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Looking for info and input from anyone who is/was a live-in landlord, the good, bad, ugly of it. I'm thinking of purchasing a tri- or fourplex, living in one unit and renting the others. I have a large down payment saved and am looking at small college towns with the idea of it being a steady rental market. Hope to hear from others what kind of experiences they've had, etc. Thanks!
Looking for info and input from anyone who is/was a live-in landlord, the good, bad, ugly of it. I'm thinking of purchasing a tri- or fourplex, living in one unit and renting the others.
First, while you're online - bring up HUD (Housing and Urban Development) and FHA (Fair Housing Administration). You are accountable to all of their laws, rules, amendments, addendums, etc. Find out if there are any training seminars that you can both afford and get to - it's very important to protect yourself from getting sued. This is what "landlording" has become today - with any property - no matter how small or how large.
A 4plx may not be too bad. Figure this tho, you may be replacing a lot of carpet and you will be painting walls everytime someone moves out with the possible exception of a non-smoking tenant who inhabited a short time only (90 days perhaps). There are appliances to maintain, furnaces to service, toilets to rebuild, roofs to keep patched - in short, unless you're a handy ... really handyman, you'll need good, fair, certified contractors to help maintain your building.
Your tenants have rights .... ALL OF THEM. You will have, basically, none!
There are attorney fees if you must evict. Every step you take, every conversation you have with a tenant - is governed by HUD & FHA.
You might get by okay - my personal advice as a long-term on-site manager of affordable, government-subsidized housing is -
"YO! Don't Do It"! Buy yourself a 24plex or larger and hire a management company to run it for you - let them worry about the legalities ... and then, you'll STILL be named in any lawsuit.
Hope I've been of assistance. Good luck!
I've lived in the bottom half of a three family I owned while we were building up equity to start a business. The house in total was about 3500 sq ft with three br's down, and a one br, and a two br upstairs. The upstairs apts had a seperate entrance from us and we had a huge parking lot to get cars off the street.
The place had originally been condemned and we completely rebuilt the whole thing, new carpet, new siding, new roof, new wiring, new floorplan, new plumbing, new kitchens and baths, etc so the upkeep wasn't too bad.
One apt was rented to an elderly gentleman who was quiet and no trouble. The other, above my DR, because it had two br's ended up rented to a single mother w one kid. Let's just say bussloads of men pulled up on the hour. She was HUD and so her A/c ended up costing us. I wouldn't rent to HUD people again. We could hear everything as the DR had a drop ceiling. We couldn't get her out so we ended up moving ourselves and renting the downstairs.
My approach when interviewing tenants was to make sure they were employed and give them the "I'll be the first person to call the police speech if I hear partying, fights, drug use or drinking". That usually scares the bad ones away. Unfortunately, she had been the sister of a friend and I didn't get to use the intimidation tactic first.
I have been both a live-in landlord and a 'mail me your payment' landlord. I would never do the live-in thing again - ever. It is so simple to just give the tenants pre-addresses envelopes with a coupon book. Tear out January's payment coupon, put it in January's envelope, mail payment.
No payment? Go to court, start eviction proceedings. Call sheriff, put belongings on street, rent to someone else.
When I was a live-in the tenants would come and knock on my door at all hours of the day or night to complain about the smallest thing. I had one wake me in the middle of the night to tell me that "the toilet didn't sound right". My advice - Don't be a live-in landlord.
It was probably Shakespeare who said "Nere a Landlord or Tenent be".
Very good advice.
I was a contractor and a good percent of our clients were small landlords in the Boston area. Typically two or three family, most of the landlords lived in. Maybe 30 - 40% of our total work. Both for repairs and makeovers when they moved.
Entire range of stories I can tell you. Some real horror stories. The best situation seemed to be landlords who rented to a relative or someone they knew well. Those stayed a very long time at the best case.
Students are probably the worst tenents. They on average will do the most damage. Single women can be very bad trouble. Pets are a super no, no.
As mentioned get ready for it all. Carpets get trashed. I would limit the hanging of pictures if possible. Lots of damage to walls. You really better understand how to do repairs to drywall, quick and efficient. I could do it, in one day and paint it that same day. Typical was 2 - 3 days to do a makeover, ready to rent out again. You need a lot of technique and planning before the tenent actually moves to get ready for the next. You never can have the security deposit too high. I would insist on a non-refundable cleaning / repair deposit on top of all the other deposits, you WILL need every dime you can get. Just your normal repairs can take a lot of cash. Take a zillion pictures before they move in. Be able to prove "Condition", make them sign, make the rental agreement super restrictive. Better have a super good lawyer in a lot of cases.
The worst one I probably saw was a repair bill of ~$18,000 for a bunch that only stayed there one year. Forget that idea of quick and easy money. Contractors make the sure money. Taxman gets a good share. Everybody and his brother get paid. I would never be a Landlord in a million years.
