# Is owning rental property worth it?



## Bentley (Jul 10, 2008)

I own a couple of small tracts aside from my home. One is 1 acre, and the other is 2.5 acres. I am considering buying a couple of mobile homes and rent them out on these tracts.

Anyone have thoughts on the upside or downside?

Thanks

B


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## copperkid3 (Mar 18, 2005)

matter as to whether there is a market for the area you are considering.....and by market, 
I mean more than just a few warm bodies who 'swear to you on their mother's grave' that 
they'll have the rent by the *END* of the month!!! It takes a lot of hard work to actually
make it work....background checks, credit reports.....time and money to check it out.

And then there is the maintenance to contend with......both during the time of occupancy and *AFTER* 
they leave; either willingly or evicted. Human nature can be a nasty thing to have to deal with.....
and you will see the worst they have to offer. Figure it into the equation now.....because more 
than likely, you will be having to pay the price for it later as well.

You will need to check other things as well.....is the land zoned for residential mutiple families? 
How about a perk test for a septic system? What will putting one in cost? Don't forget about a 
well with safe and a reliable amount of water. Add electric to the equation and a heat source; 
who pays for the propane? The list goes on but you get the idea.... the main thing is: Do *YOU* have 
what it takes to be a landlord; i.e. can you file the papers to evict, the first time the rent is late? 
If you can't, then one of two things are necessary.....pay a lawyer to have it done and figure the 
additional cost into doing business.....or get out_* BEFORE *_you lose your shirt.


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## unregistered168043 (Sep 9, 2011)

I've done pretty good with commercial property. You avoid a lot of pitfalls with commercial property, its a lot easier to evict a business then getting someone out of their home.


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## Whisperwindkat (May 28, 2009)

No. The first tenant in our rental destroyed the septic lines by flushing cat litter down the toilet. The second tenant destroyed the bathroom in two ways. First by locking the dog that they weren't supposed to have in the bathroom. It ripped up the linoleum and ate all molding within reach, even leaving claw marks on the walls where it tried to scratch its way out. Second, apparently there was a leak that they never told us about. It rotted the floor and left nasty mold all in the wall which had to ripped out and replaced. Security deposits don't even begin to cover the damage. Oh, and second tenants moved out in the middle of the night owing quite a lot of money. In court now trying to recoup what we can.


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## InvalidID (Feb 18, 2011)

Rentals can be a good business. I make pretty decent money renting out a few homes and in apts. BUT, and this is a big but, I use a rental service to handle the day to day stuff. There is no way it would be worth it to me otherwise.

Would I rent out homes where the renters not only knew where I lived and had my home phone, but could walk to my house? NO WAY!!!!!!!!!!


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## StatHaldol (Sep 1, 2006)

copperkid3 said:


> matter as to whether there is a market for the area you are considering.....and by market,
> I mean more than just a few warm bodies who 'swear to you on their mother's grave' that
> they'll have the rent by the *END* of the month!!! It takes a lot of hard work to actually
> make it work....*background checks, credit reports*.....time and money to check it out.
> ...



Copper is right. We inherited an older house and rented it out for a while and we were constantly doing work on it.

The main things are credit checks and background checks. I know some people who love it; but it was a pain to me.


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## steff bugielski (Nov 10, 2003)

My 2 cents...
We have 7 small studio apartments along the road of where we live. These are low income type apt. The people renting them mostly are on assistance and not the most trust worthy. We charge $400.00 month tenant pays utilities

My FIL has 20 apts 70 miles away closer to suburban New Jersey. These are a bit nicer than ours and cover all the expenses there as well as his home, which is in a nice area. Mostly one bedrooms. They run $600.00 month tenant pays utilities.

I was left a 1 bedroom condo when my mom passed, in a nice area. Very close to FIL's house. I charge $1200.00 month rent tenant pays utilities. 

My experience tells me that in a nice area people who have decent jobs make good tenants. Those paying a small amount of rent tend to trash the apt when they leave. living paycheck to paycheck leaves too many ways for them not to have rent. One car repair puts them behind. Once behind it is hard to get back on track.

