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The hardest part to accept, and the most important, is that you are not their friend. Don't visit them, get invited to birthdays... You will have to be the bad-guy once in a while. Treat this as a business, and it can be a good idea. Insurance and mortgage rates are usually cheaper on owner-occupied houses. Just treat your tenants as a business. It's hard to go to court against "friends", and life-long renters know all the psychological ways to get around the rules. I owned a trailer court once. The ones that were the most trouble were the ones who came to be my friends first. They know how to play the game. Again... Tenants are not your friends. Keep receipts, and stay by the book.
I have had several rental properties in both NY and GA. I don't recommend it in NY. You may as well marry your tenant because they are impossible to get rid of. In GA its a piece of cake. You don't need an atty to get rid of them. Check the laws in the state you live in.
I have never been a live-in landlord, but either on site or off, I urge you to set up an LLC for the house and then act as agent on the house. DO NOT tell the tenant you own the house. Let them think you work for the owner. Otherwise, you will hear every sad story they can come up with come the first of the month. As an employee you can tell them that you are sorry but you can't help them... you just work here.
The hardest part to accept, and the most important, is that you are not their friend. Don't visit them, get invited to birthdays... You will have to be the bad-guy once in a while. Treat this as a business, and it can be a good idea. Insurance and mortgage rates are usually cheaper on owner-occupied houses. Just treat your tenants as a business. It's hard to go to court against "friends", and life-long renters know all the psychological ways to get around the rules. I owned a trailer court once. The ones that were the most trouble were the ones who came to be my friends first. They know how to play the game. Again... Tenants are not your friends. Keep receipts, and stay by the book.
Insurance may be lower because you are not insuring the contents, only the house itself. Mortgage rates may be higher because of higher risk of the owner walking away.
It is important to treat your tenants as a business. I don't visit or do much chit-chat. I am prompt in returning phone calls, scheduling repairs, etc. I do send a greeting card around the winter holidays (but I do that with my business associates as well). I would also say, it's preferable to keep business relationship separate. I had a tenant that worked in the trades, but I really didn't feel comfortable hiring him to do any work for me. It just puts both of us in an awkward position. I have a friend who hired his tenant to do some maintenance for the tenant's unit--guess what. Every month he found stuff wrong, so that he could "fix" it and get reduction in rent. Bad news.
We have owned Multi-Family-Residences in Ca, Ct, Wa, and Scotland.
We have had a couple of 'bad' relationships with tenants, but over all it has been very good for us.
We have never made a down payment when buying.
I see no reason to put my money into the mortgage when other folks are willing to let me put their money onto my mortgage.
Each MFR was owner-occupied when I bought them. Then usually after a few years my employer transfered me. Each time that we moved away from a property, we used a manager to manage the MFRs for us. Most of the times when we were non-local and using a manager it did not work out so well for us.
We sold all but one of the properties when I got my 20-year pension from my job, and I have retired.
We kept that one property as it's Net Worth is growing so much that I just can not bring myself to sell it.
The good things is if there is a problem with your tenant, you can go right over and let them hear about it. The bad thing is if there is a problem with the unit, they can come right over and let you hear about it.
Also, owner occupied rentals are not subject to many of the strict HUD and Fair Housing laws. Make sure you read what applies to you, your situation is different.
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