# any experience?



## wannabfarmer (Jun 30, 2015)

A friend got me thinking about eventually buying properties to fix and then rent. Anyone have experience with being a landlord? Things you would have done differently? My step dad is a contractor so i'd be looking to buy the properties in Octoberish and when he slows down for the winter hire him to renovate during the winter and our old neighbor is a master plumber and his son is an electrician. My step dads cousin has been a realtor for 15 years. It seems I am set up well if I decide to but I've heard some horror stories about renters destroying houses. I think the idea of monthly income would be nice when i'm ready to retire I just don't know if the hassle is worth the reward. 

The houses I will be buying will be townhouses 3-5 bedrooms and 1.5-3 bathrooms. most have a detached garage. average prices I've found are between 60k and 130k. most just need to be updated, I would stay away from major remodel or foundation work.


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## Esteban29304 (Apr 29, 2003)

I owned & rented some property some years ago. Had rental homes, commercial building, & pasture land , that I rented. OF COURSE, there are the good points & bad points of being a landlord. You will hear more about the bad, since people do like to complain more than paise. For me,,,, I made money . The best advice I can give, is to buy cheaply. Even if it needs some repairs [ avoid expensive repairs ] , getting a good deal will help in the long run. I like duplexes, since one side can bring in income, while the other is empty, being repaired, etc. Many use the " Rule of ONE percent " If you have $100,000, TOTAL, in it, you need to rent it for $1000 . I always tried for 1.5% . There is just too much to go over, here. Libraries have books about it & do some online research.


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## TripleD (Feb 12, 2011)

I'm a 3rd generation landlord and love it. Find your own deals. Avoid realtors if at all possible. Remember every month it sits vacant that's money you can never get back. Good luck...


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## GTX63 (Dec 13, 2016)

Make sure it is something you love doing; if you are not sure, then I'd advise against it.
I have owned a lot properties of various sorts. I managed several hundred at one time and did housing inspections both for the government and privately.

If you are in it for retirement income, then cash flow isn't as important.
If you are trying to draw off of the profits, that is another game.
For me, I didn't start turning a real profit until I had 10 or so properties. Even then, it can take one furnace, one roof, one drunken brawl to eat everything up for the month and put you into the red.
You can buy low, go section 8 and cash flow to the moon until the local tv station showcases you as the slumlord of the year and your maintenance man gets shot collecting the rent.
You can also buy better, get better tenants, maybe make less up front but have a little more secure investment.

One example that comes to mind was a guy I knew who retired from the phone company and proceeded to buy up foreclosures on the bad side of town. He and his wife handled almost everything from screening, to cleaning, light remodeling and yes, the evictions. He worked as hard as he did before he retired but he made good money and they enjoyed it for the most part.
My first sentence was the most important. If you don't like your job you can quit. When you own real estate, it isn't as easy to walk away.


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## wannabfarmer (Jun 30, 2015)

I've been doing research and so far I haven't found anything to deter me. I have a realtor to help find me properties but the listings I will do myself. The only thing i'm not completely sure about is this new law here where they cap how much rent you can charge. I'm meeting with a woman to have this clarified but from what I've gathered its to keep landlords from going nuts charging whatever. I don't fully understand it because 2 bd apartments here go for about 1200 a month but I can't rent my 4 bd house for that? When I know more i'll post it, I do know every state is different but this doesn't seem fair if it is a law. They have a few places for sale here that have 4 units but they are beyond my means and experience right now. one day though lol. Thanks for the advice


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## wannabfarmer (Jun 30, 2015)

GTX63, thanks for the advice. I thankfully love my job but i'm looking for long term income and something to do when I go to retire. I plan on going slowly and doing one property at a time and i'm not going to buy section 8 but i'm not going to buy above renting class houses. most are going to be town houses in blue collar areas. My plan is to buy a house and in a perfect world (I know it wont happen) pay it off asap and save up for a 2nd and just snowball until I get to a figure that i'm comfortable handling. I'm not trying to do a get rich quick thing i'm going to be in this for the long haul so i'll take my time until I am ready.


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

I have done this for decades, starting with distressed properties in a small rural Texas town. I like it. 

More later after coffee.


