Calling All Landlords!

[mickeyville]

Just wondering if anyone out there has any experience owning/renting apartments. We think that purchasing/renting a 3 family is a good investment (with the market right now). However, I notice all the "for rent" signs in our area. The unit we are looking at needs some work...BUT...as long as 2 of the 3 units are rented, expenses would all be paid (mortgage, taxes, water/sewer). The third rental would let us save for repairs.

I love the idea of a minimal investment out of our pocket, and a great return when it is time to retire in 15 years. I see this as a better investment then my 401k will produce. I believe that with the prices now, a 10K invertment could net us 100K when it is time to sell.

Does anyone have advice for us?

I have SO MANY questions !!!

 

[Poohbear5]

We owned a tenant for 3 years going back about 15 years ago. If you get good tenants, it's not bad. If you don't, it's a nightmare. It was definitely an interesting experience, but not one we will be repeating again.

Screen your tenants very carefully.
When we were landlords, the internet as a resource was not readily available to do background checks like it is now.
We had a young couple who had first and last month rent in cash, we called their two previous "landlords" (in retrospect, they were likely relatives helping them with their con) and their fictious employer, who all gave rave reviews. They were running a drug house out of our apartment. It was a nightmare getting them out..

 

[MEM]

First check on the lead paint laws in your state. If the three family you are looking to buy and fix up has any lead paint, it could cost you a small fortune to hire lead abatement pros - here in Massachusetts you can't do it yourself without approved training.

 

[hlkeck]

It can be very very difficult. I have two rentals right now and I wouldn't ever do it again. One home has been vacant for some time after we had to evict the previous tenants, who completely vandalized our property. I mean tens of thousands of dollars in damage that is taking us some time to fix.
Is your husband very handy? Can he run over in the middle of the night to fix something? It's a committment. Good luck with your decision...but don't make it without some careful introspection as to whether or not you'll want the headaches that come with *some* cash flow...

 

[bored]

You need to have a high tolerance for BS, and you can't be a softie when it comes to collecting rent. Trust me from experience.

 

[DebMcDonald]

You couldn't pay me enough to voluntarily become a landlord. We own a house two hours away from where we live and have rented it for the past 13 years and oh the headaches upon headaches upon headaches. We were once sued because a light fell out of the ceiling and hit her on the head. The way you take care of a house is NOT the way tenants take care of a property. We try to turn the house over ourselves after one tenant leaves and another one comes, but it's alot of work and alot of weekends. I wouldn't do it.

I work with someone who has a six family house and right now she has 5 of the aparments vacant.

 

[cseca]

We owned a tenant for 3 years going back about 15 years ago. If you get good tenants, it's not bad. If you don't, it's a nightmare. It was definitely an interesting experience, but not one we will be repeating again.

Screen your tenants very carefully.
...

Worth it or not depends on your area housing market, where the rental house is located, and your current financial situation.

My suggestion if you do take on this challenge is get a property manager. They usually charge more in the 1st month but then 10%/month afterwards. They are responsible for listing your rental and communicating with your tenants, screen possible tenants, and fill out the necessary paperwork. They will also save you calls in the middle of the night because of any possible emergency repairs. And if you have a deadbeat tenant to evict. They will help with the eviction, court proceedings, paperwork, etc. They will also tell you how much your house could go for rent, depending on the area and current market condition.

Unless your are well versed in those scenarios I suggest to get in touch with a property manager.

You have to know your area well before you decide on renting the property. Everytime we want to look at a house for rent we'll talk to our prop mgr and she'll come around to get a feel of the place. Depending on what she says we decide on whether it's worth the time/effort to get it.

And PP also mentioned a good point. Does your DH know how to fix things well? If not, find a good fixer upper person to go to. We have one who we know are reliable and reasonably priced. If there are things out of our expertise we'll call him and he'll fix it up.

Anyways good luck with your decision!

 

[cglaura]

Make sure you have enough in savings or disposable income too, to cover un-rented months. Some places around here can go 3-4 months between leases, depending on fix up, screening, eviction process of previous tenants if necessary, etc.

Could easily be upwards of $3,000 out of pocket depending on mortgage size and how many months.

 

[pilesoflaundry]

I'm not a landlord but around here stuff with for rent signs can sit empty for months and months. Keep an eye out and see if in a few weeks those for rent places still have signs up to give yourself an idea how long your place might sit empty and then thing carefully how much money you would need for repairs, empty months, damages.

Don't look at it as a potential money maker, while houses right now are really cheap I doubt we will ever see the inflated values of the last few years.

 

[DVC-Don]

We owned a tenant for 3 years going back about 15 years ago. If you get good tenants, it's not bad. If you don't, it's a nightmare. It was definitely an interesting experience, but not one we will be repeating again.

Screen your tenants very carefully.
.................

Dito. We sold both our our rental units many years ago after a run in with a bad tenant that involved lawyers & courts. Finally got them out but, lost our shirt that year.

 

[luvmarypoppins]

Call dh and I the "we hate being landlords" landlords.

We inherited 2 houses from dh dad. We cant sell the property since its jointly owned with dh cousins, They own the other 2 houses on the property.
1. Know the tenant laws in your state. Some are very favorable to tenants. We live in NY and our tenants are in NJ. We actually paid one tenant to move out. Our lawyer told us to do this. He said between being tied up in court with a judge if we tried to evict them and the lawyers fee of 300 an hour , giving them cash and forgiving the rent and security deposit etc. was a better choice.

Our other tenant now is o.k. He paid the rent late and dh told him, if he did it again he would raise his rent since he is on a month to month lease.

Word your lease carefully. Are tenants responsible for repairs etc.
Do criminal and financial background checks.

Best of luck. We also would never do this again by choice.