A tenant paying upwards of $1000.00 a month MUST have a good job, probably some money in the bank and also of a better character. 

Not saying those on unemployment or govt assistance are not trustworthy it is just my experience over the last 15 years.

Always get the one or two prior landlords phone number and call for a reference. Why two landlords? Because the current landlord will say anything for this guy to find a new place to live and get out of his place. I know we have done it.

I hate to be cynical but you asked.


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## greengrow (Jul 3, 2011)

The above advice is all good. you must do the homework first and then some.

Talk to a lawyer, and a debt collection agency so that when it goes wrong you have a plan in place. I found out things from the debt collection service that would have helped if I had talked to them first. 

The other thing is that repairs have to be done on time and well, it is not your home so putting thins off is not so possiable


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## springvalley (Jun 23, 2009)

My Answer would be NO, not worth the trouble to go into. > Marc


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## Nomad (Dec 19, 2002)

How about storage units? Not much for maintenance I wouldn't think. And if they don't pay, you sell their stuff.

Nomad


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## jwal10 (Jun 5, 2010)

I had small rentals, 1 bedroom cottages that I would rent to the elderly, mostly low income couples. They really appreciate a nice place and didn't tear them up. I did not advertise, the senior center let me know when there is a need. A nice place with reasonable rent, some become good friends and rented from me for many years. I let them move up to a different one when they became available. I even helped some move. I would rather have one set empty than rent to just anyone, it gave me time to update, paint and general maint. This worked well for me and my kids have them now, I do some maint but there isn't much to do....James


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## Alice In TX/MO (May 10, 2002)

For me, yes, it has been worth it. I bought homes in need of fixing up and turned them into rentals. I've got everything from a one bedroom home that rents for $450 a month in a small town to a home in a major metropolitan area that rents for $1350. Two houses in Austin, four in south Texas, two in Missouri. I've been both careful and blessed with renters. Only two deadbeats in fifteen years.

One of the HUGE benefits is being able to write off business expenses. My tools, cell phone, and mileage are deductible. 

As I've gotten older, and now I have some other things to do, I'm gradually transitioning some of them into income producers in a different way by selling them and carrying the loan myself. Cash flow and no repairs.  They have held their value better than the stock market.


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## ChristieAcres (Apr 11, 2009)

Bentley said:


> I own a couple of small tracts aside from my home. One is 1 acre, and the other is 2.5 acres. I am considering buying a couple of mobile homes and rent them out on these tracts.
> 
> Anyone have thoughts on the upside or downside?
> 
> ...


I would not recommend becoming a landlord right now


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## steff bugielski (Nov 10, 2003)

Personally I do not think the economy has anything to do with it. It might be better. People still need a place to live. 
You just need to be sure those people are respectful and trustworthy.


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## ChristieAcres (Apr 11, 2009)

steff bugielski said:


> Personally *I do not think the economy has anything to do with it*. It might be better. People still need a place to live.
> You just need to be sure those people are respectful and trustworthy.


If it doesn't, rent should be FREE. I see everything getting far worse... This equates to more and more folks UNABLE to pay their mortgages or even RENT. Last night, spoke to a family member (DH to a relative), who told me he was concerned about his work, too. This man is flat brilliant in software development. If he loses his job, becomes unemployed for any length of time, the cards fold. His DW is pressuring him to buy a mult-plex (looking at different ones). As businesses continue to fold, lay-offs increase, the rental market will collapse, as well. Last night, on our way back, we stopped in a coffee shop we used to frequent. Since we know the owners, we went in to visit them after hours. We had a chat about the economy, politics, and the state of our Country. This couple had a beautiful house with a view. It was sold about a year ago, and they moved into the upstairs of their coffee shop!She pointed out people better start considering moving in with each other. This is happening more and more. So, you rent to one couple, friends move in, RV's pull in... Where I live, this is happening.

