Anyone own rental property??

jessie_mags · Jun 12th, 2008, 12:02 PM

Hello! I was just wondering how many of you ladies own rental properties? If you do, do you manage them yourself or have you hired a property manager? What have your experiences been? Is it worth the hassle? How have your renters been? Leases? Do you have to charge a lot to have positive cash flow? Tell me all! I am very curious and have been researching all lately! With the housing market being bad, I'm wondering if this would be a worthwhile investment. Any info/advice would be welcomed! Thanks!

guccimamma · Jun 12th, 2008, 01:03 PM

yes, i have several...i manage them. make sure you buy in a location that has a strong demand, otherwise you can be sitting on an un-rented place.

know your market, if there are lots of places selling dirt cheap...who is going to rent from you? make sure you have that answer.

where i live, positive cash-flow is almost unheard of...but we are in it for the long haul. you get lots of good tax advantages to owning rental property, my husband handles that..so i can't speak very clearly on the specifics.

it really depends on where you are, that is the most important factor. you can buy a bunch of cheap houses right now, but if you can't find decent renters...then it will always be a pain in the neck.

pidgeon92 · Jun 12th, 2008, 03:50 PM

Unless you are very lucky, the only way you will make money renting is by managing the property yourself, and doing all of the maintenance yourself. The property we own has 21 units, we have owned it since 1993. It's like a roller coaster, good years and bad years.

Right now, renting is excellent. However, it has now always been that way, there were plenty of times we had 3 or more units empty for several months. Renting is not a pleasant experience, people often make appointments and don't show up, they have unrealistic expectations.

Dealing with tenants once you have them can be very trying. I'd say that 80% of them are fine, only calling when they have a real problem. The rest are constantly late with the rent, fighting with each other, putting stuff in the water pipes that are NOT meant to go down them. I could make a long list of the bizarre things I have seen people do. You have to understand that aggravation is a big part of running this kind of business, and you have to be available 24/7 if there is an emergency.

When we bought the building it was not in great shape. We had some apartments where there were 6 people in a one-bedroom. We've had the roof done a few times already, tuckpointed twice, replaced all of the windows and lots of walls and ceilings, replaced the furnace and added another, replaced the electricity, argued with the county over the exorbitant real-estate taxes, been sued someone who claimed we wouldn't rent her an apartment because we were racist.... I could go on and on here too.

The first ten years it was a money pit, but we are finally getting to the point where we are seeing decent income, so despite all of the problems, it has proven to be a great investment. You must treat it like a business. Do not get personally involved with your tenants, they are not your buddies. Never rent to friends. Fix broken things immediately (within a few days if not an emergency). Make sure you have enough money set aside for emergencies. Get good insurance. Make the landscaping attractive. Keep the grounds clean. Mow the lawn and shovel the sidewalks.

guccimamma · Jun 12th, 2008, 08:47 PM

Quote:

Originally Posted by pidgeon92

Unless you are very lucky, the only way you will make money renting is by managing the property yourself, and doing all of the maintenance yourself. The property we own has 21 units, we have owned it since 1993. It's like a roller coaster, good years and bad years.

Right now, renting is excellent. However, it has now always been that way, there were plenty of times we had 3 or more units empty for several months. Renting is not a pleasant experience, people often make appointments and don't show up, they have unrealistic expectations.

Dealing with tenants once you have them can be very trying. I'd say that 80% of them are fine, only calling when they have a real problem. The rest are constantly late with the rent, fighting with each other, putting stuff in the water pipes that are NOT meant to go down them. I could make a long list of the bizarre things I have seen people do. You have to understand that aggravation is a big part of running this kind of business, and you have to be available 24/7 if there is an emergency.

When we bought the building it was not in great shape. We had some apartments where there were 6 people in a one-bedroom. We've had the roof done a few times already, tuckpointed twice, replaced all of the windows and lots of walls and ceilings, replaced the furnace and added another, replaced the electricity, argued with the county over the exorbitant real-estate taxes, been sued someone who claimed we wouldn't rent her an apartment because we were racist.... I could go on and on here too.

