People's Life and Financial Experiences off of Rental Property

**ktmarvels** · 07-23-2009, 10:15 AM

One thing to be aware of is that many of the tax credits only apply if it is your primary residence, so if you bought it with plans of renting you would not qualify.

Other than that I have no advice, but I am curious if anyone has had a positive experience (I know many people have had very bad experiences), as DH and I will probably be looking to rent here in the next couple of years.

**creditcardfree** · 07-23-2009, 10:32 AM

This is totally off the top of my head and may not be exactly right, but one needs to be careful about unpaid taxes on properties. If this were a foreclosure, the bank may be selling to recoup their costs, but the county may have liens on the property for back taxes owed. Those often are inherited with the property.

Again, I might have it a little wrong...but it seems like something to check on.

**amarowsky** · 07-23-2009, 10:33 PM

Dually noted, ill make sure to investigate and inquire about both the point you have raised.

What invigorates me is that, even though I happen to be fortunate enough to find one of the houses I have wished for to be in auction, the first auction I that has been brought to my attention has brought with it a attractive renter possibility. I am in no hurry to rent, and upon realizing that the first time I have noticed and researched an auction that I have found such an attractive Deal, I am sure that there are more than plenty to come. So I am really looking forward to researching/learning all of the possibilities and tax advantages I could possibly take before thinking in investing in one of these at least cosmeticially good looking renting investmentment opportunities.

Once again anymore literature on renting or real estate investing that you or someone you know has found to be exceptional compared to the median of real estate literature I would be happy to know about, or even something that you found to be particularly helpful!

**gamecock43** · 07-24-2009, 04:00 AM

I have an inherited property and the renter has been in there 7 years and I have never had a problem. Because the property is across the country she deducts any expenses from her monthly rent and sends me the receipts of the work done without notifying me. An easy policy to abuse but I only spend around 500-1000 a year in expenses.

I have a rental unit here where I live and the renters have been great here too. This is their 2nd year here. These are college kids so there is the adjustment of loud noise but otherwise I have no complaints.

I did purchase umbrella insurance and am looking into setting up an LLC for peace of mind reasons- but really I have never had a problem.

**wincrasher** · 07-28-2009, 09:46 AM

Sounds like a situation where you really need to do your homework.

Buying condos you need to get some info about the whole building/complex. There could be looming costs if the whole development needs work or if many of the units have been foreclosed - could be nobody has been paying thier HOA fees. What happens if the condo association goes belly up?

Also, bank financing of condo units have alot more conditions than they used to - some banks won't finance if a certain number of the units are vacant or foreclosed. Or if they are rentals. Some buildings prohibit rentals entirely. If they go for the prices you are posting, then financing may not be an issue, but if you know the conditions for financing, it may give you some clues as to what to look out for.

Lastly, keep in mind that these prices are severely depressed for a reason - either condition or the state of the community's economy. If a house in decent condition is selling for <$20k, don't you think that the rents will be similarly depressed? If people have no jobs or are running from the community, who are you going to rent to?

**mdcrim** · 07-28-2009, 10:17 AM

I have a rental that I bought several years ago. The location is great, so I haven't had any real vacancy issues (I think the longest it's been empty is one week-BUT the vacating tenants had left and still paid through the end of the month). The rent does not quite cover the mortgage, but the loss helps offset my tax burden so I don't mind. I bought the home warranty upon purchase so if there ever are any issues (there haven't been too many), it's an $85 deductible to fix the problems. I manage the property myself. It doesn't take much time. I haven't even been in the house in the past two years. I think I've gotten very lucky. I vet my tenants very carefully, call references, check credit, etc. I probably just jinxed myself...

**Ima saver** · 07-28-2009, 10:41 AM

I had 3 rentals and I would rather have major surgery than go thru that again. We were called constantly, the tennants trashed the houses and the one condo was terrible. It leaked and they would NOT fix the roof. The condo assoc. never had the money to pay the water bill and you can't rent without water. I sold all of the rentals at a big loss. I am talking for less than half of what I paid, just to get rid of them.

**GREENBACK** · 07-28-2009, 11:39 AM

Originally posted by creditcardfree View Post

This is totally off the top of my head and may not be exactly right, but one needs to be careful about unpaid taxes on properties. If this were a foreclosure, the bank may be selling to recoup their costs, but the county may have liens on the property for back taxes owed. Those often are inherited with the property.

Again, I might have it a little wrong...but it seems like something to check on.

Iwould think a simple title search would uncover any liens on property like this.

To address the original question. I've heard so many bad stories compared to good that I'll never consider rental property unless I'm worth millions and I'm not.

**snafu** · 07-28-2009, 07:51 PM

Are you willing and able to do painting and sm. repairs? Is it possible to view Condo minutes and access Reserve Fund report? Can you have a Home Inspection to ensure there are no significant problems with the Complex or your particular unit?

