GMT -5
I can tell you now it's not for me. I don't like caulking my own bathtub - I sure as heck don't want to be responsible for a dozen extra bathtubs. (Not to mention every other maintenance issue)
Looks like I'll have to build wealth another way.
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resolution
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Post by resolution on May 21, 2011 7:36:08 GMT -5
My parents lost a lot of money on an economy apartment building in a bad part of town. Their tenants were low income/no assets and would wreck the place faster than dad could fix it. When they hired on site managers they ripped them off and then took off. They were very happy to unload the place at a loss. They consider rentals as a liability and a recipe for losing money.
My friend's son was a crazy flipper who got caught with 5 underwater houses when the market crashed. He is a bankruptcy attorney so he has the income to prop up all the payments and he has all of them rented out at a loss through a management company. He is losing about $3000 a month on them to keep the mortgages current. However he refuses to pay more than 5% to the management company so he keeps going from one crappy company to another and has tons of problems.
Another friend has a cheap condo in the ghetto that he picked up for about 20k during the S&L crisis in the 80s. Its good that he paid so little because his tenant has been behind for at least 10 years. She pays about one month out of three, but she was an old coworker of his and he feels sorry for her so he just wrote off the investment and she lives there under whatever terms she wants.
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8 Bit WWBG
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Post by 8 Bit WWBG on May 21, 2011 7:52:10 GMT -5
...:::"Hiring a property manager, while an option, eats up all your profits.":::...
I'd imagine it would eat up most of them. You'd either have to get the property at a steal, or it would have to be a property you inherited or bought long ago.
When my boss and his wife upgraded, they were able to keep their first home and use it as a rental. They hired a PM and the numbers worked for them.
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Gardening Grandma
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Post by Gardening Grandma on May 21, 2011 9:57:47 GMT -5
what if I like him find out I hate it or it's just not for me. What to do?
As posters on this board repeatedly point out - it's not for everyone. But even before you start, you should have some clues: 1) Are you handy around the house? Or not? 2) Are you pretty good with people? Or not? 3) Are you detail oriented? Or not?
If you plan to manage a property yourself then you need to be all of the above. Most folks I know personally who do this start out buying a home for themselves and live in it for a while, then they buy another home for themselves and rent out the first home. There are lots of advantages to doing this: you know the house and the issues, you probably have some equity in the house so that you don't start out with a negative cash flow.
If you decide that this is not a route you want to pursue, then you can put the house up for sale....and be done with it.
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phil5185
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Post by phil5185 on May 21, 2011 10:27:10 GMT -5
...:::"Hiring a property manager, while an option, eats up all your profits.":::... I'd imagine it would eat up most of them. You'd either have to get the property at a steal, or it would have to be a property you inherited or bought long ago. We ran our houses ourselves for about 15 yrs, then switched to a PM for the last 20 yrs. Our PM cost has been roughly 13% - ie, a month's rent to lease and 5% a month. In our case, the profit stayed about the same. The PM has a waiting list of screened tenants so there is never a vacancy, no breaks in rent. And their screening process has nearly eliminated the dead-beat renter issue. Plus our PM consistently gets about 5% to 10% more rent than we got with our individual advertising. And it is nice to get a 1099 & Year-end Report listing income, expenses, repairs, yada - just click & paste into Turbo Tax. For me, the big time consumer was not upkeep or maintenance but interviewing/showing houses. Weekends were spent at the houses doing walk-thrus, handling deposits, arranging for a crew of cleaners/painters to do a w/e upgrade, etc. Some times one of the houses would go vacant just as you were leaving on a 2-week family vacation. So you can either lose a month of rent, or you can reschedule both his/hers vacations at work (usually a hassle).
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dancinmama
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Post by dancinmama on May 21, 2011 10:34:50 GMT -5
I think you have to really think about what it entails (talk to people who are landlords) and then decide if it is for you. After that, decide whether doing it might be profitable.
I would think that today's RE market would make it profitable, but you never know.
We bought a (4) bedroom house on the CA central coast (golf course property) that had been a rental for (8) years. The landlord had bought it as a future retirement home, but in the meantime had been renting it out to airmen who rotated in and out as they got transferred on and off a nearby base. The clientele was a good guarantee that the rent would be collected, but they were hard on the property. The outside had been well maintained (the landlord paid the water bill and had a weekly garden service), but the inside had been totally neglected and the property was no longer fit to live in and was going to require major cosmetic work. I guess the timing wasn't right for the landlord and after renting for several years in a sluggish housing market, he decided to sell in 1998 - right before the start of the housing boom.
