Does anyone have rental property experience?

**snafu** · 01-15-2014, 01:10 PM

I'm not sure whether you want to buy an investment property that you rent to others or a REIT which is very similar to a Mutual Fund except the manager purchases shares in personal, corporate or business properties.

There are a great many rules and laws that must be followed as a landlord if you plan to manage a rental property. You need time, skill sets for repair and maintenance, and expertise in assessing potential renters for example. You need sufficient cash reserve as back up should a tenant fail to pay rent or if the place remains empty for a few months. Most community's offer courses for Landlords as pat of Continuing Ed. evening programs. Most communities have an Organization or Association for Landlords whose meetings are very informative.

I managed a small, 6 unit apartment building for several years. The work was straight forward but I didn't like being 'on-call,' 24/7. I hated having to nag people to pay their rent, it felt horrid. It's a long slow process to actually evict a tenant [lawyer and sheriff ] resulting in a serious loss of income that is never made-up, except for the tax write-off for the owners.

**JBinKC** · 01-16-2014, 07:10 AM

I rented a single family home for about approximately 5 years and lived in it for 10. At the time I couldn't pass up the deal on the home. A foreclosure with less than 1/2 the value of comps in excellent condition. So no more capital investment and a perfect candidate to rent out with a very high initial return and to keep as a backup home in the city without a potential mortgage payment should something go wrong on the money side for me. I made approximately a 400% capital gain profit over a 15 year holding period.

Like the post before it was a hassle mainly for trashing risk. I.e large pets where your contract forbid them and of course it happened.

There was still some learning curve even with some family experience of commercial renting for a living. I have found you are shouldering risk with 2 months of rent deposit to cover for the "trashing" repairs. If you are not at all handy I would initially recommend at the minimum of at least a 25% gross rent to your capex that is also a competitive rent to your comps to your initial investment as a minimum to make it worth your time (at least I met that parameter).

**97guns** · 01-16-2014, 07:37 AM

i have been in the rental market for 5 years, i have 5 single family homes in my portfolio right now grossing $5200/mo. i have a rental manager that takes 7% of the rents and he takes care of everything. fill tenants, collect rent, and does repairs. i have not looked at any of my properties in close to a year.

not all peaches and cream though, right now im going through a busted copper line that is in the slab, plumber had to locate the leak and jack hammer it up, it had extensive mold issues, i had to strip lots of sheetrock out, gut both bathrooms and rip out flooring. all in all a $10,500 job thats fully covered by my $1000 deductable insurance, insurance company is paying me off $14K so a few bucks go into my pocket. they even reimburse a full months rent of $1050

other than this problem i have gone pretty much trouble free, just minor stuff, i have changed 1 water heater, fixed leaks, changed toilets, etc in this time. all the homes i purchased were 1996 and newer and i would highly reccomend buying something newer like this.

tenant placing is key too, ive learned a lot from my manager.

1) when you show a house let the prospective tenant look inside while you stay outside ad look at their car. is registration up to date, is it full of garbage and fast food cups/bags, is it washed or grungy with lots of dents. how the tenant lives with his car is how he will live in your home

2) when screening for the tenants work call the place of business and ask questions directly pertaining to their business, once you establish the business is legit then do you question the tenants worthiness, we have had tenants give false job info, they will have you call their friend and they make like the tenant is a great employee

i read the book The Millionaire Real Estate Investor and it was very helpful

**97guns** · 01-16-2014, 07:40 AM

to avoid a rush of pets and the renter bringing in multiple families to live i have the property manager inspect the inside 4x a year, with this time he changes the furnace filter, checks the fire detectors and just views the inside. he also drives by one of the properties every day, he takes a different route into town just to drive by a different property, he knew 1 tenant was leaving before they told us

**Joe Moore** · 01-18-2014, 08:51 AM

In property investment there are three words; location, location, location. If you have a property located centrally and near transportation you can find a tenant before the other one leave. Also, tenants stay long. I have properties matching this description and I let them out sometimes even before they have the chance to have a look inside. They are worried that they will miss the chance and they wire a deposit to take it.

Also, I failed several for the same reason. I bought a nice house that I would be happy to live. But nobody rented it because it was too far away from everything. I had to sell them after leaving them empty for several months.

Does anyone have rental property experience?