Im putting my big boy pants back on and diving back into the rental house biz.

[fastfredracing]

Are any of you guys , really making a living at this ? We have 5 units. Big 4-5 bedroom houses in the city. All are in decent shape. All paid off, with new roofs, and furnaces, hot water tanks, new service lines, and panels. No more real gotcha's. ( fingers crossed )
Still, even with rents up , taxes, insurance, maintenance, bad pays, and vacancies make this tough to really make enough money to be worth it.
5 years ago, I wanted to sell, and my partner did not.
I walked away for a few years, and would only help out when we were in emergency status. I still managed to put tenants into empty units , and keeps rents flowing, while my partner handled the maintenance , and upkeep .
I figured, that we have vested so much $ , and effort at this point. I am going to give it one more big push, and attempt to make it profitable . "We have brought my wife on board to handle all the admin, and we will once again handle the units themselves .
Got any last minute tips from the seasoned pro's? I've been at this off and on for 15 years now, and have yet to unlock the code.
In a perfect world, I would have dumped all these places in the city, and purchased 2 fixxer uppers in nicer areas, or even commercial spots, but my partner was a no starter on that .

[Dantilla]

Playing landlord got easy after I acquired enough property that it became my full-time job.
Trying a little on the side can be a nightmare.

[Dantilla]

A few things I’ve learned along the way with residential rentals……

If someone is going to give us money every month, they are our customer, and we want to give them excellent customer service.

A nice property attracts nice people. A sketchy property attracts sketchy people.

The best way to get rid of a lousy tenant is to not rent to them in the first place.
Keep screening standards high, and do not deviate. No exceptions.
I would rather have an apartment be empty, than wish it was empty because some clown is in there, making a mess, not paying rent. Keep screening standards high, and do not deviate. No exceptions.

That one statement will eliminate 90% of a landlord’s headaches. ^

We don’t have “tenants,” we have “residents”.
We don’t talk to residents about their “unit”, we talk about their “home”.
This is simply treating people with respect.

I don’t sign six month or one year leases. Only month-to-month. If I get a lousy renter, I’m not waiting a year to get them out. But we don’t want to run a hotel, with constant turnovers, so my rental agreement specifies that if the resident is there less than six months, the security deposit becomes non-refundable.

[Seahawk]

I know a guy that specializes in the Section 8 Housing Voucher Program...there is oversight and he gets paid on time.

May be worth your time to explore that option.

I took my landlord pants off years ago, btw, I just couldn't deal with the drama.

I hate drama.

[fastfredracing]

We used to do section 8, but that usually brought us less than excellent tenants, Rarely, did section 8 pay the full boat, so we were always left on the hook for a good portion of the rent.
We finally just got rid of our last one. Rent was 740, section 8 paid $345. She has not paid us in a year, and my partner was scared of her drug dealing bad ass gangsta boyfriend ( I was too) , so he never evicted her.
She walked out on an $800.00 water bill too!
It was all a huge negative experience for me I used to carry a gun with me to go to work at the rentals. I cleaned up 100's of empty stamp bags. I've found needles .
I appreciate the advice though.
I am looking for good , honest , working paying tenants. We will treat them like gold, if they pay their rent, and treat us , and our property with respect .
Right now, we have 3 units full with good paying people, that we get along with great. Looking to do this with all 5 , then , maybe pile on, and add a few more as we go.

[fastfredracing]

Thanks Dantilla, I think that was our main problem all along. We purchased, rehabbed, and rented all 5 of these places with our own money in our spare time , while we both ran our own seperate businesses , and had family.
It was not making money, and after 10 years of running, and running, I just got tired of it and could not give it any more . It left zero time for me to live my life . I think we are at a crossroads, where we either go for broke, or sell, and walk.
I agree with you on all points. Our places are in city neighborhoods though, so we are dealing with a lower working class clientele . It makes finding good ones a little harder .

[1990C4S]

I was recently transferred to another state, my house is going up for rent soon.

Where I used to live rents are very high. I need to try, my house is sitting empty.

[biosurfer1]

Originally Posted by fastfredracing

We used to do section 8, but that usually brought us less than excellent tenants, Rarely, did section 8 pay the full boat, so we were always left on the hook for a good portion of the rent.
We finally just got rid of our last one. Rent was 740, section 8 paid $345. She has not paid us in a year, and my partner was scared of her drug dealing bad ass gangsta boyfriend ( I was too) , so he never evicted her.
She walked out on an $800.00 water bill too!
It was all a huge negative experience for me I used to carry a gun with me to go to work at the rentals. I cleaned up 100's of empty stamp bags. I've found needles .

Barely making any money (profit) would cause me to second guess doing any residential, then pile on all of things you mentioned and it's a complete non-starter for me. I know there are those where the upsides outweigh the downsides, but it seems like for every one of those, there are 10 with absolute nightmare stories.

I would sell all 5 and get into commercial real estate in some way. Seems like when you take the "that's someones home" factor out of the equation, the laws swing to the owner and extreme drama get taken out too. Sure, it's not perfect and has its own faults, but having to carry a gun and clean up used needles?!?!? I'm only 38 and even I'm too old to put up with that crap with out 100x's of ROI.

[McLovin]

It can be the greatest thing in the world, or it can be the worst.

It all just depends, there's a lot of factors.

But one of the biggest one is this: Does it make (net) REAL money?

