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I am considering becoming a first time landlord. I normally wouldn't consider this, but I bought my primary residence 18 months ago in a great location that seems to have long term potential for appreciation with a fixed 3.3% interest rate on 30 year mortgage. I am being relocated within my same company to a different location that will be a great experience for approx. 4 years and will return back to original location.
I do not want to move away, work really hard for 4 years, return and then be priced out of a neighborhood I worked really hard to get into and didn't have much time to enjoy. Priced out would be combo of property value appreciation and rising interest rates.
So I am considering becoming a first time landlord. I have an experienced property manager lined up if I choose to go this route. What all do I need to consider?
Also, I don't need to sell this property to get an acceptable property in the new location.
Ultimately, I would re-occupy the property as primary residence after 4 years.
For specifics, the property is located near the center of Sugar Land TX, a suburb of Houston TX. Tenant - landlord policy would be subject to TX law, which I am not yet familiar with.
Normally, I would not recommend that people become "accidental" landlords. But if you fully expect that you will re-occupy the house in four years, I think that you should keep the house and rent it out. I also think that having a good property manager to take care of the rental will be well worth the cost as it can save you from the headache of being a landlord. Good luck.
(You'll be saving on the costs of selling; the time and cost of re-purchasing; and you won't be subject to potentially higher interest rates in 4 years.)
If you want to do it yourself, hop on over to the renting forum and go to the first "sticky" where you'll find a link to TX landlord tenant laws which you should read from top to bottom and side to side many times over.
The renting forum will provide you with a ton of reading material which will give you a good grounding in what's expected of you as a landlord, what to expect of tenants and the pitfalls to be anticipated.
When you decide upon a lease agreement, have a good real estate attorney read it over and amend it accordingly to ensure that you're covered for any eventuality under state or federal laws.
If you're not going to be close enough to the property to take care of it yourself then hire a property manager. Do your due diligence where that's concerned, read the small print in the contract you enter into and check their local references.
STT hit the nail on the head. Being a remote landlord, particularly for the first time, is asking for trouble. However with a solid lease and a thoroughly checked-out property manager (and a high-rent property with a long-term lease), you should be okay. Make sure you get a property manager who knows something about repairs/maintenance and has ongoing contacts to back that up (You don't want one who only knows how to phone a new repairman everytime the renter has a problem. You will also need to think-out landscaping and yard maintenance (Who will pay for it and can you ensure that the renter will not kill-off the yard and/or pay to water the lawn?)
The situation is improved by the fact that you do not need to sell the property to buy your new property, but, must you depend on the rental income to pay your new mortgage? A lot can happen in 4-years, so it may be best not to plan too heavily on moving back. (Is the property likely to appreciate in value enough over the next 4-years to let you make a decent profit after sales/repair expenses?)
o not need to sell the property to buy your new property, but, must you depend on the rental income to pay your new mortgage? A lot can happen in 4-years, so it may be best not to plan too heavily on moving back. (Is the property likely to appreciate in value enough over the next 4-years to let you make a decent profit after sales/repair expenses?)
Good Point...If your tenants don't pay, will you be able to carry everything yourself while you get them out and get the unit re rented?
Find a good accountant who can handle your taxes, too.
This! It's the first thing I though of before I bought a single house. Fortunately I have a good cpa who did my taxes for 2 years when I had my corporation. I know my cpa will be there for me when I need her.
Right now I'm organizing and auditing my documentation. I expect to discuss my new status with her in the next month or two. Understand that this is for 2014 taxes due April 2015.
Right now I'm not throwing any documentation away until it's scanned and backed up. Eventually I plan to hand her a CD with everything she needs on it, organized, and everything else I have in case she wants it.
I am considering becoming a first time landlord. I normally wouldn't consider this, but I bought my primary residence 18 months ago in a great location that seems to have long term potential for appreciation with a fixed 3.3% interest rate on 30 year mortgage. I am being relocated within my same company to a different location that will be a great experience for approx. 4 years and will return back to original location.
I do not want to move away, work really hard for 4 years, return and then be priced out of a neighborhood I worked really hard to get into and didn't have much time to enjoy. Priced out would be combo of property value appreciation and rising interest rates.
So I am considering becoming a first time landlord. I have an experienced property manager lined up if I choose to go this route. What all do I need to consider?
Also, I don't need to sell this property to get an acceptable property in the new location.
Ultimately, I would re-occupy the property as primary residence after 4 years.
For specifics, the property is located near the center of Sugar Land TX, a suburb of Houston TX. Tenant - landlord policy would be subject to TX law, which I am not yet familiar with.
Find a GOOD property management company. Get references and interview them all. It's literally a job interview. Let them deal with the property while you're gone. When you come back simply. Make sure you plan it right to coincide with the tenant moving out. Make sure you understand that it can be beat up when you get it back
I manage my own properties -- 4 houses. The management company would want what I calculate is about the same as my return. All of it.
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