Rental houses, tell me about landlording

[BlueC]

bought a couple of houses next door out here.
Yes, it can be a pain in the ass when they know you're the owner but that also works the other way. They tend to keep on the straight and narrow because they know you'll see whatever BS they are pulling.

I have thought about that. I've also thought if I offer to do basic lawn maintenance, that'd give me a chance to put eye on the exterior fairly often, and may entice a slightly higher rent fee since 90+% around here are tenant maintained.

A guy I loosely know told me to be sure I provide a trash service. He said for $25 a month (our local residential rate) you will ensure the trash is removed and not just stacked up on the property. Makes sense to me.

I prefer to be the one to pick my neighbor- that was a big part of why we bought the place to begin with. If we hadn't bought it, someone could've bought it and had a dirt bike track on it and there's not a damn thing we could've done.
You look to be in a similar situation.

Back in '21 we let another house next door go because we thought it was over priced. Turns out, with rent and real estate priced since then, we fucked up. The people who bought it are nice enough, but trashy, very trashy, and the only thing I can do about it now is a privacy fence. With the 25 acres, I was mostly worried a developer would swoop in and throw a generic housing development on it, which has been prevalent around here for the last 5 years. It has really jacked up our land prices.

This 10 ac tract was a hay field until last summer.

This one was a horse farm up to about '20 and they started building last year. I'm guessing the old house and barns at the top will be razed soon.

 

[MtPockets]

I got it at a decent price and cash flow is good so I'm not hard up to get rid of it, but I could potentially be doing better elsewhere.

When I sold mine, I just paid the taxes. It was worth it to me because I lived 3 states away and was getting screwed by renters and contractors alike.

If you're making decent money and have decent renters, maybe stick it out.
The thing that I had hoped for is for the renters to pay the mortgage and I'd at least benefit when I sold.
That didnt end up as good as Id hoped but I did get a little money out of it.

 

[DeltaNu1142]

When I sold mine, I just paid the taxes.

It was a real gut-punch when I did it.

 

[BlueC]

It was a real gut-punch when I did it.

I met a guy a while back who was moving from house to house, and when I got to talking to him, he told me he was moving in to avoid extra taxes. Said he had to stay in each house just over a year before selling. I think he was moving from #4 to #5 when I talked to him and he was about done.

 

[steelhd]

I think there's more money to be made in the lower end of the rental market, but I just saw that as too much work for a side gig when working 60 hours a week.

I have a buddy with four or five nice multi bedroom multi bath homes in great neighborhoods. He never has to screw with bad tenants, deadbeats, or vacancies.

Edit ... So far!

 

[sab]

I have a buddy with four or five nice multi bedroom multi bath homes in great neighborhoods. He never has to screw with bad tenants, deadbeats, or vacancies.

Edit ... So far!

So far is right. Luck is the only thing that prevents bad tenants from showing up at some point. No screening process is perfect, unfortunately.

 

[sab]

In the past few years, I 1) sold a property and paid a massive tax on the profit, and 2) transferred the sale of another property into a different one via 1031. I still own the one I 1031'd into, and unless I want to pay taxes on it (nope) or move into it (hell nope), my money is stuck there. It's off the topic OP is asking about, but I'm curious how others got out of theirs.

There are only three choices:

1. Do a 1031 exchange to defer the tax liability
2. Pay the man
3. Cheat the man, and risk your freedom

At the end of my rental "career," I paid the man, and it hurt. I didn't know about depreciation recapture until I was preparing to sell. That really sucked. Had I known about that from the beginning, I would have considered not taking a depreciation deduction to avoid it, if that made sense (I didn't do the math because it was too late.)

 

[BlueC]

I didn't know about depreciation recapture until I was preparing to sell. That really sucked.

New term for me. That sounds rough. Something I'll have to keep in mind when I talk with my CPA.

 

[LJ owner]

I've had a few rentals and currently own one. Couple of thoughts:

• Don't budge on the credit score. Responsible folks keep their score up.
• Be patient, better to miss a couple months rent than to get the wrong tenant.
• Property managers only work well if they have a good handy man in their back pocket. If they can't help keep your expenses down they are worthless. Anyone can pick a licensed plumber/electrician/landscaper off the internet and pass on an overpriced invoice.
• Schedule occasional walk thru inspections. Keep track of your investment regardless of a property manager or self management.
• I'm only counting on a nice payout when we bail and sell out. Property is a great place to park some investment dollars separated from the 401k and the stock market. Retirement for me is soon, then we sell.

Best of luck

 

[MtPockets]

I have thought about that. I've also thought if I offer to do basic lawn maintenance, that'd give me a chance to put eye on the exterior fairly often, and may entice a slightly higher rent fee since 90+% around here are tenant maintained.

A guy I loosely know told me to be sure I provide a trash service.

We do yard maintenance and snow removal except for clearing the steps and walkway in the winter.

We also go into the home every month to fill the water softener with salt. That way we get eyes (and noses) inside on a regular basis.

 

[Mhass]

Funny, trash pick up and garden maintenance is pretty standard here (Sicilyl. It's itemized but billed with the rent.

 

[sab]

New term for me. That sounds rough. Something I'll have to keep in mind when I talk with my CPA.

Yeah, I was prepared for a capital gains hit, but depreciation recapture goes as ordinary income so the rate was higher. It almost doubled my tax owed.

 

[B1Toad]

Find a management company to find and vet tenants. You don't have to have them manage the rental, just find your tenants. I prefer to have quality, long term tenants - so I price towards the bottom of the market, and raise $50/yr.

