Owning a Rental Property -- Good Investment or Nightmare?

[DiannaVM]

My parents have been renting for years, and honestly, alot of Landlords are nightmares too.

 

[disneydentist]

Ask yourself this, how much would you net if you sold the house? Then assume a 5% return on that money. If it's more than renting it's an easy answer about what it do. If it's less, ask your self are the potential headaches over time worth the difference?

Allowing yourself $1800 a year towards upkeep is a good idea but depending on the age of the house might not be near enough. That's another question only you can answer. Roofs, windows, appliances, and the like can add up quickly.

 

[here757]

not sure if it's the same elsewhere but we've lived in areas where existing homes that were used as rentals didn't increase in value as much as owner occupied (even when the owner went to sell and threw a ton of money cleaning the place up). that might be something to check on w/realtors local to the property.

management companies-REALY research them, and make sure there's an iron clad provision in the contract w/the company that they MUST an inside/out full visual periodic inspection of the property to ensure it's use/condition-with them on the hook if they don't and long term damage is discovered.

a friend was SOOOOOOOO thankful her contract was written up this way-police raided the place and found that the high credit scoring/great background check tenants the management company had sworn by had made a bedroom into their own personal illegal grow room-apparently the management company hadn't done the periodic checks b/c when an evaluation of the property damages were completed it was discovered that the hardwood floors throughout the entire home that were very visibly warped (total loss) had to have been subjected to months and months of slow leakage from the indoor drip irrigation system the tenants installed. between replacing the floors, fumigation, wall/base board repairs, drywall (grow lights suspended from the cielings made big holes), paint.....tens upon tens of thousands in damage..........all of which the management company had to pay up on (so friend did not have to submit to homeowners and jack up the rates on both the rental and her then existing home-she opted to move back in when the repairs were done and get rid of the other home).

Yuck!!! Grow house huh.. Only thing worse is a meth house.. Total loss!
Unrelated.. No one takes care of ur house like you do. Plus the cost of the insurance on the house is crazy. Fire policy covers home you own but don't live in

 

[Hisgirl]

We do heavy due diligence on our tenants, go with our gut, talk to previous Landlords, check credit history, income etc etc. We have managed our own rental home for four years. It has almost doubled in value and we are making a good profit each year. My sister has six properties and my son in law has 20. it can be a full time job or a hobby but overall if you are careful, it can be a solid place to grow your money.

With one leg of the 'three legged stool' (pension, investment income, social security) now missing as most people don't have a pension, I think having rental income is a good thing to consider to increase your chances of meeting all financial needs in the future. And, if you take social security early, rental income is not considered 'earned income' so it will not affect your benefits. But you must be prepared to carry the burden of an empty house should you have a dry period and have cash available to replace a roof, appliances, replace waste pipes, encapsulate crawl spaces, replace HVACs etc.

 

[Disney Doll]

Nope. Never. Too much can go wrong that can cost WAY too much time, money and aggravation.

My brother owns rental properties and he seems to have pretty decent tenants but there's still that element of "fix this, shovel snow, rakes leaves". You either do it yourself which only adds work to one's already busy life or you pay someone...bye bye profit.

The few people he's had skip town or do damage and hat he couldn't get them to pay for he ends up reporting to the IRS for "debt forgiveness". Sic the IRS zone them and let them deal with it.

 

[barkley]

We could never have anyone over because the living room and kitchen were so small, only 5-6 people at a time could fit!

that sounds like the house we rented! it wasn't a huge issue for us b/c we knew it was going to be short term (real deciding factor on renting it was the 3 car garage we could use as storage vs. renting another house and paying out the wazoo for storage lockers for our furniture/household goods pending our big move) but I would have killed to see how the developer staged the model when the development was being marketed. VERY small, narrow living room w/windows the length of two sides so no real wall space-you could really only fit a small sofa (like loveseat size) and one small chair (no way to really put in a t.v.). we joked that the neighbors must have had to pull all their furniture out and replace it with folding chairs to fit even a small Christmas tree. useless built in island that overwhelmed the small kitchen-and don't plan on having family over for a holiday dinner-the dining room could only fit a 4 seater table unless you wanted it to extend into the already small living room, AND the counter in the kitchen that might have afforded some seating space w/ a few barstools-was built adjacent to the door to the backyard such that you had to be careful opening and closing the door or it slammed into the counter

the micro small 'office' was unlike anything I've ever seen-one single room comprised of 9 walls (only 1 of which was wide enough to put a small desk on)

 

[sukhakuli]

My parents have been renting for years, and honestly, alot of Landlords are nightmares too.

That's certainly true, and that's why we never rent if we can help it. We always buy. I don't think I've ever had a landlord that wasn't a major jerk. Because of that, we try to be good to our tenants.