If you are renting big houses for $740/month and having to take a gun to go visit the units, I can't imagine how that could be worth doing.

It's not for everyone, but that's mainly because most people do it wrong and are wasting their time.

[911boost]

Find a college town, buy residential there. Rents here are crazy near the campus and none of my friends with rental properties ever have a problem getting renters. Sit back and let the house appreciate.

[drcoastline]

I dumped all my residential rentals years ago. As Seahawk stated way to much drama. I still have three commercial rentals. Tenant pays for everything, fixes anything that breaks and if they don't pay the rent they must leave. None of the residential my refrigerator broke, my washer backed up, the A/C isn't blowing cold, it's winter this is my home I can't find another place to live. File eviction notice three months later go to court to get them out while they don't pay rent crap.

If you want to be in the real estate business get a real estate license and list properties for sale or rent. Collect your commission. Thank you very much. Next!

Worst case flip houses.

[LWJ]

Yes. I have some thoughts. First. Are you buying for capital appreciations or cash flow? I think that if you get both, you win the lottery. Most often, you have to purchase for one or the other. My most recent ones have been cash flow only for several reasons.

You have some equity. I like leverage. I also like controlled risk. I would be very interested in selling with a 1031 exchange into larger properties that can work harder for your goals. Mind you, commercial loans are a dicey thing and can bite you in the azz. For that, you might consider 4 plexes which still use traditional 30 year mortgages.

Last piece. I used to manage my own. I HATED IT. HATE. I now have property managers. It pains me to pay them but my free time is exactly that. Free. Also, they get to deal with the scumbags and lawsuits. They also were more successful at collections and rent increases.

The above thoughts have made me some good dollars. Be prudent. Take measured risk. You will do great. Enjoy!

[MBAtarga]

I think I aged about 4 years in the 18 months I owned a Section 8 rental.

If there are no mortgages and you still don't show a cash flow then you're in the wrong neighborhood.

[Tobra]

You are better off renting for less to a good tenant than to get a little more dough from a marginal one.

Less turnover means more profit, less spent on paint, carpet and rekeying of locks.

[drcoastline]

No section 8 for me when I rented. If the state pays but tenant doesn't you can not evict. If the tenant is tearing your property to pieces but the state pays, you can not evict. Not worth it.

[speeder]

I cannot imagine being a landlord in an area where you have to rent to people like you describe. I'd rather live in a tent and collect welfare, less stress.

Here is what I told someone years ago who wanted to invest in rental property and could only afford to buy in a small town in the desert:

Forget it. You want to own property where people want to live. Instead of buying three or four shacks in the middle of nowhere, get 5 other broke-ass friends together and go in on one apartment in NYC. Not one apartment building, one apartment. The monthly rent would equal several shacks in bumfk New Mexico and you will have one tennant and one apartment to manage.

At the time when I told him that, a 1BR apartment I was eyeing in Manhattan went from $850k to $1.6M in a little over a year. Good luck getting that appreciation in Sec. 8 land in PA.

[jwasbury]

Originally Posted by speeder

I cannot imagine being a landlord in an area where you have to rent to people like you describe. I'd rather live in a tent and collect welfare, less stress.

Originally Posted by MBAtarga

If there are no mortgages and you still don't show a cash flow then you're in the wrong neighborhood.

Originally Posted by McLovin

If you are renting big houses for $740/month and having to take a gun to go visit the units, I can't imagine how that could be worth doing.

This this and this^

Not currently a landlord, but did it for 12 years. In my case it was a 2 family house that I lived in too. Made rookie mistake with first tenant (see Dantilla's post: "Keep screening standards high, and do not deviate. No exceptions."). After we figured that out, next tenant was with us for 11 years and were fantastic. Now this was in Jersey City, mind you, bought when the neighborhood was just on the verge of exploding with its easy commute to NYC...we did very well when we decided to move and sell out.

[Zeke]

To me having rentals is a investment business. Investments pay out in many different ways. Make sure you know what your return is to your investment. Move it if it's not ideal.

Another way to look at it is leveraging. You say the properties are paid for and your return on that investment is rents. I see others that keep the leveraging at a point where tax advantages are maximized and profits are zero. Any equity that can be used is used to acquire.

You could get out with an exchange. Trade your equity for that in a multiple owner conglomerate. Money is money and like Paul says, no drama pays out that I know of. I could give a rat's about water heaters. I have my opinions because I did property maintenance early on in my career. I got a 'taste' of what people are all about the first time I scraped peanut butter out of a kitchen drawer that need to be painted. I installed new windows in rentals when my door and window business was young. I got away from POS renters as soon as I could afford to pass on those jobs.

I've never met a renter that I would have live next to me, given the choice. I've met hundreds. Even the hot babes are more trouble than the eye candy. Maybe especially.

[JacobS911]

Any chance your partner would buy you out? Homes paid off and struggling to make it profitable and a partner that won't sell or (hear new ideas on different real estate investment) makes me think it would be best to part ways..if possible. Understand getting back at it though to make them profitable since you have a very vested interest. Hopefully it works out!

[WPOZZZ]

Section 8 is a PITA. That said, I've been doing this for over 20 years. I pay myself a small salary and have a real estate company do my lease management. You will get a call for broken things at night or weekends, when a plumber/electrician/appliance store delivery is not readily available. Worse yet, it happens on a long weekend.