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## wannabfarmer (Jun 30, 2015)

advice is always best after coffee lol.


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## TripleD (Feb 12, 2011)

Alice In TX/MO said:


> I have done this for decades, starting with distressed properties in a small rural Texas town. I like it.
> 
> More later after coffee.


You know your market if you stay close. I don't buy anything farther than five miles from this office.


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## GTX63 (Dec 13, 2016)

If you are comfortable, you can find your own properties with or without a broker.
I'm not knocking them; I had several who called or emailed daily but they are not necessarily beholden to you. Any property auction for example, will have a regular herd of investors, many who know each other and use the same realtor.
A good broker, a good title company, and if you borrow, a lender, is worth the money, but amazing deals can be found on your keyboard as well.


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## wannabfarmer (Jun 30, 2015)

i'm probably going to go through the motions for the first few, yes I know I will spend a little more but i'll also gain an education/experience in the process. I like covering everything until I fully understand it then i'll take over as much of the process as I can.


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## ozarkchaz (Feb 4, 2005)

Lessons Learned: There is no such thing as the “perfect” prospect, applicant, or tenant. Was appears to be, is not always so. And unfortunately you have no control over another individuals life choices. And speaking of life, yup it happens! People lose jobs, people get divorced, people Die! 
Renters don’t respect your property, it’s considered temporary habitation to them. And when it comes down to paying the rent, Its low on the priority list over food and other obligations for most folks. And never, I repeat never, rent to Family.

Chaz


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## phrogpharmer (Apr 25, 2005)

Don't list your place for rent. Check through the listings of people looking to rent. Sob stories are a BIG red flag. Be wary of anyone who needs a place immediately, there is a reason they are in this position and it is almost always their fault. If the potential renter can't come up with the full rent and deposit right now, you will have trouble collecting rent from them down the road. A pet, if you allow one, increases the rent and doubles the deposit. If the potential renter is local, go and check out where they are moving from, ask the neighbors about them. Remember, some landlords will give bad tenants a good reference just to get rid of them. After you have carefully investigated the application of potential tenants and checked their references, and things appear to be good, one last thing. Go out and take a look at their car inside and out. Your rental will look like their car in a short while. 
I've had some wonderful renters, some ok renters, and some very bad renters. The bad renters were the result of me not following the suggestions listed above.


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## Wolf mom (Mar 8, 2005)

I used to have rentals in the $3-400,000 price range. I'd never go section 8. It cost's as much to put in a destroyed door no matter what the price of the house, but with a high end rental, the deposit is larger. I also think higher end rentals aren't beat up as much. 

One thing I did, was write into the lease that I had access to the house with 24 hour notice to install a new furnace filter. They need to be changed monthly and it gave me a chance to see the condition of the house.

Consider getting your Realtor's license, especially since you are using a Realtor - at least save part of the commission.


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## wannabfarmer (Jun 30, 2015)

all sound advice, Thank you


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## GTX63 (Dec 13, 2016)

Wolf mom said:


> One thing I did, was write into the lease that I had access to the house with 24 hour notice to install a new furnace filter. They need to be changed monthly and it gave me a chance to see the condition of the house.


We also put into the leases that we would complete periodic maintenance ie spray for spiders, treat for mice, change out filters, smoke alarm batteries, etc. I


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## GTX63 (Dec 13, 2016)

Landlord references, from ones you may not know, aren't necessarily equal to the good seal of approval.
There are property owners out there that will tell you anything to get either, paid back rent in lieu of a reference, or to just plain
get rid of their dead beat tenant. Even if it means becoming your problem.
A background check and verifiable references should be a must.
The potential renter, when filling out an application, also agreed to a home visit at their current residence.
We had a couple folks who thought it clever to put down a friends address that kept a nicer home.


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## wannabfarmer (Jun 30, 2015)

wow that's shady lol.


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## Nimrod (Jun 8, 2010)

Too much to cover. Get a book.

Understand that the laws are all in favor of the tenant. One bad tenant can cost you way more than the rent you collect for the rest of the year. If I had to give one bit of advice it would be GET GOOD TENANTS!! Have all (must have all or it's discrimination) prospective tenants sign a release allowing a full background check and make them pay for the check up front. There are companies that specialize in background checks. Have them run credit, unlawful detainers (evictions), and criminal history. Ninety five percent of the bad tenants won't pay for the check because they know it will come back bad, therefore winnowing themselves out. 

