How's the rental biz?

[cashflyer]

A house in my neighborhood has come onto the market and I am considering buying it as a rental property.

Never been a landlord before. I have read plenty of horror stories here on Pelican.

Anyhow, the house was owner financed to the previous occupant who was evicted in November. The owner is two states away, retired, and says he doesn't want to f*ck with it any more. Price is attractive.

I live in the neighborhood, and feel that I could "keep an eye on it" - unlike the absentee owner did.

Some people tell me that there is a glut of renters because so many people lost their credit, and that this is a great time to own rental property.

Others would refer me back to the horror stories.



Any opinions from the Pelican trust?

[stomachmonkey]

Being close by is certainly an advantage but does not make you immune to the problems.

Still if it was all doom and gloom all the time then no one would be a landlord.

[Jim Bremner]

If you do buy it put it a LLC.
Tell the renters that you're just the jackhole that is there to collect the rent. Turn your phone off at 7pm and on at 8am. Don't have your phone on at 3 am when the water heater fails and they call to complain.

How many months can you survive with out a pyment? What are the tennant laws in your state?

Take a good look and if it makes sense DO IT and in time leverage it to get another..................

[Jim Bremner]

I would want to do light industrial. Cheaper roofs, no carpet, no kitchen, 1 sink, 1 toilet, no lawns cheaper to paint and same $$$ per square foot.

[cashflyer]

If you do buy it put it a LLC.
Absolutely... I did know this much.

Turn your phone off at 7pm and on at 8am.
I already have to do this because of work!

How many months can you survive with out a pyment?
I hate to say "indefinitely" but the price of the property IS low enough that the payments would be within my budget.

What are the tennant laws in your state?
No clue.


Does it make sense to use a rental management company? Ie: Are they worth their cut?

[pwd72s]

Good luck...I was once a landlord. When I sold, it gave me a springboard for easier & better investing.

[Evans, Marv]

You may as well give it a try, especially if it's within your budget. You would have lots of options: rent it out, rent to sell later on, use it as a starter property, etc. You'll never know what it's like to be a landlord & if you are cut out for it or not if you don't try it, and one house would be a good way to get your feet wet. I wouldn't recpommend using a management company. One house is manageable, and using a management company would put distance between you and the property preventing you from knowing what it's all about.

[Bill Douglas]

I'm a full time landlord and have been doing it for over 25 years. The main thing I have learnt is do NOT rent to the riff raff classes. Their lives revolve around getting out of paying for things, and the landlord is the enemy.

People with a "good" job are a pleasure.

After a few years instead of breaking even you will be making a bit of money, in ten years or so (hopefully) you will be laughing. I am.

It helps to be fairly thick skined.

[Seahawk]

It isn't all doom and gloom. We did very well with three rental properties over the years. When the tenants are good it is like stealing money...when they are not it is hard work with an iffy ROI.

After twenty plus years I simply ran out of hydraulic fluid in my fun meter and won't ever own a rental again. But, I make Rick Lee look like a social butterfly.

Talk to some landlords in the area, find out what the tenant base is like, the market base, and a take a long look at the condition of the house, with an eye towards what is going to break.

And, please, do whatever background checks on the tenants the state allows...never, ever rent without due diligence.

Originally Posted by cashflyer

A house in my neighborhood has come onto the market and I am considering buying it as a rental property.

Never been a landlord before. I have read plenty of horror stories here on Pelican.

Anyhow, the house was owner financed to the previous occupant who was evicted in November. The owner is two states away, retired, and says he doesn't want to f*ck with it any more. Price is attractive.

I live in the neighborhood, and feel that I could "keep an eye on it" - unlike the absentee owner did.

Some people tell me that there is a glut of renters because so many people lost their credit, and that this is a great time to own rental property.

Others would refer me back to the horror stories.



Any opinions from the Pelican trust?

[HardDrive]

Why an LLC? Just the added insurance barrier?

We are about to buy a rental house, so do tell......

[CarreraDan]

Harvey,
I say find out about the rental laws in SC and go for it. I know someone in Spartanburg who has multiple rentals and only works now when he wants to as the rentals provide him with a very comfortable lifestyle. He put ceramic tile in all the kitchens/baths and laminate everywhere else as he feels those are the most durable floors. His security deposits cover any paintwork that is needed. I can give you his number if you want it.

I think you would be ok as you can be quite an intimidating guy and I seriously doubt people would really want to mess with you--I mean that in the nicest possible way. Take care, Daniel.

[BK911]

Like a lot of other things:

When it's good it's great
When it's bad it sucks!

[gr8fl4porsche]

Originally Posted by BK911

Like a lot of other things:

When it's good it's great
When it's bad it sucks!

You beat me to it!

Bottom line is good tenants make all the difference.

Get a good tenant at a good rate, make them responsible for most repairs and upkeep and life will be easy.

Screen your tenants well.

Credit history usually paints a fairly accurate picture.

[Jim Bremner]

Originally Posted by HardDrive

Why an LLC? Just the added insurance barrier?

