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Anyone here rented before?Anyone here rented before?
Bob_sapp said: "I was considering renting for awhile. I have enough for a huge down payment on a condo, which I would've rented while living with family, paying off the mortgage with the rent. I then talked some friends, and heard the horror stories. Anyone here rent properties, or have past experience with it?"
Aligator said: "[QUOTE=Bob_sapp;61504]I was considering renting for awhile. I have enough for a huge down payment on a condo, which I would've rented while living with family, paying off the mortgage with the rent. I then talked some friends, and heard the horror stories. Anyone here rent properties, or have past experience with it?[/QUOTE]
Yeah, we've done it for years. Your plan will probably work. The plan that doesn't work is the one where the home owner (or condo owner) becomes filthy rich by renting out properties.
But even that is possible if the will is strong and the plan sound.
You should isten to friends who had a good plan in the first place and have first hand experience."
AlfredSokol said: "Bone up on the law. Renter's can wreck a place in no time and you get stuck with the bills."
Airelon said: "Don't reason with them, don't wait to see how a renter 'turns out' if they are late with the rent. I have two friends that rents out.
The one friend is very successful, and has properties all over the county. First time the rent is late, strike one, and they wait 10 days. Second time the rent is late, the eviction process is started. Go with your gut, and when your gut is wrong - cut your losses immediately. Just like trading.
The second friend never got beyond their first property. They never brushed up, as Alfred says, on rental law. They will try and reason with a known crack addict, and 18 year old kids. They will wait for 6 months before they even [i]start[/i] the eviction process."
ratAphooey said: "Shoot first and ask questions later in other words...hehe"
Aligator said: "It is not unusual for me to disagree, and I find myself in sharp disagreement with a lot of the comments here.
I forgive rent sometimes. Sometimes.
I had a good rentor who lost her job so we reduced her rent until she got back on her feet. She stayed there 6 - 8 years. Then she got married and moved.
I say: Accept the fact - and it is a fact - that you will not get all your rent most years. Someone will move, something will happen, etc., etc. But is it really wise to throw out an otherwise good rentor?.....No. Not always.
I say: Form a relationship with your tenants; they are people, too. And forget this nonsense about "Yeah, but this is business, so I gotta be tough". If you're smart you won't need to be tough nearly as often.
But when time comes to evict use every portion of the law that is in your favor. I intimidated one couple out of the house in one day a few years back.
(I phonied up an official looking document, nailed it to the front door, took the disconnect out of the a/c unit, put it in my pocket and drove away. They never knew that I did it, but they did know I wanted them out and it was August.)
If you [I]have[/I] to have all your rent every month you are in the wrong business.....BTW, this year (2006) we collected every bit of it."
ryan07 said: "No i have rent thats why i take loan and buy my own home , now i have also given all the emi to the bank.....:flipoff:"
DStewart said: "The first mistake investors in the rental business make is not realizing that they are investing in a business which requires them to actually manage. It is not "I'll just rent the unit out and sit back and collect monthly cash flow".
In actuality, the majority of single-family rental investors have a NEGATIVE cash flow while holding the property.
Why?
Lack of management. You have to physically become involved in the property and learn how to properly become a property manager (hire a management service you say? Hogwash. Never met another prosperous landlord that has used one).
On a side note about collecting late rents or getting people out: Hire a county constable to serve your notices. When somebody shows up in an official uniform they tend to heed the notice a little better and they usually don't start arguments or fights.
Also, be diligent about researching your applicants BEFORE you rent to them. Background and credit checks, actually calling the place they claim to work at, etc..
Needless to say, there is a huge amount of information you NEED to know about landlording before you buy your first property. So much that I couldn't even begin to fit it all in a post on a web forum (although, I have been throwing around the idea of writing a book)."
pranith said: "Yes, I have rented for 15 years and sick of paying the rent and I buyed a home with loan and currently paying emi's. If your desire is good and strong then go to own a house but depends on your needs go to buy a lome."
lil dickie said: "Rent isnt that bad of a deal. at least you arent responsible for repairs. i dont mind renting."
Priya Gokhle said: "but if you take loan and then pay emi at least you will be having a house to say your own after few(20!!)years.... do not put this down for being scared of repaires
-Priya"
AlfredSokol said: "Tell you one thing, owning your own home can definitely get expensive when it's time for any major repairs.
At times liket that you wish you had rented!"
Heather said: "Tenants can be a real pain if you don't know who you're renting to. My grandpa used to be a "landlord" and a couple of tenants left the house a disaster. No respect whatsoever.