If you go ahead I can't stress enough how important it is to check-out any prospective tennant [employment verification, previous landlord, credit rating, reference from bank]. It is very difficult to get 'problem' tennants out!

**PetMom** · 08-05-2009, 04:43 AM

The lien problem - that can really be tricky. There are mechanics liens, tax liens (can be from IRS, county) and even not mowing your lawn liens. Some of those swift investment real estate seminars and books just gloss over this.

The property inherits any of the attached liens.

I would go to a professional title search company. I know those seminars try to tell people they can do that themselves but there may be a complicated property situation.

AND get the Tax Lien insurance.

The desertion factor as someone mentioned - make sure people are staying in the neighborhood and it will not become empty. People would not want to rent and be the only person on a street.

Get the property professionally inspected. You don't want to walk into something that has major problems.

Do you know home maintenance and repairs? Can you get a call at 6:00 a.m. being told of a broken heater and they need it fixed.

And be aware of renters that just pack up and leave at night and for some reason just sort of or really trash the house. Some almost to the point of vandalism. They leave you with expense of lost rent, and the fixing up.

It just goes without saying - try not to rent to a freind or even a relative - they might have the understanding they are going to get a big discount on rent and might be able to skip rent some months when things are tough for them, tough times turns to years and

Then you get to learn about eviction laws, with an attorney.

Although one friend of the family was worth it and paid on time, etc... she was the rare one and stayed a few years.

If you do rent to a friend/relative have a real contract.

Do a credit check background on your tenant, don't just rent to anyone without checking them out.

If the property should stay empty for a few months can you keep it mowed? Make sure squatters are not squatting - there are forums teaching people how to do this in empty property.

Can your personal budget cover a loss of rent income while you paying the taxes and insurance for empty months?

One person who I read of who really did well with renting had a big fund for all the expenses that can happen of people not renting or leaving) his having to fork over the taxes and ins. for the property - he had a big enough cushion for this.

Renting was profitable for this guy because he worked at it and kept up with it. He was an experienced handyman. He could keep the properties well maintained, could do preventative maintenance to stop future problems, was able to fix on call fairly quickly as he just had to get the tools and go there.

At any empty property he made sure to go there, check out the place, mow the grass (you can get a weed lien which can be quite high) and kept the place looking presentable. He also saved by doing this himself and not hiring lawn care company.

He would check out his would be renters - not just rent to anyone.

So a lot of things play into being a landlord. It can really take a lot of work but some people have done this and it has worked for them.

This guy had started with just one house at first - which is a good thing and then kept slowly adding homes as he learned more about it.

**amarowsky** · 08-23-2009, 12:59 PM

PetMom thank you for all that good information and food for thought. I really appreciate it!

I'm kinda bummed though, because I saw that house I wanted sell for $42,000.00 I had a ceiling price of $29,000.00. But now I am motivated to start doing some real learning and research about rental properties.

I'm going to throw out a rough game plan about what I want to try and do.
1. Locate and purchase a house with the intention to rent. I want to pay less than $30,000.00 and get at least a $800 monthly rent for the home.
2. I want to research the insurance, legality, process, and marketing necessary to get people into the house.
3. I need to find some information on the demographic I would be looking at for renters in the area, and just generally how many people are renting around my area.
4. Further my reading and go to some seminars to understand every facet necessary to renting to avoid as many pitfalls as possible.

Does anyone happen to have any literature they could suggest that they or someone they know have found exceptionally helpful as far as real estate investing/renting? I would greatly appreciate it! Thank you all for being so helpful so far in this thread, I love this forum and you guys are all great folks!

**amarowsky** · 11-03-2009, 08:24 PM

I wound up buying this book off of amazon as my first piece of literature.

Amazon.com: Landlording: A Handymanual for Scrupulous Landlords and Landladies Who Do It Themselves (9780932956309): Leigh Robinson: Books

I'm about 1/3 the way though it, I find a lot of the tips very very clever and useful so far. Another thing I really like is they have Ton's of blank documents such as leasing agreements, deposit agreements, legal disclosures, rubrics for rating possible tenants, credit check applications, regular tenant applications, and much more that are Incredibly helpful and full of incite towards what I would need to know for a good tenant.

Either after I buy a house to rent (but more likely before) I will get and read this book too

Amazon.com: Every Landlord's Legal Guide (9781413308563): Marcia Stewart Nolo Acquisitions Editor, Ralph Warner Attorney, Janet Portman Attorney Nolo Managing Editor: Books

This one boasts being able to avoid alot of the legal bruises for becoming a landlord. And hopefully it has a lot of the tax routes I can use to help write off extra expenses.

Either way I'll keep you all posted on how my Landlord' endeavor goes and hopefully I'll have some good news about turning into a solid company with some nice passive income.

People's Life and Financial Experiences off of Rental Property