We are about to buy a rental house, so do tell......

Layer of protection incase you get THAT horror tenant. Smarter men than I use them every property is isolated.


I'm living in a rental right now that my parents own! I have a home being remodeled and my wife can't handle the stress of the work while she's there. I lived in this SAME house 20 years ago. the Kitchen was brand new when I was there and is way haggard now. If I ever own a rental or 5 ( Thinking of it right now) any and all kitchens will be painted white. the wood finished soaks up grease from sloppy cooks. I would have the best superflush toilets that I could buy! a $300 upfront expense vs. several plumbers visits for clogged toilets on a sundays

Landscape to prevent people from parking on the lawns! I came to mow my folks rental and the tenant was draining his coolant from his Camero on the lawn. Have a sprinkler sytem on a timer so the ;awn get's taken care of. If the BUY price is low enough to get in and sell it for a profit if it doesn't work it's a LOW risk! get in!

[Bill Douglas]

I haven't "worked" for the last 7 years and my rents coming in pay me fairly much twice what I was getting as a low level computer tech.

When I say not worked, I work a two hour day doing renovations, working on my own places. I do one at a time so I'm only ever one rent payment down, then rent to a better person for more money, and on to the next.

[cashflyer]

Originally Posted by HardDrive

Why an LLC? Just the added insurance barrier

LLC = Limited Liability Company
Owning the house as an LLC helps insulate your personal assets from "business assets." An LLC can also act as a barrier to limit your loss exposure in the event of a lawsuit. An LLC also allows you to better account for and claim your business expense deductions. Income from the LLC is taxed at the personal level, and the LLC files as a schedule C attachment to your regular taxes. Click above for the Wiki link.

Originally Posted by CarreraDan

I can give you his number if you want it.

DAN!! I haven't heard from you in forever!! Sure, bud... PM me the info. Or email me if you still have my addy.

Originally Posted by CarreraDan

I think you would be ok as you can be quite an intimidating guy and I seriously doubt people would really want to mess with you--I mean that in the nicest possible way.

Ah, don't let the image fool you. I'm a real sweatheart.

[sck007]

There are a lot sound advice from those who have chimed in. I would suggest doing a study for your surrounding area. Here in Houston we have HAR (Houston Area Realtors) site. You can lookup properties for rent in your market area including market sale to gauge what the going rate is.... Also, tax records as a base for the value of property being purchased. It's no Bible but should give a general tax value and tax rates currently being paid.

Some people buy properties to rent for monthly income or investment for the appreciated value or if luckier....both. If your getting a good discount and it cash flows out than it is almost a no brainer. You didn't mention if you were paying cash or bank financing. If financing at the bank that maybe a harder sale unless you put a significant amount down.

I have been doing the landlord thing as a side business with a Partner for the past 8 years. Location....location.....location is really important. Also, it is a big benefit if you can do most repairs yourself. All it takes is a few repairs and you will have a negative cashflow. It is a benefit in your case that you are so close to the property so you can manage it.

Finally, as mentioned above please do a proper background check on renter. The laws are really in favor of the tenant....

Good luck!

[Eric Coffey]

Originally Posted by HardDrive

Why an LLC? Just the added insurance barrier?

We are about to buy a rental house, so do tell......

I believe the "limited liability" part is to your advantage (EDIT: Cash beat me to it, see above). There are also some tax advantages as well. If structured and maintained properly, an LLC can protect your additional assets outside of the LLC if someone wants to come after you. So, you would want to form one for each rental property, or at least limit the assets in each. It doesn't take much to "pierce the corporate veil" though, so you need to do your homework, and make sure that you set it up properly AND maintain/run it properly.

Regardless, I would make it a requirement (written into the lease) that all tenants must carry renters insurance, with a specified minimum liability coverage if possible.

[cashflyer]

Originally Posted by Eric Coffey

If structured and maintained properly, an LLC can protect your additional assets outside of the LLC if someone wants to come after you. So, you would want to form one for each rental property, or at least limit the assets in each. It doesn't take much to "pierce the corporate veil" though, so you need to do your homework, and make sure that you set it up properly AND maintain/run it properly.

Absolutely it is necessary to keep your personal and business assets distinctly separated to keep the liability protection (the veil) in place. My attorney suggested putting all of our personal assets into a trust as a means of further separating them from the business activities.


Just as an example that I was given regarding piercing the corporate veil:

You live close to the property. Let's say you take your riding mower down to the rental house and mow the lawn. While doing this, a rock flies out of the mower deck and pokes your tenant's eye out. Well, you were doing this work with your personal mower (as opposed to your business mower) and now they can come after your personal assets. Personal is personal, business is business, and never ever mix the two.

I don't know if this example stands up to an attorney's scrutiny, but it sounds like something that would happen in our litigious society.

[Jim Bremner]

heck my LLC bank account os even at another bank than my house! Also look at getting your HOME, the house that you live in set up as a HOMESTEAD Homestead Act - Wikipedia, the free encyclopedia