1st time landlords?

[Addicting]

As this winter was bitterly cold for me, I have been daydreaming of Arizona. All the hunting one could want and great year round weather in the foothills. Perfect for when the kids move out and the wife and I can start enjoying us again.

Friend of mine suggested shopping for a place now, and if we find it, to consider buying it.

Renting it out till we are ready to pull the plug on Michigan. Let the renters pay 5-6 years of it off.

I’ve been looking near military bases as that is my background. The rental rates are matched to the BAH for the area. Plus a mature military family would be good renters. There would be a steady stream of them if one isn’t working out.

Any advice for those of you who are landlords?

 

[jpc01101]

It sounds good to say "Let the renters pay off x years of it." and there is some truth to it, but there is nothing passive about being a landlord. Make sure you have a plan for who you will call WHEN the HVAC breaks in July, when a water pipe bursts, etc. Single family home is the easiest, so it's not like a massive hassle if you can keep good renters and military families should be good renters, but I'd imagine there could be some short notice moves, etc. All of these things are manageable if you have the temperament to deal with it. I just sold a 4-plex that we had for several years and it felt like such a weight off, not having to worry about what they were going to tear up next or who was and wasn't going to pay. Also, keep in mind the politics of an area, it makes a massive difference when you have to try to evict someone. SOrry, that may not have been much help, it can work out great but you will have to see how it works for you.

 

[Nick87]

Just my .02 but if I was planning on living somewhere I'd only rent it first if I wa planning on doing a remodel anyway. No longer a landlord but was for a short period of time.

 

[grizzly_]

Hire a property management company. I have rentals that I haven't been inside of since I bought them. I literally have no clue who the tenants are. The rents are paid and repairs are handled. If the numbers don't run with a property manager, they don't run IMO.

 

[Potsie]

Hire a property management company. I have rentals that I haven't been inside of since I bought them. I literally have no clue who the tenants are. The rents are paid and repairs are handled. If the numbers don't run with a property manager, they don't run IMO.

^^this^^

But I also refuse to be a long distance land lord. I’m slightly OCD and like having my rentals within a 60 minute drive. Ultimately it’s my house, if I drive by and there’s a bunch of broke down cars in the front yard then that’s a problem.

Make sure your lease agreement is solid. It’s nice to hit the easy button and rely on that black and white agreement governing the nature of your business relationship with your tenant. It takes all the excuses away, especially when it comes to stuff like HVAC filter changes, lawn maintenance, and the notification process for entry.

 

[peterk1234]

I spent the bulk of my career in real estate. One of the businesses I owned was property management, mostly commercial.

Renters suck. So be prepared that it won't always go well. If you hire a management company you will make no money. Managing a single family home is not a profitable venture. They will have to charge too much. Being an absentee landlord is tough. You have no ability to react to things quickly or manage the issues that come up.

It's not a great idea. Best thing to do is buy it and suck it up. I suppose you can try to air bnb it. There are folks who are set up to manage those. Again. Not very profitable but maybe it offers some costs.

Residential rentals aren't as easy as people think. Until you get up 20 units or, so you can hire full time help, it's a pain in the ass.

 

[LuketheDog]

Hire a property management company. I have rentals that I haven't been inside of since I bought them. I literally have no clue who the tenants are. The rents are paid and repairs are handled. If the numbers don't run with a property manager, they don't run IMO.

This^ if you don't want brain damage associated with day-to-day complaints or if the rental is more than a short drive away, but some management companies are clowns too, shop around.

Make sure your lease agreement is solid. It’s nice to hit the easy button and rely on that black and white agreement governing the nature of your business relationship with your tenant. It takes all the excuses away, especially when it comes to stuff like HVAC filter changes, lawn maintenance, and the notification process for entry.

This^ for sure, do NOT print out a lease off the internet, find a real estate atty who has a good one that's already been used and tested.

 

[Addicting]

Not really looking to make any money off this, just hoping that it stays a break even investment. Housing prices are continuing to rise. We are wondering if the real value of buying now and breaking even is just being ahead of the curve vs buying when we are ready to leave.

 

[Southern Elk]

It can be tough to break even at today’s home prices. The rule of thumb for a good rental used to be 1% of purchase price per month. For example, if you paid $100,000 for it, rent of $1,000 per month was the goal. That doesn’t work any longer. Remember that you not only have to cover the mortgage, but also taxes, insurance, maintenance/repairs, ect. If you have to hire a management company on top of all of that, it may not be worth the hassle.

