I've been thinking of getting into full time landlording

[Arkitech]

I've been kicking this idea around for awhile now, I've been reading up on landlording and whats involved. I'm thinking if I could find 2 or 3 10 unit buildings (or bigger) then I could live off the rents collected. Anyone out there have experience in this area?

 

[wyvrn]

I have two rental houses. They will be paid off in ~9 years from now. It's a great time if you're an investor because of the low interest rates. I make a small monthly profit now, but certainly nothing I could live on. Your first few years of real estate are not going to be profitable. There are down payments to make, then you have to fix up the properties to sell, and then you have the ongoing maintenance. But, you will be building equity which you can recapture by refinancing or selling. And when the properties are paid off, about 85% of the rental income will be profit (after you pay taxes, insurance, and maintenance). So if you want a good long-term income, real estate is a good way to do it. I also have a friend that recently quit her job at Delta after 20 years because she owns close to 30 properties and some of them are paid off, so the rental income > her previous salary. She could retire in about 5-7 years very well off if she wants to.

 

[FeathersMcGraw]

If you're not already independently wealthy and the buildings are cheap enough that you can buy 2 or 3 of them, I'm guessing they're not the sort of places that are going to draw big rents. Nor are its tenants likely going to be low-turnover people who will keep good maintenance habits.

 

[Ferocious]

A lot of work involved.

I own 5 rental properties yielding 7 units (3 single family homes and 2 duplexes). I actually plan to sell them over the next few years....as I want more free time.

With several 10 unit buildings....you'd be extremely busy unless you hired a full time helper.

In any case go with QUALITY units.....which will generally attract QUALITY tenants.

 

[BurnItDwn]

no expierience here ... But hopefully within the next 12 months I will own one or two rental buildings (probably duplexes or 3 flats)

If you havent already checked this site out .. you can learn a LOT from The Creative Investor REI forums

I'm currently still saving money to use towards a down payment, and HOPEFULLY my stock will go up by 20% by then (if not thats OK too since i'm not Depending on it for anything) , and hopefully my job will promote me and transfer me to an area with lowwer cost of living (either that or I would need to save more, maybe an additional year or two for the initial down payment) ... If all goes well ... I just may be successfull with REI

 

[Arkitech]

Originally posted by: FeathersMcGraw
If you're not already independently wealthy and the buildings are cheap enough that you can buy 2 or 3 of them, I'm guessing they're not the sort of places that are going to draw big rents. Nor are its tenants likely going to be low-turnover people who will keep good maintenance habits.

Thats the funny thing about my area, its possible to find properties that produce market rent for cheap. A lot of landlords mismanage their properties and either they lose them or desperately try to sell them. I'm very familiar with the areas that some of these buildings are in, so I guess that kinda gives me a greater advantage when looking for that deal. Also it appears that there are more foreclosures taking place now than it has been in years.

I guess my problem is not neccesarily being able to find good deals but its just making sure I don't make any crucial mistakes. My goal is to get a property management company to handle phone calls from tenants, repairs, screenings and rent collection. I would then write up building policies, leases, oversee tenant screenings, pay taxes and utilities and manage rent increases and late fees. I just wish I actually knew some people in the business to get a little more advice.

 

[wyvrn]

My advice would be to slow down and do a couple of small properties first. Give yourself time to learn the system and find quality tenants and help. Making a small mistake now could save you a lot of money later. If you just jump into real estate, you could set yourself up for a big fall.

 

[Arkitech]

Originally posted by: wyvrn
My advice would be to slow down and do a couple of small properties first. Give yourself time to learn the system and find quality tenants and help. Making a small mistake now could save you a lot of money later. If you just jump into real estate, you could set yourself up for a big fall.

I'm not exactly new to real estate, I've been doing pretty decent as an investor for a few years now. However landlording will be a new area of real estate for me. I think the prevailing attitude on landlording is to start slow and work up to bigger projects, normally I would agree with this type of approach. However I've been looking at landlording slightly different in that it seems like its possible to take a large building(s) and successfully earn a profit with minimum hassles. It seems like good management is essential but even more importantly it appears that "superior tenant selection and screening" and "thorough lease agreements" are what determines if a landlord will have a hard or easy time in dealing with tenants. Of course I don't have any actual experience to verify this but from what I've read in books and experiences from landlords those 2 things are really important. But as always like you mentioned caution is definitely needed.

 

[wyvrn]

My wife and I screened our tenants. We verified employement and rental history, plus we reserve the right to check credit in our agreements. We used a Texas apartment association lease agreement which seems rock solid. And so far (knock on wood), we haven't had a single problem. I do think this is the most important part of landlording.

 

[Heddis]

Originally posted by: Ferocious
In any case go with QUALITY units.....which will generally attract QUALITY tenants.

 

[mcveigh]

I own a duplex and check backgrounds, for all tenants who will be living there not just the lease signer, I check criminal and credit background

 

[Arkitech]

Originally posted by: mcveigh
I own a duplex and check backgrounds, for all tenants who will be living there not just the lease signer, I check criminal and credit background

interesting... how would a person go about doing a criminal background check? how much and how long does it take? are you able to find out what crime the person committed and when?

 

[caboob]

good advice here guys...this is something i've been thinking about doing myself now that my kids are growing up and i'll have more time on my hands.