The first ten years it was a money pit, but we are finally getting to the point where we are seeing decent income, so despite all of the problems, it has proven to be a great investment. You must treat it like a business. Do not get personally involved with your tenants, they are not your buddies. Never rent to friends. Fix broken things immediately (within a few days if not an emergency). Make sure you have enough money set aside for emergencies. Get good insurance. Make the landscaping attractive. Keep the grounds clean. Mow the lawn and shovel the sidewalks.

^Everything is true.

We make sure our places are upgraded to the hilt (not that they will treat them any better...but it makes the process of renting easier). We only buy within a certain circle of a location that has a high draw. Say employer, university, beach, etc.

Do not get drawn into the drama...you will hear every story imaginable. Keep the place in good order. Keep your insurance in place.

Eventually somebody will try to sue you. It will happen.

Irishgal · Jun 12th, 2008, 10:03 PM

Quote:

Originally Posted by guccimamma

^Everything is true.

We make sure our places are upgraded to the hilt (not that they will treat them any better...but it makes the process of renting easier). We only buy within a certain circle of a location that has a high draw. Say employer, university, beach, etc.

Do not get drawn into the drama...you will hear every story imaginable. Keep the place in good order. Keep your insurance in place.

Eventually somebody will try to sue you. It will happen.

Had to laugh at that, so true.
Everything the 2 posters say above is spot on. We have a number of properties so we use a management firm for most of them. However, when we first started we did it ourselves (love those service calls at 3:00am). Good luck!

BlkLadyLaw · Jun 13th, 2008, 07:55 AM

I do. It is not far from my own home. In a rush to get income I had tenants selected before I closed on the property. My first tenants were a nightmare. It was a couple and they broke up 2 months after moving in. I rented to them based on the girl's income and stable job....the guy was in and out of odd construction jobs. Well they broke up and she moved out and he stopped paying rent and was a complete slob, red Koolaid stains on the carpet etc. I finally got him out of there after 2 months of no rent. It has been smooth ever since. I have an older lady that I rent to know that works as a secretary for a law firm and she has been there for 3 years now and plans to stay indefinitely. I redid the kitchen flooring and added granite countertops, painted, updated doorknobs, etc. but hadn't done a lot of other things before I started renting. I upgrade something every year or two. Added ceiling fans last year. Just added a new stainless refrigerator which she adores. I brak even if you look at inflow and outflow but with tax deductions including depreciation I profit monthly. I think it is hard for folks to profit buying property at todays prices since mortgages are out of wack with rental prices. The people making a killing in my building are those who bought the units at $20k-$50 in 2002 and prior years...I bought in 2005 at $140 and they are now $200k and rising due to a new waterfront development nearby.

I manage it myself which is easy since I live nearby. Finding good affordable maintenance people is the hard part. I've lucked out now because my soon to be DH's uncle does a lot of the work for me for a great price.

Note that interest rates and property taxes are higher for non-owner occupied property. It can be very difficult to get equity lines on investment property...few places do it and if they do the criteria is tougher than for primary homes. Make sure you get umbrella coverage to protect yourself from lawsuits. Require tenants to get rental insurance, add clauses in the lease about couples/roommates and what happens if someone moves out. Really research what your costs will be compared to what you can realistically rent for in the area...for new purchases it is hard to profit in the early years. With my income bracket I need the tax breaks so it is useful to me in that regard...I also plan for this to be one source of an extra $800- $1000/month retirement income for me in the future once it is paid off. I could also move elderly family from the midwest here near me if I choose one day.

jessie_mags · Jun 13th, 2008, 04:45 PM

Wow. Thank you for the in-depth replies! I understand there is so much to think about and I haven't considered some of the things mentioned. I will definitely have to do more research, but hearing personal experiences is just as informative (and way more interesting).

Thanks again!

Zophie · Jun 13th, 2008, 07:24 PM

I don't but my parents do. I rent from them. :)

They manage them themselves, but my mom also does not have a job. That is her job basically. Dealing with tennants and maintenance issues can be a pain. Katrina really threw them for a loop, but hopefully you'd never have to deal with anything like that. The advice my mom gave me was to only buy something in what is a stable neighborhood and be sure not to overpay for a property. Do your research. None of their properties flooded with Katrina because they are all in a low flood risk area and they never sit unrented because they don't set the rents so high as to price themselves out of the market. But taking care of them really can be a pain.

sphere99 · Jun 13th, 2008, 08:06 PM

I have had my home for sale for 6 months and (suprise) it hasn't sold, but the rental market in my area is great, so I am thinking of renting it for a while, would it really be a great tax savings? I am moving out of state so will have my realtor manage it.

aine1313 · Jun 14th, 2008, 10:41 AM

Quote:

Originally Posted by guccimamma

^Everything is true.

