Any landlords in here?

Shizelbs

Just curious. My get rich eventually scheme du jour is to buy a condo or two, more eventually, rent them out, use the bank's money to build equity. Thanks in advance.

codyc1ark

I submit a rental bill every month to my dogs... But they never pay up. Lowlifes.

Aaron and Amanda 007.JPG

Seriously, good luck. Its a good plan if you can keep them rented, and keep good tennents. I almost did this a few years back, and really wish I would have.

nooshinjohn

I am renting my house in Indiana out. I am getting 400 bucks a month more than my nut, so I am happy with that. The house is part of my retirement plans, whether I live in it after I retire, or sell it for the funds. My wife and I have three rentals in California that currently provide income for her parents, and I have two more in Minnesota that my mom uses for her income and living expenses.

I guess we have enough property to be paper millionaires, but I only count the coin in the bank, and by that measure... I'm broke:eek:

Rental property, purchased well (positive cash flow) is the best way for the common man to prepare for the future IMHO. I don't trust the **** on Wall Street any further than I can throw them, so this gives me control over my future, and I like it that way.

Shizelbs

John, how did you come about having properties out of state? Any advice? Things you look for in a property?

nooshinjohn

Shizelbs wrote: »

John, how did you come about having properties out of state? Any advice? Things you look for in a property?

I lived in Indiana, and bought my home there, my mom lives in Minnesota, so she is taken care of there. Here in Cali, my wife's family bought three condos here with cash.

What I look for now is condition, location, comps, and potential for return. I will be buying now in neigborhoods that were concidered strong buys before the crash, and that have fallen the furthest during. Condo's can be had here now for less than 150k. These same units were 375k plus before the bottom fell out, and banks are hot to get rid of them. Rents are higher now than pre crash, so the potential returns are good. If/when the economy gets rolling again, the ten year return could have these units double their values.

My suggestion would be to speak with those in your town that are successful owners and see if you can find someone willing to help you along for your first few transactions, or at least sit with you for a bit and answer questions about what they do and the best way to get started.

Drenis

If I had the money to start, I would get into this. Real estate is promising if you play your cards right.

cstmar01

one issue I see all too often.

If you don't have the cash flow monthly that if a person moved out and you can't cover it, then don't buy it.

For example if you go to the bank and state oh its already got a lease and the person will be there for a year, thats cool. You don't have to worry for about a year. With the funds you are getting what are you doing? Looking to put them back into the system and buy another?

Do you have enough reserves to fund repairs and other problems?

What if you have bad renters?

Do you have enough cash on hand to cover a time that the unit could be vacant? would it put a stress on you if you had to do this?

What are you legal rights as a landlord? are you drafting the lease through an attorney? What are you rights to inspection?

Are you having an outside company manage and inspect monthly? If not make sure its in your lease.

I see way too often people that bought a condo or rental prop, thought it would be great for income, and then it went vacant for a couple months because of bad renters and they didn't have the cash flow to cover their normal expense and the cost of the rental monthly.

If your making like say 8K a month and have like 2K in expense then all the power to you. your DITI is low enough you can cover it. but if your already at like 50% and the extra cost pushes you to 70% have fun.

decal

Remember this, it takes forever and a day to evict someone from a rental property legally. Scumbags can stay in your place for months without paying. Check with your local housing authority to find out the regulations in your area.

heiney9

decal wrote: »

Remember this, it takes forever and a day to evict someone from a rental property legally. Scumbags can stay in your place for months without paying. Check with your local housing authority to find out the regulations in your area.

On top of this, sueing them to get damages is many times like getting blood from a turnip. If they don't have the money you can bring all the lawsuites against them you want, you're not getting the money today if ever. So you are left with a damaged place that has had no income for 6 months. The people are gone, but you are out the rent and you need to put more money in to get the place ready for new renters. One wrong set of tenants can set you back a lot and bankrupt you if you are not prepared for the worst case scenario.

I have seen it happen to friends. If you don't have a lot of reserve cash to begin with to weather these types of situations, you are just looking for failure or unbelievable stress.

H9

tonyb

decal wrote: »

Remember this, it takes forever and a day to evict someone from a rental property legally. Scumbags can stay in your place for months without paying. Check with your local housing authority to find out the regulations in your area.

This is true, every state is different.

As far as Condo's go, it depends on the area but generally speaking, condo's are the worse choice for investment. They are the slowest to appreciate in value, and the quickest to lose value when the market tanks. Condos usually do better in large downtown metro area's and vacation spots where you have a never ending supply of renters, but also the competition is stiff too so take that into consideration. Single family homes is still your best bet as well as 4 flats or 6 flats for investment purposes. Now is the time for single family homes at great prices all over the country. Practically giving them away in Vegas right now.

nooshinjohn

The properties I have that have non-family renters in them are insured against property damage beyond normal wear/tear kind of stuff.

