How do you know when you are looking at a house that the expenses are going to be 2%, 3% or whatever. I am struggling with getting used to looking at ugly houses. I run my farm and business by keeping everything in top shape and looking good. Many if not most of the rentals that I am looking at look like dumps to me.
How do you get used to or over that? How do you tell if indeed a certain building is likely to eat more repair and maintenance money than the normal average? Or do you just do a bunch of buildings so that the average works out?
As I look at buildings, I find myself thinking “dump”, “dump”, “dump”.
and comming up with lower and lower numbers that I am willing to pay because I see so many things that could cost me a ton. (maybe this is prudent, but it does seem to make my offers laughable in most situations).
It is hard to get used to. The first rental I bought I put in new carpet with pad and wallpaper in the kitchen and grass cloth wallpaper in the living room. Several months later after I evicted the folks are had to remove all the grass cloth and texture the wall and repaint over all the crayon I started to get the message not to fix them up so good.
In low income areas I still have a nice clean unit but not as nice as it could be. I stay with just the basics and fix stuff that is broken but do not go to any extremes. I use glue down carpet is it needs new. It lasts a bit longer and costs a bit less too. It is still a battle. The best way to help win the battle is to visit the home of the prospective tenant before deciding to rent to them. If they are filthy you may decide to search for another tenant.
That makes sense to me.(almost everything you say makes sense to me)
I was wondering though on making offers. There are several numbers that I have seen tossed around to use as expected repairs percentages. When I look at a property, do I just blindly trust in these numbers, and some will be worse and some better? In your experience, how far away from these general numbers can the maintenance actually get?
If I were to buy 100 houses, then you can just play the percentage I suppose. If you are looking at your first one, then I am trying to make sure that I don’t get one that hits the top of the maintenance range. It seems that if you only have one house, one major expense could kill you. ie. roof, major leak, appliances, etc.
Maybe this is just a fear that needs to be dealt with and pushed through to learn from.
I too started with maing my rentals too nice. Nicer appliances, doors, tubs, carpet, etc. Throughout, my wife would always tell me who is going to rent the place unless it is very nice. After we evicted the first few tenants and the place was destroyed, we too had to replace everything.
First, I no longer listen to wife regarding my rentals. The fact is that if you keep the place clean, nice looking and everything works, someone will rent it (especially low income).
Second, this is not YOUR home. It is a rental unit for someone else. If they want to commit to your rental unit, they can put in nicer carpeting and the rest.
I have a long term tenant of 8 1/2 years that came with a building I just bought. She is very nervous that I will evict her. She keeps the palce great, doing many repairs herself. The problem is that she is paying $320/month, when her rent should be $650/month. I will have to evict her.