Become a Landlord in this economy? :runforhills:

If I had extra money, it would be invested into our primary property, to develop further self-sustainance, add a larger greenhouse, a solar system, buy more fruiting bushes/trees/vines, get more bee hives, etc... Also, stock up on gold/silver/etc... 

With our Fiat System of money, the dollar will decrease in value until it is worth nothing (not if, but when). When you are hungry, you can't eat it. I see monetary wealth in precious metals, in food, what can be traded or bartered, in supplies, etc...


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## redwall (Mar 10, 2007)

I will give the advice my grandpa gave me go big. one house bad get at least three of them and charge enogh rent that half of your coasts can be paid out even if a few units go empty. have a spare bank acount to keep up with income and outcome. save and plan to spend at least one weekend a month to tending to the houses. This is a Job!! and its not fun allways.


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## willow_girl (Dec 7, 2002)

> As I've gotten older, and now I have some other things to do, I'm gradually transitioning some of them into income producers in a different way by selling them and carrying the loan myself. Cash flow and no repairs.


^^^This!!!^^^


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## Guest (Nov 26, 2011)

Renting to friends and relatives will ruin a friendship or a kinship. Renting to people because you think you get along with them or you think they'd make good neighbors,,,, Well, they won't be good neighbors to you. Renting in return for trading out work never works. Renting to "FWB's" (Friends with Benefits)destroys the "F" part and makes the "B" part seem like part of the rent, so that'll go away too. REAL soon. What seems to work pretty good is getting a decent down payment(more than a month or two rent in advance) and selling with owner financing. People will at least try to maintain the place. If they default, you want to at least be even on the "rent" when you have them evicted.


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## wharton (Oct 9, 2011)

I really think that the correct answer to this question is exceptionally specific to the individual and the individual micro location the potential investor has in mind. Specifically, I can drive fifteen minutes from here in two directions, and find radically different rental markets. 

In one location the market is retirement/vacation oriented and there are several stratified layers of activity. The very low end units are selling at less than $120K and renting for $800/month. the middle of the market is dead, stone cold. The upper end houses with 4-5 bedrooms are going fast to investors as vacation rentals, bringing $1500 to $3500 a WEEK. A lot of Russian and Indian buyers are in play on these properties. 

Another nearby location is, unfortunately located on the outer ring of the "exurbs", that being the most extremely distant of commuting locations during the boom years. IMHO, I wouldn't buy rental property in that demographic for love or money. As the economy collapsed these areas are in deep trouble and are filling up with excess rental inventory, as the banks devalue their massive holding to clear their books. There are now billboard in town advertizing lots of "cute houses for rent" As a builder, my own house would cost a buyer $245-$255K if I were to duplicate it. In reality, it is worth about 40% less currently, and falling fast. 
I believe that it is quite possible to be fully competent, capable and knowledgeable about being a landlord and still get horribly burned. I have seen our local real estate economy in the last four horrendous years, as many well capitalized, competent, experienced individuals ended up being driven to their knees. They did nothing wrong, and were just at the wrong place at the wrong time. If you would of asked any one of these folks, in 2007, if they knew were going to be standing before the bankruptcy court in less than four years? They would of politely told you that you were crazy.


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## Guest (Nov 26, 2011)

Here you can buy land with mobile homes already set up, with well and septic, for less than you can dig the well and septic, and buy and set up the MH. Some restrictions apply to mobile homes here that may not be in place in your area.


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## rickfrosty (Jun 19, 2008)

Bentley said:


> I own a couple of small tracts aside from my home. One is 1 acre, and the other is 2.5 acres. I am considering buying a couple of mobile homes and rent them out on these tracts.
> 
> Anyone have thoughts on the upside or downside?
> 
> ...