The bottom line is that in any money-making venture, there is risk. You can either play it safe and work for someone else the rest of your life and have nothing to show for it the way things work these days, or you take a shot at doing something for yourself. I prefer the latter, and because there is nothing outside of stretching carpet that I can't handle on my own, I don't worry too much about it.

tonyb

Yep John, no risk, no reward.

In the construction buisness, we have a saying, in reference to union jobs in general. " You'll be able to eat steak every night, but you'll never get rich working for someone else."

I guess alot of people have that fear of failure, even so, failure is a necessary evil. It actually helps you do better, be better, be smarter, work harder, be more focused. Without failure, you'll never appreciate the successes.

heiney9

So a tenant gets pissed at you on the upper level of a 2 unit complex. They haven't paid rent in 6 months and you finally get them evicted, days before the sheriff shows up to escort them off the property they decide to plug the bath tube, turn on the water and leave. They flood the upper and lower units. The lower unit tenant is out of town on business. You now have two unlivable properties until they can be repaired, extensively repaired. Insurance is great, but it takes time to assess damages and payout. Do you have enough operating capital to be down 2 renters and be able to put the lower unit renter in temporary housing until things are repaired?

True story that cost a family friend almost $25K out of pocket. Sure 6 months later insurance monies started to flow and within about 6 months the damages to both units were repaired and both places were liveable again.

She lost out on atleast 6 months back rent from the prior renters and 6 months advance rent for both units since they were unlivable. Had to pay to put the displaced tenant up for almost 6 months and had to pay her insurance deductable. Insurance and DIY is all well and good until something like this happens and you need to have reserves to deal with it immediately, not 4-6 months when insurance decides what they will pay, etc.

An extreme situation? Sure, but more common than you think.

H9

villock

cstmar01, decal and heiney9 are exactly right. Have enough cash in reserves for at least 4-6 months worth of expenses or you will be digging into your own cash. I have owned properties for 20 years. When it is going smooth with positive cash flow, owning properties can be very lucritive and rewarding. I bought a condo in 92 a week before I got married, bought my house in 97, rented out my condo until 2003 when I sold it because the market was up and after paying the capital gains from the profit walked away with a check for $85,000. Have owned another property, 5 unit building since 99 and it was great with positive cash flow until 08 when the economy went down the crapper. Since then I have not had full rentals and have been to housing court more times than I can count. They now know me on a first name basis.

In my state, and I assume most other states, the tennants have all the rights and us landlords have none. If your tenant wakes up one day and says screw you, I'm not paying you rent anymore, there isn't a thing you can do about it. On average you are looking at at least 4 months before you will be able to get them out. Oh and the day that you hire a constable or sherrif to start the eviction, you can almost guarantee a visit from your local code department and they usually only give you about 72 hours to repair any code violations. Suddenly your smoke detectors don't work, your hallway lights have been removed, there is broken windows, etc. It is a fun little game that your tenant will like to play with you.

So on top of losing 4-6 months rent, you are looking at a couple thousand in repairs. Yesterday was the 1st month that I have received full rents since 08. Just finished repairing one of my apartments to the tune of 2,400,00, I basically had to rebuild the entire apartment, new flooring, paint, appliances, etc. and this was me doing about 75% of the work. Luckily my other rents were able to sustain the expenses over the last few years for the most part, but I did have to pour some of my savings into it last year. My insurance company said they weren't going to renew my insurance because I had fuses, this after they have gone up on my ins. steadily the last 5 years, so I had to come up with 5,000.00 to get a service change and have breakers put in.

So the moral of the story is you need a strong stomach to get into this game.

heiney9

She is in a position where all the apartments and a condo she rents are paid for. She lives out of town and pays someone to manage three 2 unit apartments and a condo. She is a professor at a California University, so it's not her main gig and she is financially well off. They do provide a good tax write-off and cash flow when she's not having issues with tenants. Granted, not all tenants are bad, but it can happen and it happens much more frequently in a down economy when they have nothing to loose.

Just food for thought.

H9

sda2mike

i knew a guy in florida who rented affordable housing...when it got to be too long between rent payments, he'd remove the doors..most paid..some didn't notice

Shizelbs

....

cstmar01 wrote: »

one issue I see all too often.

If you don't have the cash flow monthly that if a person moved out and you can't cover it, then don't buy it.

For example if you go to the bank and state oh its already got a lease and the person will be there for a year, thats cool. You don't have to worry for about a year. With the funds you are getting what are you doing? Looking to put them back into the system and buy another?