Eventually somebody will try to sue you. It will happen.

I am surprised to hear this. Why could they sue you?

IcansPotaFake32 · Jun 14th, 2008, 06:17 PM

Thanks for starting this thread. I am sure I will be referencing it the in future. I bought my apartment about a year ago and fully intend on never selling it and renting it out. My issue this year is whether to work on paying this one off or to buy another one. The area is great because it's right outside of Manhattan and easy for a commuter. I have also upgraded almost all of my apt and I bought it for cheap (I think). I look on craiglist to see what others are renting places for in the area and also know what the renters were renting it for before I bought the place.
I am concerned about the discrimination issue. How does one avoid this? I'm not talking about race or ethnicity but what if you think someone is slob or seems less than capable of paying your rent? I'm not sure if this question makes sense and if it doesn't I can try to clarify but I want to make sure that when I do rent I'm renting to the right person. I also would like to include a cleaning service in the cost.

guccimamma · Jun 14th, 2008, 08:53 PM

Quote:

Originally Posted by IcansPotaFake32

Thanks for starting this thread. I am sure I will be referencing it the in future. I bought my apartment about a year ago and fully intend on never selling it and renting it out. My issue this year is whether to work on paying this one off or to buy another one. The area is great because it's right outside of Manhattan and easy for a commuter. I have also upgraded almost all of my apt and I bought it for cheap (I think). I look on craiglist to see what others are renting places for in the area and also know what the renters were renting it for before I bought the place.
I am concerned about the discrimination issue. How does one avoid this? I'm not talking about race or ethnicity but what if you think someone is slob or seems less than capable of paying your rent? I'm not sure if this question makes sense and if it doesn't I can try to clarify but I want to make sure that when I do rent I'm renting to the right person. I also would like to include a cleaning service in the cost.

at least where i live, if you own under a certain number of rentals....you are not necessarily governed under the same guidelines as an apartment complex. meaning, you can be much pickier about the people you rent to, we choose not to rent to smokers....although i don't believe you can request this preference.

i find that using craigslist, people who are "good" tenants, generally will tell you more information than you need...the ones that are less desirable, seem to provide less information.

for us, a credit report seems to be the great divider. no reason to discriminate against someone with fantastic credit and great references. in order to have these kind of applicants, you MUST be in a desirable neighborhood...either close to a major employer, university, schools, etc.

Zophie · Jun 14th, 2008, 09:05 PM

My parents have used a rental agent in the past to get the apartment rented. In return I think the agent keeps the first month rent. But they would take the application and check the person's employment, etc.

My parents now do all of that themself, but my mom still checks everything out on the application. She makes sure the person has a steady job and can pay the rent and doesn't seem like they will be a problem tenant. She will NOT rent to undergrad students. She also doesn't like to rent to people that have roommates and won't allow more than a certain number of people in the aparment. She has never had any problem with being accused of discrimination.

On the downside, one apartment was rented to a crazy guy who lost his job and couldn't get another one. He had a master's degree, so no predicting he'd be a nut really. But after about three months of not paying the rent my dad had him evicted. The guy freaked out and started prank calling our house, driving by all the time, left my dad a nasty note saying "gris gris on you," and damaged the apartment.

My parents have also ended up renting to an older retired couple that were total slobs. When they were living there they always were calling with all kinds of little issues they wanted help with. Once they finally moved out, my mom has had to do beyond a major cleaning of the apartment. From what I understand, it was really nasty. She even had to replace a refrigerator they somehow destroyed. Needless to say, this goes beyond any damage deposit.