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## rickfrosty (Jun 19, 2008)

lorichristie said:


> If it doesn't, rent should be FREE. I see everything getting far worse... This equates to more and more folks UNABLE to pay their mortgages or even RENT. Last night, spoke to a family member (DH to a relative), who told me he was concerned about his work, too. This man is flat brilliant in software development. If he loses his job, becomes unemployed for any length of time, the cards fold. His DW is pressuring him to buy a mult-plex (looking at different ones). As businesses continue to fold, lay-offs increase, the rental market will collapse, as well. Last night, on our way back, we stopped in a coffee shop we used to frequent. Since we know the owners, we went in to visit them after hours. We had a chat about the economy, politics, and the state of our Country. This couple had a beautiful house with a view. It was sold about a year ago, and they moved into the upstairs of their coffee shop!She pointed out people better start considering moving in with each other. This is happening more and more. So, you rent to one couple, friends move in, RV's pull in... Where I live, this is happening.
> 
> Become a Landlord in this economy? :runforhills:
> 
> ...


Lorichristie - you are a wise woman !


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## rickfrosty (Jun 19, 2008)

steff bugielski said:


> My 2 cents...
> We have 7 small studio apartments along the road of where we live. These are low income type apt
> 
> Always get the one or two prior landlords phone number and call for a reference. Why two landlords? Because the current landlord will say anything for this guy to find a new place to live and get out of his place. I know we have done it.
> ...


True about present landlord references - 2ice they have lied to me to get rid of bad tenents !


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## gaucli (Nov 20, 2008)

3 answers...NO, NO and NO!!!!!!!!!!!!


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## Alice In TX/MO (May 10, 2002)

Now is a GREAT time to have rentals. More demand because people can't get home loans. You can cherry pick the applicants.

The five bedroom house that came vacant on Nov 1 has had four inquiries, even though it has NOT been advertised. I've already got a new tenant lined up.


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## ChristieAcres (Apr 11, 2009)

rickfrosty said:


> Lorichristie - you are a wise woman !


Thanks, also in Real Estate, Managing Broker. I have no desire to ever be a Landlord again.


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## Kevingr (Mar 10, 2006)

I'll let you know in about 10 years when I can finally sell the 4 that I have. I've have these properties between 10 and 6 years so far. Good and bad tenants, it's a crap shoot, even with background checks, most people are one paycheck away from a disaster.


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## ChristieAcres (Apr 11, 2009)

Kevingr said:


> I'll let you know in about 10 years when I can finally sell the 4 that I have. I've have these properties between 10 and 6 years so far. Good and bad tenants, it's a crap shoot, even with background checks, *most people are one paycheck away from a disaster*.


I wish you the best!

We went to a brunch at a friend's home, and discussed where to place money in this economy...gold/silver/platinum/items of high demand (too many to list), and FOOD. All thought becoming a Landlord right now to be VERY RISKY :runforhills:


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## wharton (Oct 9, 2011)

Alice In TX/MO said:


> Now is a GREAT time to have rentals. More demand because people can't get home loans. You can cherry pick the applicants.
> 
> The five bedroom house that came vacant on Nov 1 has had four inquiries, even though it has NOT been advertised. I've already got a new tenant lined up.


I hope it all goes well for you for many years to come. I hope that others give some thought to my concerns for the future. You are correct in that there certainly is an increasing demand for rental units. The flip side is supply. The banks are sitting on millions of REO units nationwide, and there are millions of units that are not yet in default, but are heading that way. What happens when your location is awash in excess inventory and the prices start to drop? I hope they don't, but in my area there is no way to be cash positive with the low rents and excess inventory currently available. A huge 4/3 with a 2 car garage goes for less than $1400/month. Homes that size are currently worth around $200K, or less and taxes run $6-7K. Numbers that simply don't add up, particularly since values continue to decline. This situation that is quite different that a few short years ago, when single family rentals were essentially unavailable.


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## BarbadosSheep (Jun 27, 2011)

I don't mean to disparage anyone who lives in a single-wide mobile home because I have done so myself several times. But......as a landlord, I'd say if a single-wide mobile home is all someone can afford to rent, I do not want them as tenants. I have rented single wides out maybe 3 times in the past and each time was bad. Between having to make repairs (single-wides are notorious for not holding up well) and trying to collect rent, it was just not worth the effort for the little money we did get back in rent.


