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Instead of looking forward to the end of the month knowing there are checks rolling in, I'd be more stressed out...
Who do I have to chase down? Who do I have to evict? Who is late? Did they move out? Why don't they answer the door? Who's going to pay half now and half later...forget just worrying about the carpet...and if you have a full-time job/career on top of this "investment"...forget about it, just my opinion.
I have a friend that owned apartments in downtown Albany, NY and knew of someone with a low rent quad apt complex in the same area. The whole thought of being involved in something like that makes me queasy.
Instead of looking forward to the end of the month knowing there are checks rolling in, I'd be more stressed out...
Who do I have to chase down? Who do I have to evict? Who is late? Did they move out? Why don't they answer the door? Who's going to pay half now and half later...forget just worrying about the carpet...and if you have a full-time job/career on top of this "investment"...forget about it, just my opinion.
+1.
Having done this stuff, I'd advise anyone considering it to think long & hard before diving into being a landlord. You know how cops will tell you they've heard every excuse/story in the book? Well, it's about like that for me as a landlord. If I had a nickel for every tall story I've heard from a tenant ... you'll need to develop a thick skin. Good tenants are worth their weight in gold, so I invest in screening up-front & try to keep them around by treating them well & minimizing rent increases. Bad tenants - don't get me started. I haven't had many bad tenants, thanks mostly to good screening, but once in a while when I take someone through a rental agency - a bad tenant will cause many hours of stress & headaches. Don't get me wrong, it's been a good learning experience & I'm prepared to do the same gig here in Las Vegas if I decide to go that route, but it's a "tough way to make an easy living" (to borrow a quote from my poker playing). If you have the budget & time to own a lot of properties & make it a full-time gig, you could generate some nice cash flow.
Most of us, tho, will be small-time landlords (like me) with just a few rentals - and that's tough to manage. A corporation with lots of rentals can absorb the odd vacancy; what happens if you have four units & one remains vacant for over a year? (I've had it happen.) That's 25% of your potential earnings just sitting there. Sure, you could get desperate & drop the rent, but you might get a flaky renter & then you've depressed your cash flow for future rentals if they stick around. They won't be happy if you try to jack up the rent to previous levels. What do you do when the furnace blows up & you have to spend several thousand dollars in a couple days to replace it? (Been there, done that.) How about if the city changes building codes & doesn't grandfather anyone, extorting thousands of dollars along the way for code violations & unnecessary repairs? (Yeah, that too.) Remember that you're not doing this 9 to 5. You're more or less on call 24/7 & some tenants will find every little thing to be an 'emergency' that requires a call Sunday at 5 AM.
I don't want to scare off potential landlords; it can be a good investment & business if you do your research & do things right. That said, expect to make some mistakes & have a 'learning curve' along the way. If you can't do basic maintenance yourself, you'll be paying a lot of your profits to handymen & tradespeople. You'll need a good internal 'BS meter' to gauge when someone's telling you the truth & when not, being careful not to become overly bitter & cynical about the whole thing. The most profitable landlords are probably the biggest jerks; unfortunately, that's the way the system is set up. I've done OK with it, but also want to sleep well at night so I've probably missed a few $$ along the way by being too ethical. As my good buddy in Chicago (who has helped me at times) told me, "After seeing what you've gone through, I wouldn't wish being a landlord on my worst enemy." That's a big stronger than it needs to be, but there is some truth in there. Be prepared, be realistic & know what you're getting into & you can do alright with it.
Hope this helps, whether to save you headache & forget it - or affirm that you want to do it & feel better prepared knowing what you may get into ...
I work in rental apt properties and the amount of destruction tenants cause in our properties are mind boggling. It does not matter whether its an apt, condo or single family homes if you rent it out, expect to spend money for maintenance.
My next door neighbor has a large pitbull, so far it has destroyed the blinds/window shades and I don't even want to see how the carpet looks like. By the way, prior to having this unit rented out, the landlord replaced the carpet, padding and even walls on this unit, prior tenant also owned a dog. Don't think tenants with dogs are the ONLY trouble makers, with the kind of populace we have in Clark County and they're not really the cream of the crop, it's expected, landlords here will spend a lot of money fixing up their rentals.
drop your rent $25 below current market for your place and just have it in your mind, "no dogs", "no kids"...it allows you to be more picky...this rule has been gold for me as you might have 5 calls the first day.
drop your rent $25 below current market for your place and just have it in your mind, "no dogs", "no kids"...it allows you to be more picky...this rule has been gold for me as you might have 5 calls the first day.
Can't remember who, but someone on here said that they considered checking children's report cards to determine how responsible the parents were. Not sure how legal that would be. Interesting screening process though.
As far as pets, we caharge an $800-$1000 for a pet deposit, depending on size and type. Pet fee is $50 extra each month. It was supposed to be a deterrent but we are finding plenty of tenants thst are willing to pay those fees.
If you can't do basic maintenance yourself, you'll be paying a lot of your profits to handymen & tradespeople. You'll need a good internal 'BS meter' to gauge when someone's telling you the truth & when not, being careful not to become overly bitter & cynical about the whole thing. The most profitable landlords are probably the biggest jerks; unfortunately, that's the way the system is set up. I've done OK with it, but also want to sleep well at night so I've probably missed a few $$ along the way by being too ethical.
Good advice.
