Should I be a landlord?

Question

I'm thinking about purchasing a house or duplex and renting it out. They need some cosmetic work which I am able to do just fine. I want to know how much risk I'm running being a landlord? What are some areas that I should look out for, what to look for in a tenant and contract, etc. If anyone can tell me what exactly I'd be in for, I'd appreciate it. Thankyou.

Answer 1

I have owned my fair share of rental property in the past. The best advice I can give you is to get a property that you can keep an eye on daily. Have it close to your work or home so you can drive past at random times. My worst experience was with a house I owned that was off the beaten path. I did not have reason to go past daily, and I ran into one of the neighbors who informed me that there were several people living at my property and they were causing trouble with the neighbors. I started driving past and came to find out that there were 12 people living in my 3 bedroom house! Between the 12 of them, they had completely trashed the place. The couple I rented the house to seemed like a great couple. They were very professional and had great references. However, they started letting people stay over and then ended up just letting anyone move in. The place ended up completely trashed. I had to replace everything from carpets to drywall. It was awful.

All the properties I have owned since then, I have kept within distance of work and home so I can keep a close eye on what's happening. The only other suggestion I have is to have a reserve of money available for when the unexpected happens. If the water heater dies or a pipe explodes or something, you are obligated to have it fixed immediately, where as if it happens in your own home, you can choose to put it off for a couple of days while you find the money to pay for it.

Good luck. You can make a ton of money if you play your cards right!!

Answer 2

My landlord has run into a lot of trouble and money loss, lately:

He owns several 3-6plexes in various areas of towns, a small house and a large house.

In the last month, there were 3 evictions, new drains needed to be installed, a tenant died from an overdose of pain meds, his "best" tenants moved out, and two days ago, the water pipes broke in the home of brand new tenants with a 6-month old baby. Then, when he called his insurance company, they could not locate his policy! Well, the bedroom ceiling is down, and no one knows where those tenants (who already paid and signed a lease) are right now.

From the fall through winter, the police arrested drug dealers from two of his properties, and the places were left in shambles. One tenant ran his SUV into a fence and broke it. A tenant left owing 2 months rent plus property damage. The police were also around for loud music in the middle of the night--they have to pay $1500, and HE has to pay $1500.

This is besides the normal stuff such as paying people to clean, paint, repair, remodel, change glass in windows, etc.

Tenants take a chance when they rent--and so do landlords. The landlord seemingly has the advantage as he can run a background check, credit check, etc.--but people change over time. Some people lose their jobs, break up with their partner, get into hard drugs, start drinking and becoming abusive and destructive, etc.

All that I have written has happened in a relatively decent area in Arizona. I wish you luck, wherever you decide to do this--but I would never do it myself.

Answer 3

THere is no hard and fast set of rules and the few that are available (Landlord for Dummies) are somewhat generic.

Here are some basics to help you decide.

What happens 'between tenants'. Do you have a good reserve to cover you for the month or two period.

What is a reasonable rent? Will that cover your bills, taxes, insurance, etc..?

Main. and upkeep? Will it be regular or do you plan to defer it.

For credit reports and tenant checking: there is usually an agency in your area that will provide you with tenant screening for a fee. Talk to some other landlords and find out who they use and what their accuracy has been.

Get yourself a good contract (but a fair one).

Don't get greedy. A good tenant is often worth more then a rent increase.

Kids, pets, etc.. develop a policy and post it up front.

Learn about your legal responsibiities (equal housing , discrimination, etc..) one mistake can be very expensive and often the law and common sense are not even close to being the same.

heard enough.??? Go listen to a few horror stories too.. better still go rent the old Michael Keton film 'The Tenant' .

.. hope this helps a bit...

.

Answer 4

Difficult question. There is no real answer as we are not you and you will not really know until after you have tried it.

Check out the website below. A lot of active investors there. Many are landlords and some are not. Those who are not tend to refurbish properties or they flip them without dealing with tenants. There are success notes, how to articles, multiple forums (legal, finance, investing, commercial investing, manufactured housing). I have personally met a number of the folks who post to the forums so I know they are real investors with real issues and real success.

I would also suggest you head to the library and the bookstore. There are many books out there explaining what you need to do as a landlord. They will give you a bit of knowledge and some sense of what it can be like.

You can own rental property and hire out the landlord tasks. Though I suggest this it could be best that you get some hands-on experience at some point if you are going to own rental property.

Do not let the question of being a landlord be the decision point for the larger topic real estate investing.

Note that I have been investing in RE for over 20 years. I have property in more than one country and generally use a property management firm now. I did direct management for a few years (5 units total across 4 properties).

Answer 5

make sure you know the rental/landlord/agreement laws in your state.
being a landlord is very frustrating at times but rewarding if you get the correct tenants .... just be firm , direct and don't let a potential tenant think your a "push-over" or they will walk all over you ! Make sure you have a great contract that protects you cause the laws all protect the tenant .
P.S. There are a huge amount of tricks to the trade and I suggest you do searches on the internet .... you wont find all the answers in a forum like this. Making your property work for you is the most ideal way to make a income.... it isn't large but it's comfy

Answer 6

Rental is a good investment. If you can cover interest on the mortgage then you are ahead since real estate tends to track inflation. You lock in your capital in the real estate and that keeps pace with inflation while the rent handles the interest.

Be careful of renting in cheap areas. Usually there are many problem tenants. Make sure your agreement is drawn up properly to protect you and buy insurance.

Answer 7

dont do it.