Yes, it did cost us about $40K (a steal by today's standards) to gut it and fix it up, but it became like a brand new home. We have since moved on due to a job relocation, but that house was a STEAL!!
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phil5185
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Post by phil5185 on May 21, 2011 10:36:18 GMT -5
I prefer buying vacant land in areas I predict will boom. I've been pretty lucky so far. As you say, vacant land requires luck - sometimes it 'hits' within a lifetime, sometimes not. Buy farmland in the Midwest. Income producing land pays for itself as you wait - both in rental income and appreciation. A 40 acre corn field produces about 7500 bushel of $7/bu corn per yr ($50k gross). And farmers are bidding against each other to lease your land, they will haul machinery from as far as 10 miles to get more land. All you do is pay the annual taxes (~$1000) and collect the annual rent, nothing to maintain.
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zibazinski
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Post by zibazinski on May 21, 2011 10:41:46 GMT -5
I do it because my mom and grandma did it and it was a way to build wealth. Even now it pays me so I don't have to work a crappy job just to eat. I'm down to 3 and they are manageable but I do a lot of the work myself plus I have family very close to them. I have 2 long term tenants so raise their rent like 5 bucks a month per year so they won't move for $60 and it covers the creep of taxes and insurance. Funny how the value goes down but the taxes still go up, huh? My other tenant I am hoping will stay but he went job searching in Idaho. I can't imagine Idaho being better economy/job wise than where he is and his wife has a job, loves the house, and wants to stay put.
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Nazgul Girl
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Post by Nazgul Girl on May 21, 2011 10:44:37 GMT -5
We've had good luck with being landlords, having two properties. We sold one because the condo association thought that they were the Lords of the Condos, or something, and kept hiking the association fees to ridiculous levels. We managed them ourselves. We've had the same tenants in our nice rental house for 3 years. We have a purchase agreement on a low-priced foreclosed 1 BR condo in a good area for $10,250, and the bank is refusing to close as of Friday, when the closing was scheduled. We are frustrated. It's a cash deal, and I actually think they believe they can get more money from someone else now. We told the realtor to tell the bank's realtor to either perform, or we want our downpayment back, or possibly we will sue them to fulfill the contract. They're blaming the delay of the closing ( which hasn't been reset ) on "not having the figures ready." Screw them. I want the condo and I'm sure that we'll get it. We're going shopping for a toilet ( which it doesn't have ) this afternoon, taking a look at the Habitat for Humanity Restore ( a store where you can buy recycled building materials and some furniture ) in a nearby city. Hopefully, we'll get a nice deal.
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Post by Deleted on May 21, 2011 12:47:55 GMT -5
"There have been plenty of tenant hell stories here. bonnap has some doozies"
I do? I consider myself pretty lucky. Perhaps you are confusing me with Debt (who also lives in Europe)?
The advice to try one at a time is good. These stories of folks wanting to buy 5 within a 2 year period of time make me shudder...
As we LLs have said, it's not for everyone. I've been very, very lucky. I've never had to evict anyone I've screened but have evicted (or started eviction proceedings) many times for folks who were screened by others (or not!). But I've done some kind of property management for over 30 years (starting at age 19!).
The key is that you need to take some time understanding the rules, do your homework on the market and your prospective tenants. You have to spend money and time on your property too. I do think that the type and how you care for your property will dictate who you get as a tenant. I haven't had to collect rent in person with the exception of one railroad tenant over ten years ago. I won't put up with games and I won't buy/keep property that needs that level of attention.
That said you do need to have a relatively thick skin about stuff. While I get annoyed when folks don't take care of the property I would DH goes Ape-shit. He couldn't deal with property management himself.
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Post by Deleted on May 21, 2011 12:59:38 GMT -5
I should add, though that I never believed the "You'll be able to sit back and collect the rents while your property appreciates" bs. My folks were real estate agents for 30 years and I learned from their mistakes (don't worry I've made plenty on my own, lol). If someone wants to earn a return on their investments with minimal effort they are probably better off investing in some good, low cost mutual funds.
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Gardening Grandma
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Post by Gardening Grandma on May 21, 2011 13:05:09 GMT -5
Yes, it was debtheaven that had the horror story - last year I think. A tenant trashed the place - it was pretty horrible. But she HAS recovered, repaired and moved on. I think she's in the process of buying another rental now. Hopefully she'll see this and post... She's in Europe like bonapp, so there's a time difference.
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