I learned from family and my neighbor that rents out homes in my neighborhood. They all have one thing in common, a team. One person doing everything will be a major headache. If you have help(family, friends,contractors) it will be that much easier. The owner of the house next to me lost a tenant, cleaned, painted, relandscaped, advertised, screened tenants in less than a week. The place is already rented out again. It looked like he had his entire family working on the home(sons/wife).
For the properties we watch, I take care of the maintenance and evictions. My wife takes care of the admin side(advertising/screening/application/background checks). If I need help, I go grab some of my large cousins for heavy lifting or major tenant issues...but a constable works too. There is no mortgage but my aunt takes care of the taxes, HOA, bills, reciepts etc.
I really do need to recalibrate my BS meter though.
As far as "no dogs, no kids". Be careful saying you are not renting to someone because they have kids. That is considered a discriminatory act. Not that your average tenant knows how to get you in trouble but not worth the risk of saying these words out loud.
You do not have to rent to people with pets but many times people will lie about not having pets or get one after they move in.
Best thing to do is to go to where they currently live and look through the house. Do they keep their current rental in good shape? Great. If not, avoid the hassle, if it means keeping the house empty for 6 months, so be it. That's how much you're going to spend on home rehabilitation after a scummy tenant vacates.
Also consider their motivations for moving. Are they moving from a 2000 sqft house to your 2000 sqft house? Why would they do that? Unless they can give you a very tangible reason like: the neighborhood was bad there, the rent was too high and landlord would not reduce it; then you should probably be very cautious with this person. Clark county justice court look ups is a great way to do quick researching on someone before running their credit and rental history.
I've had people reluctant about paying the app fee, that's a good indicator they are not willing to pay for their share of the maintenance of the house.
Avoid section 8 renters. The guaranteed portion from the housing authority is not worth the potential damage you risk to your house and the neighborhood by renting to these people. Also the bureaucracy you have to put up with is also not worth it.
I've had people ask me if the house is "in good standing". That shows to me they are not responsible enough to do their own research. What good is asking the devil that may have his property going into foreclosure whether the house is in foreclosure or not?
I've evicted people after 3 months of moving in. The longest tenant I had to date is one that continues to rent after 7 years. Your average tenant will stay 2 years.
I've had tenants who refused to do basic front yard upkeep and I had to hire a gardener. Tenants who went through appliances like kleenex. Tenants who got into fist fights with neighbors and asked me to write a letter describing their character as "exemplary". Tenants who screamed at me for their car getting towed because they could not follow simple parking rules. Tenants who flooded my house and blamed it on everything except their own misuse of the plumbing. Tenants who nitpicked the condition of the house only to return it in a condition where they did not get a penny of their deposit back. Tenants who called constantly 6 am to talk about something that is a non emergency. Tenants who shut off the sprinklers and nearly killed all the plants outside. Tenants who constantly disregard simple HOA rules.
The potential money is really not worth it if you have even a decent job. It's not a "sit back and watch the money pile in". You will be doing work. If not doing the repairs yourself, taking a whole day of taking bids to get the best price. Supervising the work so that a contractor doing the painting, doesn't scratch your floors or cabinets. Coordinating contractors schedules with your tenants schedule and the tenant not giving access to the property anyways. I could go on but this is already turning into an essay.
Are you interested in multi-family apartments? My wife's boss is buying up and building new apartments all around the valley like crazy. He "jokes" to her about buying a small complex herself to manage. We are not ready right now but maybe in the future when the kids are older.
By the way, my wife has a couple 200-500 unit complexes that she manages that sit at 92-99% occupied. One is at 100%. You can just imagine the return on those with good management...
Pardon me for sounding a bit elitist, but apartments aren't known for attracting the best clientele, especially once they are 10+ years older and begin to show their age. They often become defacto housing projects full of Section 8 renters and dens of drug dealing, prostitution and other deviant activity.
Someone who goes around building them like "crazy" must not care too much about the surrounding area where they are being built.
Here in California, the trend in many cities is to demolish apartments and be rid of the crime and deviant activity that permeate from them. It seems like Nevada is moving in the opposite direction. Yes, by all means use capitalism to your advantage, but remember the impact on the community around you.
Pardon me for sounding a bit elitist, but apartments aren't known for attracting the best clientele, especially once they are 10+ years older and begin to show their age. They often become defacto housing projects full of Section 8 renters and dens of drug dealing, prostitution and other deviant activity.
Someone who goes around building them like "crazy" must not care too much about the surrounding area where they are being built.
Here in California, the trend in many cities is to demolish apartments and be rid of the crime and deviant activity that permeate from them. It seems like Nevada is moving in the opposite direction. Yes, by all means use capitalism to your advantage, but remember the impact on the community around you.
Some owners treat their real estate as assets. Which means they want the best people managing their assets. Not all property owners are slum lords.
Yes, my wife works for someone that has thousands of section 8/42 tenents housed in units in the valley. That does not mean that these properties are "defacto projects". Some of them can hang with the luxury apartments that don't even allow S8. Leasing guidlines are still strict. Employment is verified. Background checks are thorough. Fees are enforced. The only difference is the tenant receives some form of help from the government.
Believe me, if you passed some of the properties that my wife manages, you would not be able to tell that they were low income housing. A brand new apartment building is always better than an empty lot with a for sale sign. More jobs, more tax revenue and less of an eye sore.
By the way, some of the apartments that are being built are senior living communities along with low income complexes. Got anything against seniors?
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