Hi All
Started to consider purchasing a single family home for a long term investment. The price is right and the area is growing, lots of working class family's, good schools etc. Is the hassle of finding good tenants and all the legal bull involved with being a landlord worth the time and effort? Some thoughts please.

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joe moon/95Benzman

You need a certain emotional toughness,the ability to do your own home repairs which include a knowledge of plumbing{including a good working knowledge of heating systems},basic electrical and carpentry.

Until the blessed day when you find a good tenant it can be a bugbear but if you have a decent rent roll the advantages outweigh the annoyances,remember most tenants could care less about both appearance and taking care of things so you'll have to be on top of it,additionally expect to be called for the most trifling problems since most tenants greatly resent having to pay your price in the first place.

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I've owned rental houses for 23 years, getting up to a maximum of 12.

I've tapered down a bit in the last few years. Burnout finally settled in.

You definitely need to have a very strong personality and not be deterred by the multitude of issues that you face with this business. And, in reality, that is exactly what it is. A separate business.

The difficulties of finding a proper tenant that will pay the rent on time and not damage the premises are not insignificant. You need to have patience to reject 90% of the people who walk through the door.

As far as maintenance goes, I must say that I am a failure at managing the business because I did (do) all the maintenance and repairs with my own two hands. Sometimes I get a helper, if the job is a large one. But, most of the time, I do it all myself. This clearly leaves no time for other activities when the house count gets up above four or so.

The alternative, which I was never able to do, was to hire people to get the jobs done at a reasonable price. My problem is that any "handyman" who could do the job at a reasonable price would do it in a way that ensures that it must be redone in a couple of years. There is not sufficient knowledge and skill to do it correctly the first time. If you hire a proper professional, the costs are prohibitive.

Houses are like cars in many ways. You can drive them for years and defer all maintenance and rust issues. But, there will be a time to pay the piper and then you will need to bend way over. Unfortunately, it's easy to do with a house because it's not in your face every day.

The flip side of the equation is the return on the investment. Most of the houses that I own have returned 6% per year, compounded over 20 years. This is strictly due to the increase in real estate values. Naturally, I only used 10% of my own money when I initially purchased the house, so the 6% return was thereby increased significantly due to leverage.

The business is not for the faint of heart, and, truthfully, I tired of it now. But, the return is definitely there if you go 20 years with them.

Check with a lawyer who knows rental law. Some areas make evicting a tenant VERY difficult, even if that tenant hasn't paid rent in months. Not the kind of thing I could put up with!

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1992 300D 2.5T
1980 Euro 300D (sadly, sold)
1998 Jetta TDI, 132K "Rudy"
1974 Triumph TR6
1999 Saab 9-5 wagon (wife's)

This can also be very true.

I failed to mention that you must become skilled in the evicition process so that you can do it without an attorney.

I'm able to evict a tenant within 60 days from the time I make the decision to start the process. An attorney would cost $500. and it would take him a minimum of 120 days.

My focus is on the increase in house/ land value. The rent just covers the cost of ownership while you hope the money is made in the longterm picture. So, yes, keeping the tenant happy and paying is the challenge, but I'd certainly not buy a house for any reason other than the hope that it a) would turn into a shopping center, b) is sitting in the middle of a chunk of land that has good value, or c) is in a real perfect area for you to deal with on a daily basis. Good luck!

I am in part of an investment group which owns two apartment buildings here in the Southern California area and in in three months of ownership one of the building's value has gone up 15%!

I am also a go between for the investor management and the property managment for repair decisions and coordinating /evaluating repairs and refurbishment to the apartments.

Brian, that's funny you mention reasonably priced handymen. Since I am new to this field I have contracted some of my friends who work in construction and so I got them a shoe in to do the repairs and updates to the units at a fair price. We're going to check the buildings out today so they can generate a bid for the work. Awhile ago we got charged by another emergency repair contractor for $40 to remove and replace a towel bar We're all in this project together and have to impress a handful of people so I hope it all works out

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1974 240D 3.0L 4(M) - 250K -OM617.910 + 300D FW + Rajay turbo power!
1977 6.9 3(A) - 84k

..........in my dreams.........

This has been the single most frustrating part of the business. To get someone to do a towel bar or a minor issue is possible. But, try and get someone to repair a faucet or fix a toilet, or replace electrical switches and outlets, or change a ceiling light, or paint a room without getting paint all over the floors, or put down some new linoleum.

If you can get someone, you worry about the consequences if they screw it up. With plumbing and electrical, there is significant risk to both person and property. In today's world, you simply can't take that risk.

I have dealt with all of the above. Hiring a management company is the most pain-free way to be a landlord. Mine charges 8% of monthly rental income. But even so, they will not guarantee a steady reliable tenant. If they need to find new occupants, they charge a big chunk of the first month's rent for their services. Being involved in the tenant selection process will improve your chances. A mistake in that department could have dire consequences. Bad tenants can be a true nightmare.

