Looking into investing in real estate as rental properties

[Phokus]

Any advice on learning about this? I wanna make my money work for me.

How realistic is it to do this along with having a fulltime job?

 

[Miramonti]

Aside from wanting to be in a good real estate market, you're going to want to have a property(ies) near you because you're going to want to do as many repairs yourself as you can. You're also going to need cash on hand so that you can cover time unrented, or getting stiffed. I think a lot has to do with your ability to get good tenants as well. Its not a cakewalk renting properties, and sometimes can be a significant pia.

I don't have any rentals, but a friend does and while he's a handyman type person with houses, he's also totally extended in terms of time and money, and if he loses rent for a couple months on any one of 3 rentals, it could completely bury him financially.

 

[meltdown75]

There are 2 guys here that are landlords. They work full-time. I think it is all about finding good tenants and having low maintenance rental units. When you combine those things it takes a lot of the BS out of being a landlord. I think one of them used to rent to students because the rent $ was more but the issues were just too crazy especially with the male students.

 

[LS21]

what will you do when you cant find renters for 1 or 2 months? a, lets say,1500x2$ payment (in addition to YOUR current living expenses) is not easy to swallow. what happens when something major happens? what happens when your deadbeat renters short you out?

 

[Miramonti]

Another factor is being in a community that has local laws/regs landlord-friendly, such as generous late-fee ability, quick eviction upon default, and a favorable court judgment process doesn't hurt as well if an evicted tenant owes past rent. These first two don't aid in getting a good tenant, but 'hold them to the fire' better.

 

[Phokus]

Thanks for the advice, more is appreciated!

 

[Thump553]

Make friends with someone local who is a landlord (maybe your own landlord or a former landlord).

It's definately not for everyone. Far more is involved than opening the mail once a month to deposit the rent checks. The comment above about being able to do your own repairs is very important, otherwise expenses will probably eat you alive in short order.

Good luck finding a jurisdiction that is pro-landlord regarding evictions. In my area it takes a minimum of three months to evict a nonpayer, and that's if you start the process right away. OTOH, evictions are tough, emotionally and financially, for the landlord too. How would you like to throw out a woman with young kids in the winter because hubby took off?

The cliche is location, location, location are the three most important aspects of real estate. For a landlord, it's good tenants, good tenants, good tenants. One bad tenant will drive out the good ones almost overnight. Its a matter of luck, gut feeling and personal relations. Incidentally, race is pretty irrelevant in my experience. Back when I was a landlord, the best tenant I had was a single black mom, followed closely by a male gay couple.

Don't buy a rental property with the expectation that future appreciation will occur. If the numbers don't make current financial sense-ie, if your projected monthly expenses excees the anticipated monthly income, stay away.

Your income taxes will grow more complicated. If you have high taxable income being a landlord can help shelter your current income, but eventually it will catch up with you (probably when you sell and don't replace).

The people I've known who did best as landlords would form a partnership, buy an older 20-40 unit building in working class suburbs, hired onsite managers, etc. But be prepared to have to feed the business cash (especially early on) when shortfalls occur.

I'm not a landlord now, but I still represent a few. I have absolutely no desire to get back into that business. It's not for the fainthearted or foolhardy, but attracts plenty of each type.

 

[thomsbrain]

At least in CA, I've never seen how this worked out to be a more attractive investment than the stock market or flipping houses. Too many expenses, and the high property cost to rent ratio makes it difficult to cover mortgages with rent, let alone make a profit. That said, if you were going to do it, now would be a decent time to look into buying, since prices are falling and more people are choosing/being forced to rent right now.

 

[Glavinsolo]

It's definitely a rewarding investment, you do need to wear many hats (landlord, maintenance, salesman, cleaner). Having it close to where you live is ideal however doesn't work out for everyone. You need to be aware of comparable rental properties in the area, after you buy a property will you be able to price it right for people to want to rent rather than get an apartment and you still make a positive cash flow. Location for rentals is what makes them sexy and worth the premium.

Heavy IT areas are good for rental properties as it seems that 50% of IT jobs are contractors needing to live somewhere for 6 months-1year and then head on to something else.

 

[Alistar7]

Wow, so much knowledge on the real estate subject that I could share, shame you have been a dick to me on the forum.....

 

[richardycc]

1. buy a property that you can afford and charge more rent than your monthly expenses to keep this place, or at least breakeven.
2. screen/background check your potential renters, and pick the best one(s) out of all.
3. keep your fingers crossed everything will work out, and expect the unexpected.


its not rocket science.

 

[Descartes]

Originally posted by: richardycc
1. buy a property that you can afford and charge more rent than your monthly expenses to keep this place, or at least breakeven.
2. screen/background check your potential renters, and pick the best one(s) out of all.
3. keep your fingers crossed everything will work out, and expect the unexpected.


its not rocket science.

I think you could distill the basic premise of just about anything in 3 bullet points or less, but that doesn't make it any simpler. In truth, it's a lot more complicated than most people realize, and that's why so many people lose their arse.

 

[Xavier434]

I don't know much about this other than the following:

1. You will want a great lease which a proper lawyer gives you the "ok"
2. It can becomes exceedingly more difficult if you have crappy tenants
3. You will want a nest egg to fall back on just in case you go through a couple months of not being able to find a tenant. In fact, it's best to start with a good nest egg for several different reasons.
4. You will want to research your particular area a lot. I know that in certain parts of Florida right now the renters doing exactly what you want to do are having a hard time because too many people are leaving instead of buying/renting while the rest are just staying wherever they are living now.

 

[MasonLuke]

1. start with a four unit. Live in one, rent the other 3.
2. 4 units and under, you get a home loan to finance instead of a commercial loan.

the end

 

[txrandom]

If you buy this house in College Station, my buddies and I will rent from it. The guy who owns is about to have his twin daughters graduate and wants to sell it rather than rent.

 

[Phokus]

Originally posted by: Alistar7
Wow, so much knowledge on the real estate subject that I could share, shame you have been a dick to me on the forum.....

Just because i hate the steelers and their fans does not mean i'm a dick to you

 

[Phokus]

Thanks guys, i'm learning lots from you! And more would be appreciated!

 

[dmcowen674]

Originally posted by: Alistar7
Wow, so much knowledge on the real estate subject that I could share, shame you have been a dick to me on the forum.....

Zing :thumbsup:

 

[DrPizza]

It's a pain in the ass sometimes.
I believe it was last February when I made a comment to a coworker, "it's got new plumbing, a new roof, new electric, what could go wrong?"
Within 48 hours, the furnace died. Trip to the house to repair it. Hours wasted. 2 days later, it died again. 2nd shot at repair. 1 day later, it died again. As an emergency measure, purchased a ventless gas heater. Put in all new black pipe for the gas line, installed the heater. Much $$$ spent just to get them through a week until I could get a new furnace installed. Then, the new furnace.

ALL of the repairs, I was able to handle by myself. But, that meant about 2 months worth of rent out of pocket without warning.

Oh well, 1 month to go and it's a big tax write-off. Huge loss on the property last year.

(Note the 4 letter word there: "loss" If you're not prepared to lose money some years, you can expect that to happen. In the future, if the local economy keeps picking up, I'll be able to raise rent a bit; hopefully a little faster than taxes are going up. We're losing that race right now. Next year, if the year is perfect, rent = taxes + mortgage - equity gained. i.e. the amount of money out of my pocket will equal the equity I gain in the home.

 

[Epic Fail]

Don't forget to factor in the attorney's fee when you start eviction, it's easily 1k to start.