I was wondering (as I have a management background) Is landlording really all that hard or is it just a matter of inexperienced investors building false expectations and creating a lot of their own problems. I would think, minus ignorance of the law, there are a lot of issues that do not have to arise if the investor was forward thinking and really qualified their prospective tenants?
cdrei,
Who told you it was hard? IT’S FUN AND A GREAT WAY TO MAKE NEW FRIENDS!
Mike
I thought it would be, but you know all the stories out there from the …destroyed my rental to the took me to court and then the boyfriend with the pitbull moved in and on and on. You know what I mean. I’m a Realtor and have seen some pretty great SFH deals that would possibly cash flow at about $100-150 each. So I’m thinking 20 rentals would be my goal. My wife is a RN and could help with the cash flow issue if needed. Am I thinking right or am I all wet? I live in a very rent demanding area that is mostly rural small townships so the labor for any issues that I couldn’t handle would be cheap. I can do all except foundations, MAJOR plumbing and electrical. Everyones input is greatly appreciated:)
cd,
I was trying to be funny with my above post. The truth is that all of the landlording nightmare stories you’re heard are true. The truth is also that the vast majority of tenants are fine (if you thoroughly screen them). In my experience, about 90% of the tenants are no problem at all. There is always about 10% of the tenants that have some issues, including the 1% per month that I evict (or otherwise use leverage to kick out).
It sounds like you have a good approach. Starting with single family houses will give you time to adjust to all the nonsense and stupidity. Over time, you’ll get numb to all the drama.
The key to being successful with rentals is to understand the real world cash flow. Lack of proper cash flow is the number one reason that new landlords fail, followed by not being able to deal with the tenants.
Good luck,
Mike
I think the answer to your question is both- It is hard in some aspects and poor management on the landlord’s part can make it harder. Proper management by you can make it less difficult but its not easy money, its a job just like anything else.
The whole key I believe to landlording is finding good tenants. A good tenant is worth a lot. People change and situations change there will always be issues. Just take a look at the news and some of the stupidity people exhibit. A good tenant can turn bad and vise versa. Sometimes tenants can be like children and test you. They will pay a bit late and then make excuses, dont let them make any excuses. What kind of excuse could they make if they walked out of a store with a cartful of goods without paying? The store wouldnt take any excuse, so you shouldnt either.
Real estate is easy…it’s the people that are difficult
True, houses don’t give you much lip or start much trouble.
The two main things I’ve found that make landlording hard are poor cash flow and bad tenants.
Great tenants make or break you. Great tenants make you want to buy the world, and bad tenants make you hate life. Also paying too much money for a property and having negative cash flow will make life horrible.
So if you can remember to only buy great deals, and be very careful who you let into your property, then you will eliminate a large amount of your headaches.
Yep, that was my thoughts as well. Also to answer your question, yes, a lot of newbies shot themselves in the foot due to poor people and financial management, but its no free lunch either. Being a LL can be frustrating at times.
The best tenants I’ve found are people who have either owned a home themselves or and/or want to own a home. It’s basically a crapshoot as one other poster said, since people are … well … people, and what looks good can sometimes be bad, etc. But in my limited experience with tenants, this seems to be the case.
There’s several issues here.
First, what are your expectations. Do you expect the rental to come back in BETTER condition than it was rented. If a tenant lived there ten years, I’m thankful that I can recarpet, paint, and have the place re-rented. A year ago, I had a new kitchen put in realizing it’s the first time in 50 years, and its about time.
Second, people mention tenant screening. I do my rentals 10% below market so I get 20 to 30 people repsonding, (at one point 150) rather than 2 or 3 wise guys to pick from. The more you charge, the less you can pick from.
Third, I consider my tenants good customers and treat them accordingly. When my mother-in-law’s tenants complain about being cold, no heat, she cites the law “I’m only required to give you 55 degrees”. When we get the same call, we apologize, and say “sorry, it really got cold, didn’t it. let us warm things up a few degrees, and I’ll bring by some thermometers to monitor things”. We’ll call in a day or two and ask if they are toastly and comfortable.
Little wonder my mother-in-laws tenants has an attitude and call “code encforecement”. If you cite the law, expect people to cite the law back to you.
Finally, they say not to get too chummy with tenants, but we’ve made exceptions. We had one where my wife goes by once a year to renew the lease over coffee and cookies, and exchange photos of the grandchildren.
We’ve just received several Xmas cards from former tenants, from Ireland (yesterday), New Mexico, Florida to name a few places. The one that moved to Florida wrote a long letter to us with the first Xmas card saying that “she thank God for letting her find us as landlords”.
Being a landlord is running a business. I own a business, and customers tell us they come because we are not rude, and treat them as human beings.
I was reminded how important it is when I had a tire blowout half a block from a tire shop. I explained to them the car is half a block down. I was yelled at “how do you expect me to wok on your car when it’s there. Bring it to the front HERE”.
You bet I had an attitude with the place.
It’s like any business, there are some good ones and some bad ones. It’s also like the news, only the horror stories make the news. And if you paid attention to the news, the lesson you’d learnd would be to never drive your car or walk down the street.
My mother has owned a rental for 20 years and for the most part, we never had too many horror stories. Never had a phone call at 3am from a tenant. Sure things broke and a couple of tenants have skipped out on us, but overall it wasn’t/isn’t too bad.
Some of the foreclosures I’ve seen on the market have been due to landlords not managing their property and letting things go, then tenants don’t pay the rent and then they can’t make the mortgage. Being overleveraged is also a problem. Like, sure, you can buy a property with 100% financing, but if you don’t have the money to fix things, things can go downhill quickly.
It sounds like you can easily select the most people who are part of your life. When your dealing with someone who is like that then how far you can manage. Do not let anyone interfere with your life.
A management background doesn’t help much when
you’re bleeding out your own money each month.
Looking back, I think it was the hardest for me when
I didn’t vet my tenants properly or let someone who
barely met my qualifications in because I didn’t want
to make that monthly payment.
Those experiences turned me into a grumpy ol man
who doesn’t take shit anymore…unless they’re military
and I know I can go to their First Sgt.
But like someone already said, “No free lunch!”
…but it’s worth it!
Tenants make it hard. If there were some way to be a landlord without having tenants, it would be great.
Screen tough, because well qualified tenants are a lot easier to deal with and cause a lot less damage.
Vacancies are miserable because they involve dealing with all the human scum who spend a lot of time trying to trick and lie their way into a decent rental unit. They can be very clever and it takes some work to catch them before they get in.