Do you have enough reserves to fund repairs and other problems? yes

What if you have bad renters? get good renters

Do you have enough cash on hand to cover a time that the unit could be vacant? would it put a stress on you if you had to do this? yes

What are you legal rights as a landlord? are you drafting the lease through an attorney? What are you rights to inspection?
not sure, probably, not sure
Are you having an outside company manage and inspect monthly? If not make sure its in your lease.
probably not

tonyb

My daughter rented a house about 6 months ago. Paying the landlord every month....until a broker showed up to show the place one day. Mind you, no sign was ever put on the property and no word from the landlord. Turns out, the landlord had the house forclosed on, he didn't even own it anymore, but was collecting the rent and pocketing it. Needless to say, the bank is now letting her live rent free until they sell it. A house lived in is easier to sell than an empty one....and the landlord ? Walked away with a few thousand more bucks in his pocket.

There's scum on both sides when it comes to landlords and renters. As a landlord, you have to be very selective on your tenants, or it will cost you long term.
I also have a rental single family home in my area, up for sale too. Has been for 2 years now. The renters haven't paid rent in over a year and are still there. I have a feeling it might be the same situation. I know the people too, they make no bones about not paying, I just never asked the details, kinda rude I guess.

heiney9

One other thing to look into in your area, is who how/much you can discriminate against a prospective tenant. Not as a bad thing, but I know around here if you own less than 10 rentals you can deny anyone rental for any reason. If you own more than 10 you have to start following State and Federal guidelines as far as discrimination laws, etc. or you could end up in a lot of trouble.

Again, just more food for thought.

H9

Oldfatdogs

Shizelbs,my wife has been a property manager for twenty years.The things people do some of these units is crazy.The screening for good tenants only can tell you so much about a person.Even good screening sometimes doesn't work as planed so just be ready if things go south.Good luck in your venture.Dan

Dennis Gardner

Shizelbs wrote: »

use the bank's money to build equity.

Ever hear of a little thing they called a housing bubble? I think using the banks money was what caused this little issue if I recall......if everyone had enough equity to begin with, they could have weathered the storm.

Landlording is great if you can afford it, not if the bank can afford it.

nooshinjohn

20-25% down is required these days for conventional financing. Anything less than this and theyhave a requirement that the buyer live in the home for "x" number of years before they can lease it out... my note required three years for the home in Indiana. This is the only one that is financed, everything else is owned clear.

Dennis Gardner

nooshinjohn wrote: »

20-25% down is required these days for conventional financing. Anything less than this and theyhave a requirement that the buyer live in the home for "x" number of years before they can lease it out... my note required three years for the home in Indiana. This is the only one that is financed, everything else is owned clear.

Sage advice....paid for rental property has got to be the goal, that is where the true everyday millionaires are found. Leveraging yourself, buying into the flip-it quick method is playing Russian Roulette.

pearsall001

I started with 4 properties in Philly. Now mind you these aren't in the nicest of sections but they have worked out well. I did sell my 1st property, and I'm in the process of selling another. The other 2 I'll keep as rental properties. My advise would be to hire a management company (give up that small rental % & avoid headaches) I've evicted a few tenants with no problem. Again this is where the management company really pays off...they have all the contacts in City Hall. The Sheriff is there in a heartbeat to change the locks & they're out within 30 days. Philly doesn't play around.

I had one tenant that we evicted that did some damage to be spiteful but my ins. co made good & then some. Another property I was rehabing had the copper pipes stolen. My ins didn't cover the loss of pipes but did cover the damage caused by being ripped out. Another generous settlement but I would have rather not gone thru that mess. Have great ins & know what's covered & what's not covered. I'm looking at another property now to add to my collection. It's been a fun & learning experience to say the least.

snow

nooshinjohn wrote: »

I am renting my house in Indiana out. I am getting 400 bucks a month more than my nut, so I am happy with that. The house is part of my retirement plans, whether I live in it after I retire, or sell it for the funds. My wife and I have three rentals in California that currently provide income for her parents, and I have two more in Minnesota that my mom uses for her income and living expenses.

I guess we have enough property to be paper millionaires, but I only count the coin in the bank, and by that measure... I'm broke:eek:

Rental property, purchased well (positive cash flow) is the best way for the common man to prepare for the future IMHO. I don't trust the **** on Wall Street any further than I can throw them, so this gives me control over my future, and I like it that way.

Do you own all these rentals? It looks like you said later on that your wife's family bought the property in California unclear on the property in Minnesota and that your still making payments on the Indiana home which is far different than actually owning all these properties, if your wife's family bought them then their not actually yours even if at some point her parents are going to will them to you, who knows you may get divorced hopefully not but certainly not something that is yours yet. Until the home in Indiana is paid off you don't own it the bank does and not clear on who actually owns the property in Minnesota.