I know they have had other issues, but these are the two that stand out the most. Being a landlord can be a huge pain in the behind, but it is a stable investment if you plan well. And a lot of tenants are great. One lady my mom rents to is a cop and happily gave me her cell number to call her if I need help since she lives around the corner. The girl who lives on the other side of the double I'm in is a fabulous tenant.

baglady.1 · Jun 21st, 2008, 10:52 PM

Jessie, I actually make a living as a landlady & it is really hard work & not much time off either. My brother & his family decided to try what I do with their house they moved out of & it was a disaster & they were happy the minute they sold it...so this life is not for the faint of heart. One thing for sure, it really changes the way you think about people and how you perceive them....because the minute a newbie Landlady/lord opens their rental to the market , all the applicants everyone else has turned down, swarm to the place with a vengeance.

(mind you we have great tenants for the most part, because we are picky, picky, picky).

Everyone here has given great advice. However even with all the foreclosures right now, I am not sure if it is a good time to jump in. Make sure the numbers work, do your home work. Make sure the area is desirable & close to employment centers. Make sure it is close to where you live so you can keep an eye on it and service it.

Where I live, there is no way the numbers will work anymore, even with a forclosure it is just not likely. I have tenants paying $1200 rent in houses that would cost $1900/month in mortgage payments including taxes & insurance. This does not take into account repairs, vacancies, damages from unforseen events (like I paid out $2000 this month on broken windows, plus add to that 2 hot water tanks burst and several appliances died & had to be replaced). You also need a lot of liquidity and financial stability due to these losses that occur.
Anyway...food for thought.

Zophie · Jun 21st, 2008, 11:45 PM

^^^

Very true. One thing too is to be sure you don't finance a property that you couldn't pay for if it's not rented. I have seen one of my parents' properties, a commercial property, go unrented for over a year. Another apartment still is unrented after a year. Granted these were both due to Hurricane Katrina, but still that is two vacancies for over a year and that is a lot of lost income. Just something to keep in mind.

Jun 12th, 2008, 12:02 PM	#1
jessie_mags Member Joined: Apr 2007 Posts: 65	Anyone own rental property?? Hello! I was just wondering how many of you ladies own rental properties? If you do, do you manage them yourself or have you hired a property manager? What have your experiences been? Is it worth the hassle? How have your renters been? Leases? Do you have to charge a lot to have positive cash flow? Tell me all! I am very curious and have been researching all lately! With the housing market being bad, I'm wondering if this would be a worthwhile investment. Any info/advice would be welcomed! Thanks!

Jun 13th, 2008, 07:55 AM	#6
BlkLadyLaw Wedding Day 9/5/08! Joined: Apr 2006 Location: Washington DC metro Posts: 1,688	I do. It is not far from my own home. In a rush to get income I had tenants selected before I closed on the property. My first tenants were a nightmare. It was a couple and they broke up 2 months after moving in. I rented to them based on the girl's income and stable job....the guy was in and out of odd construction jobs. Well they broke up and she moved out and he stopped paying rent and was a complete slob, red Koolaid stains on the carpet etc. I finally got him out of there after 2 months of no rent. It has been smooth ever since. I have an older lady that I rent to know that works as a secretary for a law firm and she has been there for 3 years now and plans to stay indefinitely. I redid the kitchen flooring and added granite countertops, painted, updated doorknobs, etc. but hadn't done a lot of other things before I started renting. I upgrade something every year or two. Added ceiling fans last year. Just added a new stainless refrigerator which she adores. I brak even if you look at inflow and outflow but with tax deductions including depreciation I profit monthly. I think it is hard for folks to profit buying property at todays prices since mortgages are out of wack with rental prices. The people making a killing in my building are those who bought the units at $20k-$50 in 2002 and prior years...I bought in 2005 at $140 and they are now $200k and rising due to a new waterfront development nearby. I manage it myself which is easy since I live nearby. Finding good affordable maintenance people is the hard part. I've lucked out now because my soon to be DH's uncle does a lot of the work for me for a great price. Note that interest rates and property taxes are higher for non-owner occupied property. It can be very difficult to get equity lines on investment property...few places do it and if they do the criteria is tougher than for primary homes. Make sure you get umbrella coverage to protect yourself from lawsuits. Require tenants to get rental insurance, add clauses in the lease about couples/roommates and what happens if someone moves out. Really research what your costs will be compared to what you can realistically rent for in the area...for new purchases it is hard to profit in the early years. With my income bracket I need the tax breaks so it is useful to me in that regard...I also plan for this to be one source of an extra $800- $1000/month retirement income for me in the future once it is paid off. I could also move elderly family from the midwest here near me if I choose one day. __________________