Don't expect much monthly income. You must have enough income from other sources to cover the expenses of the rental unit for at least 4 months. Even if you can buy the property at a good price there are many factors that eat into your rental income. Bad tenants is #1, see above. You may have vacancies. Over the years there will be some years with a shortage of rental units resulting in a building boom followed by a few years of surplus rental units (vacancies). The municipality the rental is located in will have their hand in your wallet for things like inspections and fees. If you get on the wrong side of a local big wig they can really mess with you. Unexpected maintenance can be expensive. 

A rental is not a very liquid asset. If circumstances change you will probably take a loss to sell it. 

You can expect to make money from appreciation when you sell it. Medical reasons forced me to sell the apartment building I had owned for 22 years. I sold at the bottom of the housing market and still sold for 4 times what I paid for it. When you do sell there are lots of charges and fees you have to pay. Everyone knows you have a nice chunk of change and want part of it.

Good luck.


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## wannabfarmer (Jun 30, 2015)

thanks for the advice. I don't plan on financing the rental properties after the first one but I could still see unexpected costs being a hassle. Good advice on the company doing the background check I was just going to do it online figuring it was the same thing, guess its not. from pretty much every response finding good people to rent to is going to be the biggest problem. 

I talked to my cousin who rented his house. he gave the same advice everyone here did because he did almost the opposite and didn't even last 2 years as a landlord. He also wasn't making any money on his rent he figured the tenant just covering his mortgage was good enough until things started breaking and he didn't have any savings to cover the repairs. He said his tenant was a strong tenant with a great job and a great car and worked down the street making more than 100k a year. tenant ended up sub renting the other rooms to other tenants because it wasn't covered in the lease agreement and those tenants my cousin had no idea about because he had moved out of state with his job. He told me what he would have done if he could do it again and he described pretty much what everyone has stated. He said he knew about these things before hand but the house wasn't selling and dried up his funds so he figured he could rent it for a few years until the market came back and sell it but he didn't make it and short sold it for a loss. he said in total he lost about 30k and said he's thankful it wasn't more.


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## Esteban29304 (Apr 29, 2003)

I have let a unit sit empty for a couple of months before I would rent to someone I thought would be a bad tenant. The loss off a couple month's rent pales in comparison to what a bad tenant can destroy in ONE day. Don't be a " pushover ," because they will take advantage of you !! Be a nice person but firm with your tenants. Never allow a tenant to " use " his security deposit for the last month's rent. Get ALL the money up front BEFORE allowing a tenant t move in !! Always have a written lease.


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## GTX63 (Dec 13, 2016)

Know your market. Know the demographics.
15 years ago when the banks were writing mortgages for anyone who could fog a mirror, it greatly affected the rental markets in a lot of areas.
As an example, at the time, lets say a typical apartment might rent for $500-$700 to a young couple or single with a decent job and fair credit. It wouldn't have been hard to keep renting to that segment and you might have had a good record with it. But when the lending regulations became loose, those folks now qualified for mortgages, and they began to leave the rental market.

In fact, almost anyone could get a mortgage, other than the absolute dregs. So what happened? Everyone moved up a rung or two on the ladder. The good tenant pool began to thin and the less qualified began to fill in where the previous renters were.
That created a lot of problems. Tenants with poor credit getting into rentals they shouldn't have been in. 
Good tenants with new, or marginal credit getting mortgages, many overinflated, they shouldn't have been in.
Then the market crashed. Foreclosures left and right on single family homes as well as rentals. 
A lot of landlords went belly up.
The market corrected and restarted. 
Now, lenders are loosening those standards again and the cycle continues.
Know your area, know your market.


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## TripleD (Feb 12, 2011)

I only buy single family brick ranch houses. You can drive thru the neighborhood and not tell what is a rental and owner occupied..


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## Esteban29304 (Apr 29, 2003)

Know the laws before venturing into this field.


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## Esteban29304 (Apr 29, 2003)

Did you decide to become a landlord ?


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