I work with two guys who have in excess of 10 single family rental properties each. One is the cheapest, skin-flintyest person I have ever known, who goes to great lengths to vet his potential tenants (I suspect in violation of HUD laws) and kicks people out the second they get out of line. His occupancy rate is pretty poor, as is the quality of his tenants.
The other is a bit more laid back, but still does all the right things in qualifying his tenants. He responds quickly and promptly to their concerns when things come up and he goes to great lengths to maintain and even improve his properties. He rarely has an unoccupied property. That being said, these are both career government employees, and despite their obligations at work both spend a lot of their free time dealing with the overhead and hassles of being landlords. I have a friend I used to work with in the school district who has four rental properties. He has a real estate license as well. He recently married and has a young son. He pays a management company 10% of the monthly rent to manage his properties. All he does is collect the monies monthly when the check comes in from the management company. Yes, he’s giving up 10%, but he still has the revenue stream and isn’t being woke up at 4:00 am to deal with a broken pipe. He’s not the one qualifying potential renters, either. My immediate manager is married and has three children, all of whom are school age. Wife stays at home and home schools. They live in a very small 60s era ranch home with three bedrooms and one bath. His recent promotion has given him the additional income to afford a larger home. Wife suggests they should keep their starter home and rent it, that she could deal with it since she’s home all day. My question to him was, “When the phone rings at 4:00 am and there’s a broken pipe, is your wife going to be the one to deal with it?” He put a stop to that idea right away. I guess my point is that while the idea of renting a property sounds like easy money, it’s not. It’s a lot of work and effort on your part if you’re not willing to offload the overhead to a property manager. If you want to become a slumlord, so to speak, like my fellow employees, great. But you better have time on your hands and be expected to be on call 24/7. It’s not as simple as just advertising, finding a tenant, and collecting the rent check. Also, when that property is empty, it’s not generating any revenue. But - you still have to pay the utilities and taxes on it, so you better have some reserves on hand for the lean months. I speak from direct experience, as some years ago we owned two doubles and occupied half of one. We were lucky in that the other half of the one we lived in had a long time (15+ years) tenant that was probably going to die in the place. The other we had to rent out, and it was a lot of work. At the time the tax benefits weren’t bad, but if we hadn’t had a decent tax accountant we would have missed a lot of the breaks. Another expense. Lawyer up, get the tenants out, dust yourself off and chalk this up to experience, have your lawyer sort out your lease agreement and do background and credit checks. (And you do realize the renter can be the one to pay the background and credit check fees, too? At least here in Florida they can be charged for it.) Dan > On Jul 21, 2016, at 7:38 PM, Craig via Mercedes <mercedes@okiebenz.com> wrote: > > On Thu, 21 Jul 2016 17:03:09 -0500 "Kaleb C. Striplin via Mercedes" > <mercedes@okiebenz.com> wrote: > >> My plan was to rent out house and by the time I was ready to retire it >> would be paid off and would either have the month rent coming in or >> could sell it at that time. > > Great plan. Poor execution to date. The execution, however, can be > changed. > > > Craig > > _______________________________________ > http://www.okiebenz.com > > To search list archives http://www.okiebenz.com/archive/ > > To Unsubscribe or change delivery options go to: > http://mail.okiebenz.com/mailman/listinfo/mercedes_okiebenz.com > > _______________________________________ http://www.okiebenz.com To search list archives http://www.okiebenz.com/archive/ To Unsubscribe or change delivery options go to: http://mail.okiebenz.com/mailman/listinfo/mercedes_okiebenz.com