You better have a good contractor on the payroll, if you can't do it yourself. Always give them a good heads up as to moving dates and allow them to inspect a month - 15 days in advance so they can be ready to quickly rehab / repair what is required. Never spring it on them with no notice.
Thanks to all for the input. I've anticipated some of what was mentioned - and I am capable of most general maintenance myself - but definitely interesting to hear what others have experienced and pick up some tips.
I have a small LLC and do both. Actually, we live in a fairly rural area and the small house we rent out is just aways up the road from us. The other place is down in Arizona and is done by a management company.
Everyone here has good points. Perhaps I have not been doing this long enough to have a real valid opinion, but the years in business so far have not been too bad. We got a couple books on streetwise landlording and talked to some people who had been successful in the business for awhile. They gave us some good advice, perhaps the best being that we don't advertise or advertise very specifically - it is all pretty much word of mouth and/or carefully worded ads. We only take applications due by a certain time and then screen them carefully. We do month to month leases and the contract specifically states that either party can depart the arrangement with 30 days notice. We have to turn away some folks 'cause we can't (due to subdivision rules) take dogs. Kids are okay, but we make sure they are aware of landlord/tenant policy regarding limitations of the school year. We do a thorough, and I mean thorough background check that costs about 50 bucks a head but has really saved us heartache. We have also built up a solid emergency fund so that we can afford to let the premises set empty for awhile if it become necessary. That's not a good feeling, but much cheaper than fixing a trashed house and paying lawyers court time. Plus the hassle of evicting a tenant.
I agree with the above that cultivating a relationship with a lawyer is absolutely necessary. That makes sure you keep everything proper and aboveboard.
You're gonna have some good and (hopefully few) bad experiences, but I believe you can head most stampedes off before they gain any momentum. As I do all the maintenance and such on ours, yes, I have been out there thawing water when a heat tape failed at 10p.m. on a -25 degree night. And I have had chores there piled on top of 14 hour days at my day job, and etc., etc. But it has been overall a good experience, and we have been pretty fortunate to have had good people apply and have sure met a bunch in the process. The guy that's in our neighboring place now has had a tough personal crisis, but is the absolute salt of the earth. He keeps the place way nice and I pay him some and trade him favors back and forth. I know all won't be like that, but it's something to shoot for over time.
First, while you're online - bring up HUD (Housing and Urban Development) and FHA (Fair Housing Administration). You are accountable to all of their laws, rules, amendments, addendums, etc.
..........
Your tenants have rights .... ALL OF THEM. You will have, basically, none!
There are attorney fees if you must evict. Every step you take, every conversation you have with a tenant - is governed by HUD & FHA.
You might get by okay - my personal advice as a long-term on-site manager of affordable, government-subsidized housing is -
"YO! Don't Do It"! Buy yourself a 24plex or larger and hire a management company to run it for you - let them worry about the legalities ... and then, you'll STILL be named in any lawsuit.
Hope I've been of assistance. Good luck!
Ok, I will point out that most of the "assistance" and "information" you've provided in the above post is a tad inaccurate. In a situation in which a landlord owns less than four rental units, and lives in one of the units, it is legal for the owner to discriminate in the selection process based on the those protected categories, but it is illegal for that owner to advertise or otherwise make a statement expressing that discriminatory preference. Yes, you are governed by the FHA, and FHA has specific text concerning when the owner lives in a 2-plex, 3-plex or 4-plex. It is not true that landlords do not have rights. Moreover, eviction proceedings do not necessitate legal representation (although hiring a lawyer is usually a good thing) ... you can go to court pro se.
I've done both live-in and the mail-me-your-rent-check. Both resulted in have those midnight calls with plumbing emergencies and the locked-out-and-need-someone-to-let-them-in moments.
You can never have too much of a vacancy allowance or repair allowance. I always do criminal and full credit background check and verify references. I drive by the properties from time to time and make sure that there are no complaints from the neighbors. I schedule maintenance items with my tenants (for instance, a filter replacement every 3 months) which give me an opportunity to ensure that the interiors are not trashed.
I don't recommend the absentee (out of state) landlord thing--unless you have an excellent property manager ... and even then ... it's easy for maintenance items to be deferred and then the place ends up trashed and/or you have extremely high unforeseen repair costs.
And ditto about the students ... they tend to trash the place. Especially undergraduates.
Even the nicest students will be less than ideal tenants. Be prepared for noise, messiness, parking issues, late rent and complaints from other non-student tenants-- in other words, headaches and hassle for you. Most students are just at a very me-centric point in their lives and the things that are important to you, as a landlord, probably don't mean as much to them, as tenants. Your place is a crash and party pad, and they'll likely treat it as such. Been there, done that-- on both sides of the fence. Good luck!
Actually, the students pay rent on time - because they get the money from their parents. My problems have been one roommate moving out, another one in, etc. Not to mention the noise and parties and turn-over. So, I do not rent to tenants who need a co-signer.
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I would do it like Shakespeare