Many people have been lured into the landlord business, and I was one of them. In retrospect, if it was such a great business, you would see more big companies snapping up houses and renting them out. As an individual operator, you need to be up on all the laws involving evictions or pay big bucks to have someone do the dirty work. This involves scheduling the sheriff, locksmith, and the the movers to haul everything out to the street, all at the same time.

I'm not implying that you will have such problems, but if you are not prepared, it can bite you pretty bad. As others have said, it requires a strong stomach, and the ability to look at a house as just another business asset, and not getting personally involved in your tenants affairs.

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1985 380SE Blue/Blue - 230,000 miles
2012 Subaru Forester 5-speed
2005 Toyota Sienna
2004 Chrysler Sebring convertible
1999 Toyota Tacoma

I'm not implying that you will have such problems, I'm telling you flat out that you will have such problems. Maybe not today, and maybe not tomorrow, but, unless you have the vision of a saint, you can't pick tenants with 100% accuracy.

The pressure to get a vacant unit filled causes you to accept a tenant that would be considered marginal. They are the one's with the deposit in hand and there is nobody else. Do you turn them down and let it remain empty? It's a tough call.

The resident manager who is in charge of screening and selecting tenants had to make a call like that and as a result since then the guy has delinquent and or bounced rent checks due to two family illnesses, paycheck bounce, sister's pets are sick, carpal tunnel, capillary action wasn't working in his check writing pen etc. We've issued him a letter telling him to get his act together or we're booting him. Hopefully it won't come to that.

The resident manager does a great job though. She takes pride in making sure the tenants are happy and keeping things calm. She and her husband went on vacation and in the time she was gone her replacement called me and said "The parking lot is covered in 6" of water and about to flood the tenants cars and rising fast...and the sump pump is kaput". At that point sump pumps were being sold at $400 apiece if you could find one. Going to stock up and sell em off next year. We even used a tenant's S10 pickup lined with a tarp and filled it with garbage cans water. It worked but it's quite funny when you fill a 8ft bed with water accelerate and then mash on the brakes That was one long stressful yet fun day. A lot of creative wiring and aquarium powerheads and outdoor pond pumps saved the day. The 240D provided the lighting since we had to shut off some of the grounds lighting due to fear of electrical shock. Optima battery ran the headlights for 4 hours so thumbs up to them!

As for finding good help, that is an important factor. We use only people from references. Fortunately my friends know how to play the game. You can't tick off the people who can land you more work and know you must go the extra mile to impress people. People who are trying to make a quick buck obviously don't do this so they won't mask the walls properly and paint the lightswitches and stupid things like that. There is a lot of risk because errors run into the thousands and the investors.....umm don't like that

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1974 240D 3.0L 4(M) - 250K -OM617.910 + 300D FW + Rajay turbo power!
1977 6.9 3(A) - 84k

I have one rental property and it has been tough. It seemed like a great idea before I had a tenant in it. I bought the house next door way below market a few years ago and it sat empty for a year while I put in a new fireplace and painted and basically cleaned up the basement. Pretty nice house really, but all the houses in my 'hood are old and have plaster walls and stuff-this one is on the end of the street and is a "drywall frame house."

Anyway, I finally finished up and got a ternant in there and this was my mistake so learn from it or make fun of me if you know this already! I rented it to a friend and former colleague, she is also an attorney. Her loft had major mold problems and she was getting sick, so it was an emergency move in.

Well, we're not the friends we used to be, I'll leave it at that. As far as fixing things is concerned, I do a lot of it myself. I've replaced faucets and put in a new shower, new garage door opener, etc. I paid for the AC to be checked and fixed, I can't mess with that stuff. It is only one house and its next door, so its not too big a deal. I like the tax deductions more than the income and it certainly won't help my retirement. I'd like to have more but I don't have the money yet, but when I move I think I'll rent the house I live in as opposed to selling it.

I also use a management company and they've finally proven their worth after some misunderstandings with my tenant, who seemd to think I was going to rehab the property to new construction in the burbs standards. Hmm...

I can imagine you would need some emotional toughness if you had 10 times the issues I have had. I figured I'd give it a shot, maybe you should too. You never know. I've always been a good tenant, and good tenants are out there. One thing someone told me was you have to match the property with the person for it to work, not just throw in a tenant because they need a place and have ok credit history.

I'd sooner rather have my left testicle cut out (without anesthesia) than return to that business...

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RM Smith
1988 560SL

"Where is it again that we are going, and why are we in this handbasket"?

Say no more.

Never rent to an attorney.

For that matter, avoid renting to any professional people. Their expectations are way too high and their demands are unreasonable when something needs attention. This is especially applicable for the typical mid-level rental (rents of $1000-$1200 for a two bedroom around here).

Rent to people who get a W2 form at the end of the year, who are stable in their jobs for at least five years, have a good credit history, and to people who have sufficient income, on the books, to afford the premises.

It's not easy to find such people, but, the wait is worth it. I currently have one tenant who has been in the house over ten years and she is subsidized from Section 8.

I have a second tenant who has been in the house for over five years and she and her husband were also recently admitted to the Section 8 program.

Both tenants have family members with disabilities.

............. ...............coffee on monitor.