Not saying it isn't worth doing, but just be sure you don't get someone like he did, or you'll have a lot of work on your hands."
sr106 said: "i have rented for 5 years, still paying the rent is so much, the house owner is increased the rent for one year.....
then i will decide to buy a new home...
i will buy a home with loan...."
tomtat1 said: "I prefer lease-Purchase agreements to the typical Landlord-Tenant relationship. I have spelled out my approach in the “How do we invest now” sting at this site. During the financing mania it was very hard to find people wanting to do this as the banks would lend to anyone. But now there are plenty of candidates around. While technically you still own the property and they are the tenant, their option to buy changes the dynamic dramatically. Screen your tenants thoroughly I do criminal background as well as credit checks. I do very few deals and am very picky about who my tenant is. I have any where from 3-5 properties at any given time, and I don’t spend much time at all managing the properties. The reason is that the tenant is contractually responsible for maintenance, and they feel the property is theirs so they tend to treat it better. The beauty of this strategy is that you know in most scenarios what your holding period and expected gain is going to be on a property before you ever buy it (because it is written into the contract they sign). And if something goes wrong, you have their down payment plus whatever price reductions you negotiated when purchasing the house as a safety net against losses.
Also you can move up the food chain a little further in both the properties you purchase and the tenants you deal with. I play in the 150K to 250K range for the houses I purchase, and target young professionals for tenants. I particularly like medical professionals (Nurses, X-Ray Techs ect.) because health care is the fastest growing area in the economy right now."
ratAphooey said: "With 3 to 5 properties at a given time I assume you pay a lot for property taxes and maintenance?"
tomtat1 said: "[QUOTE=ratAphooey;68988]With 3 to 5 properties at a given time I assume you pay a lot for property taxes and maintenance?[/QUOTE]
For Taxes and insurance, I write the checks, but the tenant pays the money. It’s all in the original contract they sign (just like an escrow with a mortgage). For maintenance I expect them to maintain the property and I put quarterly inspections into the contract. If large maintenance issues occur I work with the tenant to help them out. I have rewritten several agreements to include financing major repairs as it is in my best interest to keep my tenants above water and my properties maintained. The tenant agrees to pay maintenance and taxes because if they follow though with everything promised on the contract, they can buy at a price agreed upon today. In there eyes, they are buying the house, you are providing the bridge financing to get them into the house today at today’s prices even though they do not qualify for the loan because of bad credit. The negative to this strategy is that there is limited upside in markets that are going strait up."
AlfredSokol said: "How many hours per week do you end up working on these investments? It sounds like you are spending at least some hours interacting with the clients."
tomtat1 said: "[QUOTE=AlfredSokol;69148]How many hours per week do you end up working on these investments? It sounds like you are spending at least some hours interacting with the clients.[/QUOTE]
I spend a lot of time picking the tenants and negotiating the deals on the houses to begin with, but once this is done you can put it on cruise control and not spend much time at all. Some of my tenants are actually friends so its hard to say how much time is spent visiting as opposed to working when I visit the properties. I put a right to inspect every quarter in the contract, but rarely go that often. I just want the right too in case issues do come up that need to be monitored. I would say 1 hour per week per property is a good estimate (about what Jim Cramer recommends spending to monitor a stock you own)."
KDS83 said: "I currently rent out a two family house in upstate NY. I have owned the property for just under 1 year, but I already have one horror story:
One of my tenants had a boyfriend/baby's father living with her who wasn't on the lease. He got arrested for selling drugs to an undercover cop while on my property. The cops ended up raiding the house and found crack and marijuana in the house. Needless to say I had those tenants evicted. I mean, how was she going to pay the rent with her cash-cow in jail? Anyway, after the raid, the city inspectors came in and found a few violations that needed to taken care of ASAP. So for the next 3 months I had to have repairs done, and I wasn't able to collect a rent check during that time. But luckily, I had new tenants move in within a month (while the repairs were being done) so I could start collecting 2 rent checks again. I figure that the property should start making me money again next month.
Since I live in NYC and the property is upstate, I use a management company to handle everything from placing tenants and collecting rent, to doing any necessary repairs and inspections with the city. They are my savior. To the poster who said not to use a manager, I would have to disagree (at least in my situation, because the property is so far away). For only 10% of the rent collected, I get to literally sit back and collect checks. I get letters from the city when something is wrong, and I just forward it to my management and they take care of everything. That 10% is well worth it, in my opinion.
Real Estate is a great way to invest, if you know what you're doing. I plan to slowly build my real estate portfolio into a small business in the future. Anybody here have an LLC or other business structure set up to hold their investment properties? I have the paperwork sitting on my coffee table. I just need to send it in. I was just curious of other's situations."
Kloewer said: "KDS83 - Couldn't agree more about professional property management. I've just purchased my second rental property. Both are more than an hour's drive from me, so having someone handle showings and repairs takes a lot of the hassle out of being a landlord without taking too much of the revenue.
