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desabean
member
Any landlords around? What advice do you have?
desabean
member
My brother and I are trying to figure out what to do with my Dad's house. It is a townhouse that is pretty dated way out in the suburbs (so not in an area that is close enough in to not make a difference what condition it is in-- but an "ok" area".
With the market the way it is our first thought was to hold on to it rent it out. But, we're not sure we have the stomach to be landlords. I am going to meet with a colleague who is a realtor next week who should be able to give me some numbers on what we could rent/sell it for with no work/with a little work/with lots of work so we can make a more educated decision but in the meantime I am just wondering about a few things landlords have to deal with:
Do you set aside money each month for depreciation? How do you figure out the amount? Is there a standard (10% of the value of the house, a percentage of each month, something else??
Do you use a property manager? What are the pros and cons (am I right that the going rate for that is !5% of the rent?)
Any tricks for finding good tenants? We would certainly do a credit check.
Other advice?
thanks in advance!!
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Re: Any landlords around? What advice do you have?
That said, there's NO WAY IN H3LL I'd rent something out unless I was netting (before prop management cost) over double the mortage/taxes/insurance/HOA fees. Renters TRASH places. We have thrown every single cent of our "double our mortgage" profits back into the house to keep it at par. They're just way harder on a place than an owner is.
I am a landlord and it stresses me out like MAD. Remember, even when the market rebounds, value your time, your stress, and your efforts. Prop management companies help but they are just the go-between. You still have to fork out cash to them for fixes (and often more than you could contract yourself), you'll still get calls in the middle of a Saturday, etc. Is that worth the HOPE that you'll get 10K more when the housing market rebounds? And townhouses depreciate way faster than stand alone houses and appreciate MUCH slower.
Why do I keep renting my place out 2000 miles away? Its my dream house and I want it for ME. Its not about money. If it was "just a house" I would have given it away to not have to deal with the sh!t that goes with being a landlord.
"good" tenants is a joke. Even the world's best tenants will be crappy in some aspect. Our 1st year we had what we thought were AWESOME tenants. They ended up having a cat (lying to us) who peed on the floor over and over and have now ruined our hardwoods. They dented my brand new french door stainless steel fridge, they broke windows on the garage doors (on accident) and exterior light fixtures, they broke (or didn't prevent) hand railings....they smoked outside leaving butts everywhere, they installed a fire ring in my yard without my consent, when they left they left behind a ping pong table (beer pong anyone!?) and lawn furniture that I had to dispose of....
Credit and rental history checks are a must but you can't, as a landlord, report to those things if they're just idiots. So...you're always running a risk.
Choose to be a landlord VERY carefully. You will likely never profit (unless its mortgage free and then why wouldn't you just sell it) and its a total PITA.
Just my 2 cents.
Well, it's definalty not a good time to sell, at least in Las Vegas were we are, but if it doesnt make sence to sell it, as in you won't make any money then renting is definalty an option.
We have 14 rental properties, and they are a PITA! We have a property management company mostly because we have so many. They scan the tenants, collect the rent and deal with any issues that come up. We pay them 10% of the rent a month. It's worth it- we used to deal with them ourselves, but it was like another job.
WIth one property you guys could do it yourself, just screen the tenants- require a security deposit- make sure to run a credit check- although in this market most people don't have good credit- espically if they are renting, you have to be willing to bend a little in terms of the "prefect tenant", and by the way there is none! Most of them suck, even with proper screening. But just cover your butts, make sure your lease allows you to change things and make sure about every 3-4 months you do an inspection of the property- this has really helped us cut down on damages on our homes.
We do make income from the properties each month, mostly because they were bought back in the day- before the housing prices went through the roof. In the long term they will be a good investment. If you can hold onto it and be willing to deal with it- it may pay off in the long run.
I'll throw 1 cent out there... my SIL has a GREAT condo in a GREAT area of Seattle that iss nice, worth money, great ammenities, etc. GREAT place.
When she moved in with her BF, she rented it out. 3BR/2+BA to "professional" tenants. Still has nothing but headaches and BS with that place. It just seems like something is always going wrong, and no tenant (well, rare) is just going to fix the sink themselves, they're just gonna call and whine. She wishes she could dump the place, b/c of the "BS factor" alone. And FWIW, when her wonderful nursing grad students moved out, it sat empty for 5 months, despite it's appeal.
Bottom line - put a price on the "BS Factor" and be sure to make sure that's part of your decision to the financial one.
(ps - sorry you're going thru this. never fun)
Very very true- I see so many nice communities go to crap because of the houses being empty and the HOA dues not being paid. That being said- we as owners pay the HOA dues for our tenants- we don't leave that up to them, we pay water, trash, and HOA dues. We don't want to risk the HOA dues not being paid and us as the owners getting fined.
Thanks ladies! You don't really paint a pretty picture, but I'm not totally surprised by that. We assumed we would pay the HOA fees. *Ideally* we would rent it out for close to 3 times what the mortgage costs (my Dad had paid it down significantly), looking at comps the price is in line....however, I think we would need to put some money in to it first to get it there.
We figured that after HOA, mortgage, property mgmt, depreciation (we figured 300 a month, NO idea if that is right or not), we would each get a little money in our pockets...while it is not a great neighborhood, I don't think we have the foreclosure issue in DC that others do. But if I looked closely I guess there could be some.
I will meet with the realtor and get his take and then my brother and I will figure out what is right for us. There is a huge part of both of us that would love to just sell it but we know my Dad always regretted not keeping our house in NJ as an investment and I think we are channeling what he would tell us to do ; )
Try, and I know its hard, that its a house and not your dad there and, while he may have reretted a sale decision in the past doesn't mean you should saddle yourself with headaches and heartaches to try and "right" that issue for him. I know its so hard to differenciate those issues but for your sanity, try!!!!
HUGS!