Slumlords chime in!

[HydroSqueegee]

It just occured to me, since i no longer have a mortgage (but still paying cash each month to an estate for my house, long story), I could possibly get into the renting game. Before i sold my old place, I rented it out to a couple friends, but it wasnt enough to cover the house payment and taxes, much less save up some money for repairs and whatnot. So it was going to be a money pit. Friends moved on and i sold the place. I like the idea of being able to have a little more income, especially when i retire, the properties are paid off and all that cash goes into my pocket. I would assume single family homes would be tougher to make money on, but a duplex may be the place to start. We have a large college here too, so i may be able to cater to that crowd.

Help me understand what to expect, what to look for, what not to do, experiences, all of it! Hell, talk me out of this hairbrained scheme!

 

[highland145]

PITA. Stay away from section 8.

A lot depends on your personality. New carpet/paint/flooring....3 months later new carpet/paint/flooring after the douche skipped out. Lost my ass on that tenant. Screening/references doesn't guarantee a good tenant.

Use a good management company. Mine sucked balls.

 

[ichy]

The worst tenants generally have the potential to be the most profitable. If you buy a relatively nice property & rent it out to professionals who care about things like their credit score & criminal record then you're much less likely (though not guaranteed) to have to deal with hassles but your profits will be fairly slim. There's a lot more money to be made in buying dirt-cheap homes in the ghetto but I don't need to tell you how those have the potential to be a PITA. Renting houses to college students will have fewer potential issues than renting to hoodrats or white trash, but don't expect them to take good care of your properties.

 

[edro]

I am on year 2 of my first rental.
I consider myself very lucky, as I have not had any problems so far.

We were picky with the renters. They are sisters and have always paid on time.
I recommend you be picky with renters, don't allow pets, make sure they aren't smokers, run a credit check, etc.
Your rental world can come crashing down with 1 bad renter.
I have friends who have had multiple bad renters and it can really wear you down.
Their advise is to start eviction after they are 1 mo. behind on rent.
DO NOT FALL for their pity stories.

1 guy allowed a single mom to become 4-5 months behind and she was paying weekly to satisfy him. When she avoided him for 2 weeks in a row, he entered the house unannounced and she was GONE. Everything was gone.
Her pets/kids had completely destroyed the house and he had to fix multiple wall issues and replace all carpet and flooring...and he had lost 5 month's worth of rent.

You are allowed to discriminate against renters. (just not because of age, sex, religion, race, etc)

 

[highland145]

The worst tenants generally have the potential to be the most profitable. If you buy a relatively nice property & rent it out to professionals who care about things like their credit score & criminal record then you're much less likely (though not guaranteed) to have to deal with hassles but your profits will be fairly slim. There's a lot more money to be made in buying dirt-cheap homes in the ghetto but I don't need to tell you how those have the potential to be a PITA. Renting houses to college students will have fewer potential issues than renting to hoodrats or white trash, but don't expect them to take good care of your properties.

True. Bought 2 duplexes for $35K each. With everyone paying, income was 2X my payments.

@edro: Start evictions after 10 days late on the rent.

 

[ichy]

Oh, research your local lead paint laws. Frivolous lead paint suits can wipe you out.

 

[SpatiallyAware]

It's a pain and IMO not worth it unless you have enough properties to basically do it full-time.

 

[highland145]

Had a visitor of a tenant try and sue me because she stepped in a hole that I didn't know about. Broke her ankle. The lawyer, in addition to the ankle, put carpel tunnel as an injury. WTH?

Turns out the hole was on the neighbors property.:biggrin:

 

[ichy]

Ghetto tenants can be some of the most litigious as well which is something to keep in mind.

 

[ichy]

I had a friend who owned a number of properties in less than stellar areas of Baltimore. The worst thing that ever happened at one of his houses was this:

http://en.wikipedia.org/wiki/Dawson_murder_case

Obviously it's an extreme example, but go into this with eyes open.

Edit: Here's a non-wiki link about that case.

http://articles.baltimoresun.com/20...068_1_angela-dawson-written-statement-colbert

 

[dandruff]

PITA. Stay away from section 8.

Love Section 8.

all you need to know and more : http://www.fatwallet.com/forums/finance/59627/

hth!

 

[Scarpozzi]

My first house had an inlaw suite that was on the same power/water/cable of the main house. It had a separate entrance and I was able to rack up a solid $550 a month. I added wifi and marketed it to college students (typically single females paying with daddy's money...it was strategic selection knowing they wouldn't default on rent and no they weren't really attractive). The only downside was that despite 6month and 1 year leases, I had 3 tenants move out with only 2 days notice. The upside was that with my location and the condition of the place, the longest it went vacant was 3 days...just enough time to get the carpets/bathroom thoroughly cleaned between tenants. The only maintenance issues I had was with the first tenants...I had to install a vent fan for the range, fix a major leak under the concrete shower pan, and fix some electrical outlets that were faulty. After the initial fixes, everything was set for the future tenants and I had no more major issues for 4 years.