REGARDS SNOW

decal

sda2mike wrote: »

i knew a guy in florida who rented affordable housing...when it got to be too long between rent payments, he'd remove the doors..most paid..some didn't notice

The tenant can go to the municipal housing authority and file a complaint that the owner is harassing him. Then guess what, that's right, the owner will have to repair the dwelling and probably get fined. The tenant can also sue the owner.

evhudsons

I'm on my iPhone so I'll keep it short. I do many things, but I manage over 100 longterm properties. My advice: know your landlord tenant laws for your state and follow them completely or you be sued by a deadbeat abusive tenant and still lose as well as arrested. Seriously. When you rent your property you lose possession rights unless you follow the law perfectly. If you do any judge will see what's happening and you will win.
Discriminate! Yes you can and should discriminate along your gut feelings with the exception of the list of folks you can't discriminate against. Anyone not on the list is fair game for legitimate and legal discrimination but you have to make sure they aren't on the list. I do a credit check and background check too but it's just a tool to make sure they arent lying to me. Honesty, longevity, loyalty and basic manners and morals will give you great tenants, not credit scores or clean records.
Charge first last and security equal to rent and a pet fee or refundable deposit. Be clear in the lease and have them sign an agreement amendment on how to maintain the yard, report issues, change filters, and what condition to leave the property. Take before pictures and video. It doesn't matter about quality of images the fact you have it is enough.
Do twice a year inspections but don't be nosy.
I hate doing evictions because I feel like I failed in fixing a bad situation but sometimes you have to, I even evicted a doctor with perfect credit and had tons of cash and properties. I tried to help him but he thought his position allowed him to stay on without paying his last months rent.
I knew the law, and I won. Don't forget though unless you are an attorney you can't practice law, so you have to throw money away on one if you want to win. Sometimes it's better to disregard the rent and just be rid of bad tenants. Go with your gut instincts and say no unless you think it feels right.
Awright, enough for now, but I have many books to write on my experience and it's not a business for just anyone so do your homework and proceed cautiously.
Pm me anyone if you need advice as long as I legally can give it.

nooshinjohn

snow wrote: »

Do you own all these rentals? It looks like you said later on that your wife's family bought the property in California unclear on the property in Minnesota and that your still making payments on the Indiana home which is far different than actually owning all these properties, if your wife's family bought them then their not actually yours even if at some point her parents are going to will them to you, who knows you may get divorced hopefully not but certainly not something that is yours yet. Until the home in Indiana is paid off you don't own it the bank does and not clear on who actually owns the property in Minnesota.



REGARDS SNOW

I was clear in my post that they belong to the wife and I. the last I checked, that is what the word "WE" means... unless you have a somewhat more Clintonian definition I am not aware of.:razz: I own the properties in Minnesota, and I pay the note in Indiana. Not certain why the somewhat condescending tone.:question:

Shizelbs

Dennis Gardner wrote: »

Ever hear of a little thing they called a housing bubble? I think using the banks money was what caused this little issue if I recall......if everyone had enough equity to begin with, they could have weathered the storm.

Landlording is great if you can afford it, not if the bank can afford it.

I understand that. For a cheaper unit, I can afford it. I can pay my bills and have a small rental property go unrented at the same time. I meant the bank's money to finance a loan so I don't have to wait to buy the whole thing outright from the beginning. Payments I can afford, dropping off a big sack of cash for the whole title, not at this time. I'm not talking about speculating, no money down, interest only loans.

tonyb

You have to ask yourself some serious questions first.
Is your job secure ? Down the road ?
Can you use equity in your home instead of a new loan ?
Have you researched what rent is for comparable properties and would that cover the nut ?
Are you willing to get those 3 am. phone calls ?
Have you talked to a bank yet ?

In this economy, with this housing market, banks are pretty stingy these days. You have to show good financials and have some cash to put down. Unless we are talking forclosures, thats another ball game.

snow

nooshinjohn wrote: »

I was clear in my post that they belong to the wife and I. the last I checked, that is what the word "WE" means... unless you have a somewhat more Clintonian definition I am not aware of.:razz: I own the properties in Minnesota, and I pay the note in Indiana. Not certain why the somewhat condescending tone.:question:

Well it wasn't very clear to me, in post #5 you state the wife's family bought these properties in California and that they provide income for her parents which may be far different than you owning them, It is easy to assume that your wife's parents bought the properties and are leaving them to you and your wife after they pass on versus them allready being in your name considering they are receiving the income versus you and your wife. The same goes for the Minnesota properties it is easy to assume that since your mother is collecting the income from them that they belong to her and that she is leaving them to you at some point. It is kind of you to allow your mom and your wife's parents to collect the income from these, but most times the actual current owners collect the income. No condescension implied, and yes i'm certain you are paying off the note in Indiana but as we all know crap happens and until it is paid off the bank own's it.

My whole point here was unless these properties are paid off 100% and they are in your name you don't actually own them and even then if for some reason you forget to pay the taxes you may find that you no longer own them later either.



REGARDS SNOW