Teach me on being a slumlord

Have an opportunity to maybe purchase a double complex. Each side has 3 bed 1.5 bath and one car garage. New roof and furnaces in last 3 years. Ill get more details. Already have good tenants and rent is paid on time. Are these good investments?

 

It's all about vetting your tenants. Credit, background, work history, rental history. Don't rent to shit bags and you should have a good experience.

 

Depends on why you want them.
If you want cash flow: Does rent exceed your potential mortgage? If so, by how much?
If you want appreciation: Are you willing to break even & bank on the appreciation?

Do you have enough money to cover the full mortgage (for both places) for up to 6 months if they both vacate?

 

Current slumlord

Downtime is the most expensive part of owning a rental. If you keep your rent low and get good tenants that plan on staying a long time its much better than gouging people and rinsing and reusing tenants every 12 months. Give them a reason to stay with slightly lower than market rent.

 

Step 1 - Buy good properties. Buy a dump and you'll have lots of problems. Buy a quality unit and you're good.

Step 2 - Get good tenants. I personally use Zillow applications. It cost the potential renter 25 bucks, but you can see all their history. Do reference checks and employment checks.

Step 3 - Don't be absentee. I drive by my rentals all the time just to see what's going on. I treat them all with bug spray every 90 days so I can get a closer look around the properties.

Step 4 - Use an online payment service to collect rent....so much easier than dealing with checks and/or cash payments.

Step 5 - Don't blow the money every month....stash it away in an account that you have limited access to so you have money for repairs down the road.

 

My tattoo gal has multiple rentals.
She's put each into its own LLC.
That way there's a P&L for each property, and each property has its own account from where rent is collected and bills paid from.

@ClemsonsR6 hit the marks while posting from a hipster bar

 

Are you purchasing with cash or pulling a mortgage for it?

 

I'm not looking yet, but might end up being in a position to rent this townhouse and keep it if we move in a few years.

What are you guys asking or doing with employment checks? References I get and credit score I get, but calling and asking about an employee to the business? People answer those questions to strangers? How do you go about getting an idea of rental history or their experience as being a good/bad renter from a previous rental business or owner?

Also what type of net income % or amount are you guys generally comfortable with getting every month over your own mortgage given the potential events of fixing stuff or having a few months unrented from time to time? I feel like $400 a month over would be fine (and about what I could rent it for), but no actual experience with it.

 

Always have the capability to be or to have a goon to collect rent.
Of course this applies more to tougher neighborhoods.

 

Not to get dungeony but how is it collecting from folks during this Covid stuff?

 

Pretty simple on the employer - I am calling from XYZ Property Management, we have an applicant by the name of susan jones who list you as a current employer. Can you verify that Ms Jones is currently in good standing employment with your organization. Yes/NO. Wonderful, her application says she has been employed with you for specified time period, is that correct? Thank you!

On the previous places of residency - I am calling from XYZ Property Mgmt, we have an applicant who list you as a previous place of residence. Can you confirm Mr. Jones rented from you between these dates? Is Ms. Jone's currently able to come back and rent from you with a new lease beginning tomorrow?
(They can't tell you if they owe back rent or damages, etc. But asking if they are able to come back and rent tomorrow will tell you if they were a good tenant or not especially if the answer is NO.)

Income I look for 2.5X monthly rent unless there is a unique situation. One of my tenants and her live in boyfriend are both in school, so I'm guessing rent is from student loans or mom/dad. You gotta be smart and use your gut on it.

 

I use an online payment service that sends reminder e-mails. The tenants can also set-up auto-draft. I had a few tenants that came in a few days late but I think that was more personal stuff going on vs. covid.

Again, select quality tenants and you don't have to worry about it as much.

 

Tenants are KEY. When I left GA for the great white frozen north 3.5 years ago and rented my house...it was the only thing about the whole process i was worried about. Especially being 700mi away.

I have a couple in their early-mid 50s. He works she has disability income. They were late once and called me about it.....I plan to let them stay until they want to move then I will probably sell it. They dont complain, gripe, etc and they pay me. This has allowed to keep a house in a hot ATL metro market and gain even more equity.

If i had to deal with crappy, gripey, problematic tenants I would have sold years ago...

 

Step 6 - No animals of any kind. Period.

Fish - Bird - Hamster - Snake - Cat - Dog - Goat - I don't give a shit.....no animals.

Ironically enough, looking at adding another property today and the owner has been absent for nearly 7 years. Evidence of a large dog in the house (hole chewed in patio door frame / claw marks all over the front door / chewed baseboards / hole in carpet upstairs) and he is absolutely clueless on the damage and is like...it only needs a coat of paint.

 

My mom has 4 houses she rents. These are very nice houses that she collects in the $2500 per month range for. Mom also has stage 4 liver cancer so I'm taking care of them for her. She had one tenant that lost his job in March and hadn't paid rent since November. There wasn't a thing we could do but I kept going over anyway just to make sure he hadn't forgot. I though for sure she was going to get screwed and we'd have to take him to court blah, blah but damned if he didn't cut her a check for $22,500.

Funny twist of fate...my daughter went to school with this tenants daughter (15 years ago). This guy was a VP at some financial consulting firm and was your typical douchebag, my shit don't stink kind of prick and his daughter treated mine horribly. Two years ago something happened, he lost his job and his wife left him. So he rented from my mom, lost his next job and what I described in the first paragraph is what he was reduced to. I took great pleasure hounding him for the money. And he didn't pay her off from some new big time job, instead his mother passed in November and he had to use the inheritance to pay us off. He's gone s soon as his lease is up.

 

Thanks man. Easy enough. 2.5X as in... monthly rent at 2.5 times what you're paying for the mortgage? Haha if so well then I and pretty much everyone else around here is fucked. Geezus.

 

you want the potential tenant/s to have 2.5x the rent as monthly income.. i go 3x but before taxes taken out, so about same thing. Rent is $1000, income needs to be $3,000 per month pre-tax.
36 units and have had very little issue with covid stuff, but i have quality tenants for most part. location has a lot to do with this, all are close to downtown Tampa, and all 1 bedroom units. (i prefer this vs having a bunch of people living there).

 

What melk said.

 

this probably is the worst time to be a landlord because of the no evictions, so just be aware of that risk too

 

" Melka Towers ".