I haven't organized as a formal company at this point. I really don't see the reason. As investment properties, they already enjoy tax advantages. As for liability, I've got that covered on the homeowner's insurance, and I've also got an umbrella insurance policy to protect me against lawsuits that go beyond my normal homeowner's insurance coverage.
If you know of some other advantage to incorporating, do share. I may be overlooking something."
KDS83 said: "I was looking to form an LLC for liability protection if any lawsuits were to come up. I want to make sure my primary residence and personal assets will never be in danger. I don't think my insurance policy covers me for that."
AlfredSokol said: "[QUOTE=KDS83;71753]I was looking to form an LLC for liability protection if any lawsuits were to come up. I want to make sure my primary residence and personal assets will never be in danger. I don't think my insurance policy covers me for that.[/QUOTE]
You have the right idea. Check with a savvy attorney to make sure your bases are covered."
Kloewer said: "[QUOTE=KDS83;71753]I was looking to form an LLC for liability protection if any lawsuits were to come up. I want to make sure my primary residence and personal assets will never be in danger. I don't think my insurance policy covers me for that.[/QUOTE]
For small-timers like us, an "Umbrella" policy should provide this kind of protection. My umbrella provides $1 million of liability coverage for $146 per year. And that's beyond the $350,000 of protection already provided by each of my homeowners policies.
If you get to the point where you're dealing with many rental properties, you may need more liability protection in the form of incorporation. But I can't envision a situation where more than a couple million dollars worth of umbrella insurance would be necessary if you've only got a few houses. But if you like doing extra paperwork, incorporating is the way to go."
jolllyroger said: "You buy for $100,000 and hold 10 years your property should be worth $200,000
Your tenants pay all the expenses including your taxes, insurance, mortgage and repairs.
You have effectively used other peoples money.
If a tenant is late with rent you deliver 3 day pay or quit. It's amazing what people will
do when it's required of them, if it isn't they will procrastinate.If you give an inch they
will take a mile. If they don't pay in 3 days you start eviction immediately.
Hire an attorney that does a couple hundred evictions or more per year.
Come by every 3 months to inspect the interior for needed repairs and to check the smoke alarms.
Put this into the rental agreement with a date so you do not have to give 24 hours notice to enter.
This gives you the chance to see how they are caring for the house.
If they tear up the house you get a bid from a couple contractors have your attorney get a judgement
against the tenants. Even if your only getting paid a couple hundred a month your getting something.
If you get a judgement you get 10 percent interest yearly as well until paid in full.
Vacancies are part of the game.
As far as creating phony docs that's a good way to end up in jail for fraud or be sued for all you have.
I do not recomend that. Intimidation will get you in trouble.
Try offering tenants what you'd pay an attorney for eviction. Offer hem cash to be out ibn a week to 10 days.
If they move out pay them. I prefer to stand on priciple. I do not pay people to get out, I use the law.
Dstewart your right about checking tenants before renting. An ounce of prevention is worth a pound of cure.
The best bet is to cover your losses going in. The best way to do this is with a lease option.
My personal preference is to flip properties because your money will grow far faster.
400 percent, or more, annual rate of return is easy to get in the current market."
jolllyroger said: "Buy and hold....
You buy for $100,000 and hold 10 years your property should be worth $200,000
Your tenants pay all the expenses including your taxes, insurance, mortgage and repairs.
You have effectively used other peoples money.
If a tenant is late with rent you deliver 3 day pay or quit. It's amazing what people will
do when it's required of them, if it isn't they will procrastinate.If you give an inch they
will take a mile. If they don't pay in 3 days you start eviction immediately.
Hire an attorney that does a couple hundred evictions or more per year.
Come by every 3 months to inspect the interior for needed repairs and to check the smoke alarms.
Put this into the rental agreement with a date so you do not have to give 24 hours notice to enter.
This gives you the chance to see how they are caring for the house.
If they tear up the house you get a bid from a couple contractors have your attorney get a judgement
against the tenants. Even if your only getting paid a couple hundred a month your getting something.
If you get a judgement you get 10 percent interest yearly as well until paid in full.
Vacancies are part of the game.
As far as creating phony docs that's a good way to end up in jail for fraud or be sued for all you have.
I do not recomend that. Intimidation will get you in trouble.
Try offering tenants what you'd pay an attorney for eviction. Offer hem cash to be out ibn a week to 10 days.
If they move out pay them. I prefer to stand on priciple. I do not pay people to get out, I use the law.
Dstewart your right about checking tenants before renting. An ounce of prevention is worth a pound of cure.
The best bet is to cover your losses going in. The best way to do this is with a lease option.
My personal preference is to flip properties because your money will grow far faster.
400 percent, or more, annual rate of return is easy to get in the current market."
jolllyroger said: "oops it didnt show then boom there it is twice"