Buying and Renting Out The Home Next Door - Pros/Cons? (tenant, renters)

[GatorFalcon]

Hi,

I am considering buying the home next door to me. My next door neighbor foreclosed on the property and has been gone for about a year. The property is in good shape and from the pictures taken, it appears to be in good condition inside as well. It is selling for a very cheap price and I would intend to rent it out.

Would anyone be able provide any advantages/disadvantages of living next door to a home they were renting? I'm trying to consider most probable scenarios. I would make a nice profit renting and I would consider using a property management company to provide separation between myself and the tenant. Thanks for your help.

[sll3454]

Pros:
1. You know the neighborhood.
2. You may be able to tell right away if something goes wrong. You'll know if extra people live in the house, or if they are disturbing the neighbors.
3. If you are willing to put in some work and some money, being a landlord can be rewarding.

Cons:
1. Being a landlord can be difficult and frustrating.
2. See #2 above. You'll never quite be away from the responsibility.

Advice:
1. Pictures can be deceiving. Make an appointment to see it.
2. Read other threads on this forum before you make a decision.
3. Investigate the laws in your state. Some states are more landlord-friendly than others.

[chet everett]

The potential for even really good tenants to do "normal" things that happen to make landlords a little crazy will be amplified 1000 fold by beening RIGHT NEXT DOOR. Bad idea. Don't do it. Even a separation of a block or so makes A HUGE difference...

[PacificFlights]

Not to mention, all the normal contact with tenants will go out the window cause your right there, next door and you will not be able to escape anything. Ypu will not be able to enjoy your home because it will be the management office, maintainance center, complaint line, suggestion box, etc. The tenants will not hesitate (no matter what you try to do) to just call on you or stop over to deal with any issues.

I live not far from my rental compex, yet no tenanat knows where I live or even that I'm the owner. I make them go through the PMC for everything so when at the market, resturant, tractor supply, gas station, or standing along my home fence line, I don;t have any tenants interfereing with my personal time and space.

[sware2cod]

I think you should do it if it is a good investment. Do NOT decide against it simply because you are next door.

If you hire a prop mgt firm, you simply draw a line and you stay out of ALL communication with renter. else you can end up being the private maintenance service for the renters. But drawing a line ahead of time can avoid this.

I have seen some excellent deals like you mentioned near my home over the years. I thought about buying the places but never got off the fence to even look at the places. Insead, I watched others buy the places and eventually sell them for very good profit (while I kick myself for not doing the same). A good investment is a good investment.

[lawmom]

I would hire a property management company to deal with every aspect of the tenancy. The tenants do not even have to know you live next door. But as mentioned, you WILL see things that bother you, so you need to decide if you can take a hands-off approach.

[JanND]

If you haven't been a landlord, do everything suggested by the previous posters, especially reading the forum threads related to some of the conflicts that may arise. Good luck on your decision.

[GatorFalcon]

I would definitely go with a property management company to create that division. I will continue to check out other forum threads. Very good information given by all so far, thanks.

[chet everett]

I wonder how many folks suggesting a "property management company" understand HOW MUCH IT COSTS to have them involved? Back when I was running my little rental house side business I thought about "outsourcing" the tenant contact aspect of things to a PMC and believe me that would have WIPED OUT the TINY operational profit I had. The reason I was able to make money renting out small homes was that I was able to buy 'em cheap and rent 'em out for less than the relatively higher mortgage payments would've been for tenants with poor credit. The race to the bottom in interest rates and low standards for nearly no downpayment mortgages mean you are looking at a narrow pool of renters these days. The PMCs know their value and taking their cut MONTH AFTER MONTH regardless of whether the tenant is late or skips out altogether makes YOU an easily fleeced target from BOTH sides...

I know there are folks that can make things work but generally the PMC situation makes a lot more sense for a multi-unit building where the rent from a mostly full building still won't make your cashflow go negative. With ONE single family home to rent any delays / cut off of rental income turn the numbers BRIGHT RED real real real fast... Maybe if you have the reserved to PAY CASH I can something working, but any normal finance is gonna make for an unpleasant negative cash flow !

[lawmom]

It's worth it to me for my PM to take 10%. Of course, we live 2.5 hours away, but still -- I think it would be worth it even if I lived next door.