Jun 13th, 2008, 07:24 PM	#8
Zophie I <3 my Maltese! Joined: Feb 2007 Location: New Orleans, LA Posts: 6,607	I don't but my parents do. I rent from them. :) They manage them themselves, but my mom also does not have a job. That is her job basically. Dealing with tennants and maintenance issues can be a pain. Katrina really threw them for a loop, but hopefully you'd never have to deal with anything like that. The advice my mom gave me was to only buy something in what is a stable neighborhood and be sure not to overpay for a property. Do your research. None of their properties flooded with Katrina because they are all in a low flood risk area and they never sit unrented because they don't set the rents so high as to price themselves out of the market. But taking care of them really can be a pain. __________________

Jun 13th, 2008, 08:06 PM	#9
sphere99 Too Obsessed... Joined: Dec 2006 Location: Chicago Posts: 1,879	I have had my home for sale for 6 months and (suprise) it hasn't sold, but the rental market in my area is great, so I am thinking of renting it for a while, would it really be a great tax savings? I am moving out of state so will have my realtor manage it. __________________

Jun 14th, 2008, 09:05 PM	#13
Zophie I <3 my Maltese! Joined: Feb 2007 Location: New Orleans, LA Posts: 6,607	My parents have used a rental agent in the past to get the apartment rented. In return I think the agent keeps the first month rent. But they would take the application and check the person's employment, etc. My parents now do all of that themself, but my mom still checks everything out on the application. She makes sure the person has a steady job and can pay the rent and doesn't seem like they will be a problem tenant. She will NOT rent to undergrad students. She also doesn't like to rent to people that have roommates and won't allow more than a certain number of people in the aparment. She has never had any problem with being accused of discrimination. On the downside, one apartment was rented to a crazy guy who lost his job and couldn't get another one. He had a master's degree, so no predicting he'd be a nut really. But after about three months of not paying the rent my dad had him evicted. The guy freaked out and started prank calling our house, driving by all the time, left my dad a nasty note saying "gris gris on you," and damaged the apartment. My parents have also ended up renting to an older retired couple that were total slobs. When they were living there they always were calling with all kinds of little issues they wanted help with. Once they finally moved out, my mom has had to do beyond a major cleaning of the apartment. From what I understand, it was really nasty. She even had to replace a refrigerator they somehow destroyed. Needless to say, this goes beyond any damage deposit. I know they have had other issues, but these are the two that stand out the most. Being a landlord can be a huge pain in the behind, but it is a stable investment if you plan well. And a lot of tenants are great. One lady my mom rents to is a cop and happily gave me her cell number to call her if I need help since she lives around the corner. The girl who lives on the other side of the double I'm in is a fabulous tenant. __________________

Jun 12th, 2008, 01:03 PM	#2
guccimamma guccimamma Joined: Aug 2006 Posts: 2,673	yes, i have several...i manage them. make sure you buy in a location that has a strong demand, otherwise you can be sitting on an un-rented place. know your market, if there are lots of places selling dirt cheap...who is going to rent from you? make sure you have that answer. where i live, positive cash-flow is almost unheard of...but we are in it for the long haul. you get lots of good tax advantages to owning rental property, my husband handles that..so i can't speak very clearly on the specifics. it really depends on where you are, that is the most important factor. you can buy a bunch of cheap houses right now, but if you can't find decent renters...then it will always be a pain in the neck.