My last tenants before I sold the property were a married couple that I had to give 30 days notice to leave the apartment. It made me sad asking them to leave and putting them in a spot...

My advice is to be selective of who you pick, keep a close watch on the property every 2 weeks and do inspections of the property every few months. Tell them up front that you'd like to schedule walkthroughs to address any maintenance issues ever other month. Maybe provide them with light bulbs or if the property has a yard mow it for them and include those costs in the rent....just to keep an eye on your property. You don't want to be too nosey or make them feel uncomfortable, but you own the place... Definitely plan to look for leaks in the roof and the pipes. Tenants often don't report minor problems and they can eventually become major ones that can cost much more to repair.

 

[highland145]

Love Section 8.

all you need to know and more : http://www.fatwallet.com/forums/finance/59627/

hth!

Meant the quality of the tenants. The $$ is good until the yearly inspection.

 

[IceBergSLiM]

Talk to a lawyer about the eviction process. Know it inside and out. Some states can let degenerates stay rent free for months.

 

[JJ650]

The worst tenants generally have the potential to be the most profitable. If you buy a relatively nice property & rent it out to professionals who care about things like their credit score & criminal record then you're much less likely (though not guaranteed) to have to deal with hassles but your profits will be fairly slim. There's a lot more money to be made in buying dirt-cheap homes in the ghetto but I don't need to tell you how those have the potential to be a PITA. Renting houses to college students will have fewer potential issues than renting to hoodrats or white trash, but don't expect them to take good care of your properties.

Our worsrt homes rented out from the 500+ listings we have:

College Kids (no money, don't give a CRAP about the place, loud parties = police)
Section 8 (See above minus parties) - No longer deal with Section 8. No profit from it.



Best homes are the mid to lower middle class homes. The really upscale homes just don't rent well and usually the owners are a PITA to deal with. If you can affored the monthly rent on those, you might as well just buy.

Property management kinda sucks. Everyone is always threatening to sue you.

 

[M0oG0oGaiPan]

Stay away from college kids. Exactly as JJ650 said. Not all are like that but it's a big possibility if it's near a school. You should be looking to rent to working professionals.

 

[Leymenaide]

Stay away from Doctors and lawyers. They both hate to pay for anything.
I have a M.D. renting from me. I never know when I will get paid. was down 10 k for the Holidays.

 

[ichy]

Best homes are the mid to lower middle class homes. The really upscale homes just don't rent well and usually the owners are a PITA to deal with. If you can affored the monthly rent on those, you might as well just buy.

Property management kinda sucks. Everyone is always threatening to sue you.

I live in a city where a lot of young professionals rent for their first few years after college, then move to the suburbs when they buy a house & have kids. That means there's a relatively large number of moderately affluent renters.

The absolute worst potential tenants would probably be white trash tweakers who set up a meth lab & turn your house into a hazmat site. I think that home grown labs are becoming less common but if you're renting cheap houses in a rural or semi-rural area it's something to remember. At least if your house is in the hood and someone turns it into a crackhouse you just have to evict the crackheads and clean out the filth.

Landlords who rent to illegals probably play a lot of games with getting paid in cash & not declaring it all to the IRS, but I don't need to describe the potential consequences of getting caught doing that.

 

[Slew Foot]

Stay away from Doctors and lawyers. They both hate to pay for anything.
I have a M.D. renting from me. I never know when I will get paid. was down 10 k for the Holidays.

That's because you're in France. Doctors might as well be garbage men.

 

[JJ650]

That's because you're in France. Doctors might as well be garbage men.

Doctors also tend to have the worst credit. Right after that are the preachers. Once those 2 get into financial woes you might as well get ready for the inevitable eviction.

 

[highland145]

Doctors also tend to have the worst credit. Right after that are the preachers. Once those 2 get into financial woes you might as well get ready for the inevitable eviction.

Preachers and police are on my "no lend" list.

 

[Drako]

Ex-slum lord here. I got tired of people destroying my property, and dealing with dead beats. :biggrin:

 

[JJ650]

Also, be wary of anyone willing to pony up cash for the next 6 months to year of renting.
We have paid dearly when we do this.
Sure you get the money up front and there are no issues during the time they rent, but once they are gone the issues show up.
They may leave a month earlier than what the rental agreement states. Next thing you know, you may (or may not) get the keys mailed to you, do an inspection and discover the horrible truth.

Kicked in walls, dog/cat/human shit everywhere. Bug infestations, missing hardware (light fixtures, etc), cabinetry ripped out. The list goes on.
Since they left a month ago without informing, it is next to impossible to find them and will cost a good bit. The owners are informed and go nuclear (rightfully so). It ends up being a HUGE fiasco.
Everyone goes thru a credit check and 9 times out of ten if they pony-up all of the cash right from the start...they have bad credit, evictions, criminal records a mile long and/or a combination of all.