My strategy is the opposite, I rent at market price, then if they turn out to be good tenants I offer them renewals at lower rates to keep them. I figure renting at market price will help eliminate the low lifes. I also use a leasing agent who vets them, does all the showings and writes the leases. After that I take over on all the repairs and maint. (and collecting the rents)

 

[steelhd]

One of my regrets is not buying rental properties. I could have but didn't want to be a landlord.

The exception is the path another acquaintance took. He bought a large piece of property, spent money to install infrastructure for trailers, and built a small house in the center. He rents the trailer spots and let's a Mexican "el jefe" live in the house rent free as long as all the other spaces are maintained and there is no crime, drug houses, police calls, hassles with plumbing or irrigation, etc. Guy made a fortune. I just never found the right piece of property for my own personal slum.

 

[bucky]

Been a landlord for 30 yrs. It’s not easy money and not for everyone and comes with a learning curve. My Wife does all the administrative work and I handle the maintenance and dirty work. Our first tenants paid first, last and security deposit and never paid again. I lost 3 months of rent before getting them out.
I would NEVER use a management company. They put their best interests first not yours. They actually make more money from bad tenants. They take a big chunk of money from the initial rental and then a monthly cut, they take a cut from their preferred service providers for repairs. Replacing bad tenants just makes them more money. This is all money from your pocket. Also here in Ca they have to accept the first renter who meets the minimum standards. You can find good rental application forms online.
We live in the progressive state of California so everything is in the tenants favor so you’ll need to be selective of your tenants.
Things I’ve learned over the years:
Month to month only. A lease only ties you down they still can leave anytime they want.
Make sure they have a job they won’t just quit when you sue for lack of payment and garnish their wages. Over the yrs I’ve seized cars, motorcycles, caused 1 divorce and helped a father gain sole custody of his children.
No grace period for late payment of rent. Start the eviction process immediately because in the best case scenario it takes 45 days. Once they get behind they can’t come up with the money.
I keep my rentals in the shape I would want to live in and price my units lower than market rate. This gives me a good pool of candidates and reduces overall repairs.
When doing a showing pay attention to the little things that tell about them. What they drive, if their car is a mess so will your rental. Are they respectfull?
If I have a good tenant I don’t just automatically raise rent. Better to have a long term renter. I’ve had tenants payoff my rental. When tenants move out you will lose at least 1 months rent and have rehab costs even with the best tenants.
References mean nothing. They will list their friends. If they are bad tenants their current landlord will give them a glowing review just to get rid of them.
Race and age mean nothing. Bad tenants come in all shapes and sizes.
All my rentals are in my town and I do at least a weekly drive by to check things out.
No garbage disposers. Some people put everything down the disposer and I’ve had too many clogged drains because they put half a pot of mac and cheese or rice down the drain.
I’ve not had to do an eviction in over 20 yrs and have some interesting stories to tell.
Being a landlord is work but in the long run it pays well. It’s made my Wife and I wealthy and allowed me to retire early. The first rental is the hardest. We started off with a duplex where 1 rent payed the mortgage mitigating the payment if 1 was vacant.
Being a landlord gives me stuff to keep me busy in retirement but as we reach our 70s we plan on starting to start selling off most of our rentals.

 

[Zorba]

No grace period for late payment of rent. Start the eviction process immediately because in the best case scenario it takes 45 days. Once they get behind they can’t come up with the money.

I made one exception to this - a very good tenant is a TSA officer. I had to issue him some nasty paperwork every month for about 4 months when he wasn't getting paid to preserve my rights, but he paid up when he finally got his back pay.

I keep my rentals in the shape I would want to live in and price my units lower than market rate. This gives me a good pool of candidates and reduces overall repairs.


If I have a good tenant I don’t just automatically raise rent. Better to have a long term renter. I’ve had tenants payoff my rental. When tenants move out you will lose at least 1 months rent and have rehab costs even with the best tenants.

Big YES! To both of these. Gets me long term tenants, unlike the slum lords who have turn over every damn year and it sits unrented for several months because they're asking too much. I'd rather rent it TODAY for $200 less than 2 months from now, or even 1 month from now. It just doesn't pay to hold out for top dollar.

Being a landlord gives me stuff to keep me busy in retirement but as we reach our 70s we plan on starting to start selling off most of our rentals.

I need to at least consider this in a few years...

 

[B1Toad]

Mine will go directly to my son when I'm gone. I told him to sell them, if he sells them within a year after inheriting them there will be no tax liability. Meanwhile he is going to have to start managing them soon. H'e already got several of his own.

 

[Westtown Willy]

I 'had to have a rental property' many years ago so I bought a residential duplex, owned it for 4 years before running screaming for the exit.

I still get chest pains every time I think about that debacle.

Years later I bought an office building with my partners for our firm that was about 3 times bigger than what we needed for our own use, but we could 'rent-out' the other space, yea, that'll be different; owned that for 6 years before running screaming for the exit.

I still get chest pains every time I think about that debacle.

I've come to the conclusion that while I love owning real estate, that love only extends to the very specific variety that my ass actually lives in, the rest of it that's unattended & involves other people, fuck that.

Some people are built for this shit, I ain't one of them.

 

[Zorba]

I have a tenant who is moving out 7/31. He had a floor cleaner scheduled for 7/30. He just emailed me and asked if he could extend to 8/3 as the cleaner couldn't come as planned. So I told him that I didn't want to chickenshit around with day-to-day - extend it to the 8th and pay me 1/4th the rent. Unspoken was, "or find another floor cleaner and get out on time". He chose the latter, as I expected him to.

Some people are built for this shit, I ain't one of them.

I don't like it, but its the only thing that pays in today's economy.