The best money in rentals today is vacation rentals. You make more money and don’t have to worry about getting a POS long term renter that you can’t get rid of. I would look at that route if I was in your shoes.

 

[kodiakisland]

All the stupid shit renters have done to my house. Get a good property manager and insulate yourself from the day to day crap. Credit check and background check. Accept there will be damage. Hopefully they don’t run an excavator for the county and bury something in your back yard. Or cut trees down for a horse shoe pitch. And if the kitchen catches fire, let it burn.

 

[ismith]

As this winter was bitterly cold for me, I have been daydreaming of Arizona. All the hunting one could want and great year round weather in the foothills. Perfect for when the kids move out and the wife and I can start enjoying us again.

Friend of mine suggested shopping for a place now, and if we find it, to consider buying it.

Renting it out till we are ready to pull the plug on Michigan. Let the renters pay 5-6 years of it off.

I’ve been looking near military bases as that is my background. The rental rates are matched to the BAH for the area. Plus a mature military family would be good renters. There would be a steady stream of them if one isn’t working out.

Any advice for those of you who are landlords?

Use a good management company. Probably be a good idea to have a good exorcist lined up for when you decide to move in.

 

[LousyResident]

It can be tough to break even at today’s home prices. The rule of thumb for a good rental used to be 1% of purchase price per month. For example, if you paid $100,000 for it, rent of $1,000 per month was the goal. That doesn’t work any longer. Remember that you not only have to cover the mortgage, but also taxes, insurance, maintenance/repairs, ect. If you have to hire a management company on top of all of that, it may not be worth the hassle.

The best money in rentals today is vacation rentals. You make more money and don’t have to worry about getting a POS long term renter that you can’t get rid of. I would look at that route if I was in your shoes.

Keep in mind that with vacation rentals, you also have to furnish the place and compete with other vacation rentals in the area. They can make more money, but they can also be bitterly competitive and lose a lot of money as well. And, get a management company that has a flat rate for repairs and maintenance. Because short term tenants are just as bad as long-term tenants. Look at the way people treat hotel rooms. I don’t have my Airbnb in Florida anymore, it mostly just broke even for us for a couple years. The best thing we got out of it was the additional appreciation in the housing market when we sold.

 

[Mallardsx2]

My best day as a landlord was the day I took a mini excavator to the trailer I was renting out and smashed the sumbitch into tiny pieces that fit into a dumpster.

I will NEVER rent again.

 

[Steiny77]

We have a nice lake house 5 hours away that we've discussed renting. Our neighbor does this and it pretty well pays his mortgage on the place. Ours is paid for so that's not a factor, however taxes are quite high.
Thus far we've elected not to rent and we really just don't want strangers in the place, plus all the hassles mentioned above.

Good buddy of mine owns a bunch of rentals and he has some horror stories. He's a very hands on landlord and needs to be.

The fact that it's so far away would also make the decision a big NO.

 

[Gellar]

Lots of vrbo’s in our area. Don’t expect a warm welcome from the locals when you move in full time if you do the vrbo style until you do.

 

[Northwoods]

My rental property is within walking distance of my house. So far it’s worked out. It makes a little money, not a lot and I always plan on doing some work when a tenant leaves as it’s the best opportunity to get some minor repairs done. I certainly wouldn’t want a rental property several states away but your situation is a little different if you find the right house.

As far as military families goes, I say this as an old soldier myself and someone who has a lot of love and respect for our military. Young men and women in the military tend to be a little rammy. State and local laws might not let you decide between a military couple in their late 20s vs early 40s.

 

[Jamen]

I am not a landlord but have a few friends that have some rentals. They bought the properties when the market was favorable for buyers. Now rent has well surpassed their mortgage payments. I am not sure what the market looks like down there, but the business side of me i would ask myself a few questions. Is the average rent for the size of the house equal to what the mortgage would be? Is there surplus or demand for this size of house on the rental market. Could i invest money elsewhere for the 5-6 years and use that as a down payment when you're ready to buy and not deal with the headache of the rental?

Again i have no experience being a landlord but having been looking at houses in my city where i live to buy and live in the math wouldn't work in our housing market for me to turn a profit or break even.