Owning a rental property.... Pros/cons

Thinking of buying another house and renting my current home.

Nice suburban home in a great neighborhood for kids, great schools, etc. Should be easy to fill but before I do so I'd like to hear both sides of the story.

I have heard horror stories of deadbeat renters with kids that you can't evict with out court orders and that can take up to 6 months.


Let's hear your stories both good and bad, I need to decide if this is right for me soon.

Thanks, Amthony

 

I have a rental property .The best thing I did was hire a management company to look after property . Should of hired them 15 years ago.

 

Can you remain profitable while using a management company?

 

Yes, for me I'm real happy how it has worked out.

 

Here's a guy who didn't score well on the grammar test.

 

correct! should have

 

Apparently did not prevent him from becoming a successful slumlord.

 

To be a successful slumlord, you gotta speak the language of your target clientele.

 

Not if you have a management company.

 

An iron clad lease, background/credit check, and deposit. In the same folder you keep all your documents... have your eviction papers & demand letter already typed out in the tenants name.
If rent is even a day late... be there with your hand out.

Being in NJ... if all else fails you can hire some evictors in Newark for cash.

Become well versed in NJ tenant law. Pros usually charge 35% of the rent (monthly) plus any repairs are padded by 10-20%.

 

Wow. 35%??

In Oregon, it's 1/2 of first months rent, and 7-10% per month thereafter.

 

Residential rentals is how I make my living. DO NOT rent out your home if you are emotionally invested in it! Better to let another family of owners make their own happy memories there.

 

I did the exact same thing 20 years ago and in that time there has only been one trouble tenant. And the trouble was that they were a couple of spoiled brats with rich parents that paid the rent (didn't know that at the time of course).

It's very easy with just one rental property and it is something that I will probably hand down to my kids.

I wouldn't waste my time with a management company for one rental unit. My mom rents out five houses and has never used a 3rd party.

 

Depreciation is the key to this game. Make sure to have your current property properly valued AND documented.

 

The first thing you do is divorce yourself from any sentimentality toward your home. Realize it is now only a money maker for you. I never had any nice homes to rent. Only HUD repossessions and section 8 houses. They were more of a hassle but paid off nicely in the long run. As someone already mentioned, become familiar with tenant eviction laws and processes. Also have a good handyman available and pay him fairly. Of course, as someone already mentioned, a management firm can alleviate a lot of these hassles. They will cost you though.

 

I'm thinking about doing this same thing in the next year or two. Two of my five closest neighbors already have, with a third planning on doing it soon. It's worked well for one, and ok for the other (tenant is a lazy ass who won't mow his lawn or do much maintenance).

I think where we are it's a pretty good clientele. The houses rent for $800-$1000 per month and are all less than 10 years old. That seems to keep out a lot of the transient riff-raff.

 

The wife and I have two. One is going to be sold next year as it's too far away to manage myself. We've had good renters so far but even then i've had to knock on the door to get rent on time and remind a tenant of the terms of their lease.

 

I have 5. If you think taking care of your house is a chore try taking care of 5. It's a lot of work. Then, for some reason, your tenants decide to all pay their rent late on the same month, oh shit!! It's a roller coaster ride that is starting to loose its appeal. I'm getting out of the rental business this year.

 

I bought a home this year in another State from where I lived for a long time and once I get the remodel work done I had been thinking of renting it out.I already have two houses I rent out,one in Nevada and the other in the same town I moved to in Utah.

My thinking now has turned to when my old residence is fixed up to just sell it and buy the new car outright I have started to lust after instead of waiting for the extra rental money to start flowing and then build up cash for the money needed for financing.

I don't really enjoy dealing with renters,very few stay on top of paying the rent on the 1st or in keeping the yard cleaned up etc.,so one less less rental would not hurt,while a new Maserati Ghibli in my hands would put some spark back in the old mans bottom.

 

Late rent is par for the course. I give everyone til the 3rd when its considered
"contractually" late. Its technically due on the 1st. Wack em an extra $25/day after that
A lady that has been doing this forever told me that its better to leave a place vacant than put a deadbeat in it. I thought she was crazy at first til I had a real experience with it. Consider how long you can go unoccupied & if you can cover all your expenses plus 25%

Another tip... NO PETS. I know everyone claims to be the "best & most loving" parent to animals. The reality is they aren't... unless you are a fulltime animal trainer. I just had a tri-plex decide they all wanted dogs. I only notice this after 1 of the units claims their A/C isnt working (in Nov).
Send the A/C guy over... he tells me there is a big dog in the unit. I call the tenant and they claim "it's just visiting & not vicious" but then confesses to me how the other 2 units have dogs and he is always picking up after them. Now Im looking at losing $3300 in rent PLUS evicting, prepping, & listing the units because these selfish bastards decide they are the best pet owners. I wrote a very angry demand letter x 3 only to get 3 heart wrenching Sarah McLachlan rescue/divorce pet stories.

Oh and the reason the a/c didnt work was because the occupying dog, that was only "visiting", had shed so much it clogged the return filter solid (and liked the airflow so much he nested 4' from it). Of course the 200pt font note on the a/c that says CHANGE FILTER MONTHLY got ignored (I give them out free when rent is dropped off). And to top off all the fun... property taxes are due by the end of this month. Looks like 2 of the 3 can live w/o their precious pets who had til yesterday to remove offending occupants.