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## jwal10 (Jun 5, 2010)

I am working with 8 single wide mobiles right now,all 70's, early 80's models. 3 are junk and need to go, all rentals, roofs leaked, floors rotted out and walls are a mess. The owners will have them burned (free by the fire department) as soon as I have places for the renters to go. The lot would just sit empty, I can buy these lots for $10,000-11,000 and build a small frame cottage, $30,000 total. Same $500.00 a month rent, all new and energy efficient. I don't see a downside right now in this market. People have to live somewhere. The elderly are being herded to warehouses and the government is paying thousands a month through medicare when a little helping hand can provide a place that they can live in, with dignity. I get an appreciative renter and help keep a commnity together. 
The other 5 (2 rentals and 3 owned) had a pole shed with roof put over them, mostly solid. They get rehabed. We have a program here with the county providing low interest loans to the "elderly" to keep them in "their" home, new siding, roofs, bathoom updates, maintenance, etc. The interest goes back into the program and helps the next recipient stay in their home. The rent in this area is not getting cheaper, no one has the money to buy. All the foreclosures have saturated the market. A small house down the street was foreclosed on 3 years ago, it sold in 2002 for $80,250. Finally put on the market in June, price was $49,900, lowered $10,000 in Sept, just lowered again to $29,900. Talked to the broker and he has no offers. I could clean it up in 3 days, a little painting and get $750 first, last and $800 deposit tomorrow. Move in next week. Someone has to do somethng or this town will die.
How bad is it here.... 10 year old manufactured home on large lot offered for $110,000. Right beside it is a home, 1800 square ft, built in 2006 for $265,000, now for sale for $94,000. Built by the son of the neighboring modular owner. Son was forclosed on, bank took over. Home was trashed by Ex wife and kids, big holes in drywall, roof leaked....a mess. Went through several banks, bank that has it now has been cleaning it up. No offers in sight. There are 68 homes for sale or repoed in a town of less than 800 people, 348 homes and more losing them everyday. All are newer modulars or larger homes, no one has the money to buy or rent so they set empty, then the bank gets them....James


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## Alice In TX/MO (May 10, 2002)

I realize that the town where I have most of my rentals is unique. VERY small town, long term families who don't sell, very limited rentals available at all. I lucked into some distressed properties due to family/friends/networking via the grapevine. Demand is high. New industry moving in here, too.

The other major location is Austin, Texas, which bucks all the down market trends on a regular basis.


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## rickfrosty (Jun 19, 2008)

lorichristie said:


> Thanks, also in Real Estate, Managing Broker. I have no desire to ever be a Landlord again.


Was not my intention as to these present properties (to be landlord again) - my separation (& later divorce) caused me to build the house I presently live in where my RE business is, so as to get away from angry stepdaughter.
After her & her mom left I had a very nice extra house which, even at severely discounted price was unlikely to sell (compared to the 'bird-in-the-hand' renters easy to find for this 3 bdrm/2bth, super insulated 'SIPS' house w/great view (at very reasonable rent)).
In 05 I took $ from sale of a real log home I had built & bought a very rough 5 bdrm home on a lake in a quiet village near me to 'flip', but the renovations ended up taking 2 yrs. (?) while the market fell like a rock - so now I have a rooming house, renting to up to 5 individuals. Not full all year (which would be too much anyway), but also never empty.
Can fill it during winter w/workers at 'Sugarloaf' ski area 7 mi. away. 
Yes, this is a headache exposing me to much more possible problems, and house has taken a beating, but what else to do ?
I sold a 'view' lot in 08 w/owner finance to nice couple who built a shell of a passive house (& actually lived in it comfortably that winter), but then they went bankrupt - oh, oh ?!
Eventually they gave me the property back w/out foreclosure by 'deed in lieu', so now I have a tax liability instead of an income & a biggish house w/'housewrap' blowing off & TONS of other work necessary before it can be rented. I may be able to sell for very cheap to some brave soul ?
Town assessed this shell at $154,000 !!!!!!!!!! I finally tackled town tax Czar & got it abated down to $100k+, which is still crazy ?!
Can't be insured, so use it to store 'preps' + junk of no value.


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