Jun 12th, 2008, 03:50 PM	#3
pidgeon92 Member Joined: Feb 2006 Location: Waukegan, IL Posts: 1,312	Unless you are very lucky, the only way you will make money renting is by managing the property yourself, and doing all of the maintenance yourself. The property we own has 21 units, we have owned it since 1993. It's like a roller coaster, good years and bad years. Right now, renting is excellent. However, it has now always been that way, there were plenty of times we had 3 or more units empty for several months. Renting is not a pleasant experience, people often make appointments and don't show up, they have unrealistic expectations. Dealing with tenants once you have them can be very trying. I'd say that 80% of them are fine, only calling when they have a real problem. The rest are constantly late with the rent, fighting with each other, putting stuff in the water pipes that are NOT meant to go down them. I could make a long list of the bizarre things I have seen people do. You have to understand that aggravation is a big part of running this kind of business, and you have to be available 24/7 if there is an emergency. When we bought the building it was not in great shape. We had some apartments where there were 6 people in a one-bedroom. We've had the roof done a few times already, tuckpointed twice, replaced all of the windows and lots of walls and ceilings, replaced the furnace and added another, replaced the electricity, argued with the county over the exorbitant real-estate taxes, been sued someone who claimed we wouldn't rent her an apartment because we were racist.... I could go on and on here too. The first ten years it was a money pit, but we are finally getting to the point where we are seeing decent income, so despite all of the problems, it has proven to be a great investment. You must treat it like a business. Do not get personally involved with your tenants, they are not your buddies. Never rent to friends. Fix broken things immediately (within a few days if not an emergency). Make sure you have enough money set aside for emergencies. Get good insurance. Make the landscaping attractive. Keep the grounds clean. Mow the lawn and shovel the sidewalks.

Jun 13th, 2008, 04:45 PM	#7
jessie_mags Member Joined: Apr 2007 Posts: 65	Wow. Thank you for the in-depth replies! I understand there is so much to think about and I haven't considered some of the things mentioned. I will definitely have to do more research, but hearing personal experiences is just as informative (and way more interesting). Thanks again!

Jun 14th, 2008, 06:17 PM	#11
IcansPotaFake32 Member Joined: Sep 2007 Posts: 385	Thanks for starting this thread. I am sure I will be referencing it the in future. I bought my apartment about a year ago and fully intend on never selling it and renting it out. My issue this year is whether to work on paying this one off or to buy another one. The area is great because it's right outside of Manhattan and easy for a commuter. I have also upgraded almost all of my apt and I bought it for cheap (I think). I look on craiglist to see what others are renting places for in the area and also know what the renters were renting it for before I bought the place. I am concerned about the discrimination issue. How does one avoid this? I'm not talking about race or ethnicity but what if you think someone is slob or seems less than capable of paying your rent? I'm not sure if this question makes sense and if it doesn't I can try to clarify but I want to make sure that when I do rent I'm renting to the right person. I also would like to include a cleaning service in the cost.

Jun 21st, 2008, 10:52 PM	#14
baglady.1 Serious Bag Addict Joined: Jan 2007 Location: In My Handbag Closet Posts: 3,166	Jessie, I actually make a living as a landlady & it is really hard work & not much time off either. My brother & his family decided to try what I do with their house they moved out of & it was a disaster & they were happy the minute they sold it...so this life is not for the faint of heart. One thing for sure, it really changes the way you think about people and how you perceive them....because the minute a newbie Landlady/lord opens their rental to the market , all the applicants everyone else has turned down, swarm to the place with a vengeance. (mind you we have great tenants for the most part, because we are picky, picky, picky). Everyone here has given great advice. However even with all the foreclosures right now, I am not sure if it is a good time to jump in. Make sure the numbers work, do your home work. Make sure the area is desirable & close to employment centers. Make sure it is close to where you live so you can keep an eye on it and service it. Where I live, there is no way the numbers will work anymore, even with a forclosure it is just not likely. I have tenants paying $1200 rent in houses that would cost $1900/month in mortgage payments including taxes & insurance. This does not take into account repairs, vacancies, damages from unforseen events (like I paid out $2000 this month on broken windows, plus add to that 2 hot water tanks burst and several appliances died & had to be replaced). You also need a lot of liquidity and financial stability due to these losses that occur. Anyway...food for thought. __________________ *I'm BAAAACK!!* *Friends don't let friends buy fake bags!* Last edited by baglady.1; Jun 21st, 2008 at 10:56 PM.

Jun 21st, 2008, 11:45 PM	#15
Zophie I <3 my Maltese! Joined: Feb 2007 Location: New Orleans, LA Posts: 6,607	^^^ Very true. One thing too is to be sure you don't finance a property that you couldn't pay for if it's not rented. I have seen one of my parents' properties, a commercial property, go unrented for over a year. Another apartment still is unrented after a year. Granted these were both due to Hurricane Katrina, but still that is two vacancies for over a year and that is a lot of lost income. Just something to keep in mind. __________________