I am considering buying a rental property. Talk me out of it.

[Anonymous]

We have several rentals, including part ownership in an office bldg. for the rental unit in the dc area, we manage it ourself. Management companies here wanted to take WAY too much. I spent money before I first rented it: hardwoods put in on first level, steam cleaned carpets, painted the entire inside ($2k alone for inside painting), etc. I list it on Craig's list each time it is vacant and have never had a problem. I do have a credit check run, check jobs and then current rental history. So far I've never had a problem. I owe very little on it now and probably net $1k/ month. I have had expenses come up and each time it is vacant I know I will need to spend about $2500 to get it ready to rent again. Still, I have had a great experience doing it. All tenants have been 2 yrs or more.

[Anonymous]

Anonymous wrote:We have several rentals, including part ownership in an office bldg. for the rental unit in the dc area, we manage it ourself. Management companies here wanted to take WAY too much. I spent money before I first rented it: hardwoods put in on first level, steam cleaned carpets, painted the entire inside ($2k alone for inside painting), etc. I list it on Craig's list each time it is vacant and have never had a problem. I do have a credit check run, check jobs and then current rental history. So far I've never had a problem. I owe very little on it now and probably net $1k/ month. I have had expenses come up and each time it is vacant I know I will need to spend about $2500 to get it ready to rent again. Still, I have had a great experience doing it. All tenants have been 2 yrs or more.

Do you have any legal protections on yourself like putting the house in an LLC? Did you hire a lawyer or accountant? What area do you own a rental in?

I am thinking of purchasing in PG County.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have several rentals, including part ownership in an office bldg. for the rental unit in the dc area, we manage it ourself. Management companies here wanted to take WAY too much. I spent money before I first rented it: hardwoods put in on first level, steam cleaned carpets, painted the entire inside ($2k alone for inside painting), etc. I list it on Craig's list each time it is vacant and have never had a problem. I do have a credit check run, check jobs and then current rental history. So far I've never had a problem. I owe very little on it now and probably net $1k/ month. I have had expenses come up and each time it is vacant I know I will need to spend about $2500 to get it ready to rent again. Still, I have had a great experience doing it. All tenants have been 2 yrs or more.

Do you have any legal protections on yourself like putting the house in an LLC? Did you hire a lawyer or accountant? What area do you own a rental in?

I am thinking of purchasing in PG County.

They are all in llc's. we did it ourselves, however for full llc protection, I think even the mortgage needs to Be in the llc's name.

[Anonymous]

Anonymous wrote:I own some rental properties and one major con is is large unexpected bills for things that break, or just wear out over time, surprise tax bills, vacancies, etc. So make sure you have a large cash reserve to spare.

Another is the time spent on it, even if you have professional management.

The big pro is the opportunity for returns far greater than index funds.

The Bigger Pockets website and podcast is a good way to start educating yourself.

Totally agree. I am a stay-at-home-mom/real estate investor. It does take some time, even with management, but you can get great returns. Keeps me from having to do a 9-5 job, though. Start with Bigger Pockets and educate yourself,fine what areas you want to invest (Baltimore might have better deals than DC but you just have to do your research). It's great! Good luck!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have several rentals, including part ownership in an office bldg. for the rental unit in the dc area, we manage it ourself. Management companies here wanted to take WAY too much. I spent money before I first rented it: hardwoods put in on first level, steam cleaned carpets, painted the entire inside ($2k alone for inside painting), etc. I list it on Craig's list each time it is vacant and have never had a problem. I do have a credit check run, check jobs and then current rental history. So far I've never had a problem. I owe very little on it now and probably net $1k/ month. I have had expenses come up and each time it is vacant I know I will need to spend about $2500 to get it ready to rent again. Still, I have had a great experience doing it. All tenants have been 2 yrs or more.

Do you have any legal protections on yourself like putting the house in an LLC? Did you hire a lawyer or accountant? What area do you own a rental in?

I am thinking of purchasing in PG County.

They are all in llc's. we did it ourselves, however for full llc protection, I think even the mortgage needs to Be in the llc's name.

You did it yourselves? How so? What state is your LLC in? Did you use a book or something? Do you have an accountant? I am a JD but I am a little hesitant.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I own some rental properties and one major con is is large unexpected bills for things that break, or just wear out over time, surprise tax bills, vacancies, etc. So make sure you have a large cash reserve to spare.

Another is the time spent on it, even if you have professional management.

The big pro is the opportunity for returns far greater than index funds.

The Bigger Pockets website and podcast is a good way to start educating yourself.

Totally agree. I am a stay-at-home-mom/real estate investor. It does take some time, even with management, but you can get great returns. Keeps me from having to do a 9-5 job, though. Start with Bigger Pockets and educate yourself,fine what areas you want to invest (Baltimore might have better deals than DC but you just have to do your research). It's great! Good luck!

How do you find contractors to work with? Do you use a lawyer or accountant?

[Anonymous]

Landlord here. It took almost 10 trips to the MoCo District Court to finally get my tenant evicted. Oh, court meets only on Mondays, at 9am. If you can't make it then, the court rules for the tenant since you didn't show up. I once arrived from a trip to Asia the night before, and overslept.. had to re-file and wait another 6 weeks to get a court date.

There are professional deadbeats out there who ride the float of a slow court system and even slower sheriffs (they do evictions in MD). Average time from eviction order to sheriff showing up is 6 weeks. Of course, my tenant moved out 2 days before the sheriff turned up.

[Anonymous]

Anonymous wrote:Landlord here. It took almost 10 trips to the MoCo District Court to finally get my tenant evicted. Oh, court meets only on Mondays, at 9am. If you can't make it then, the court rules for the tenant since you didn't show up. I once arrived from a trip to Asia the night before, and overslept.. had to re-file and wait another 6 weeks to get a court date.

There are professional deadbeats out there who ride the float of a slow court system and even slower sheriffs (they do evictions in MD). Average time from eviction order to sheriff showing up is 6 weeks. Of course, my tenant moved out 2 days before the sheriff turned up.

Did you do a credit and employment check and get references?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Landlord here. It took almost 10 trips to the MoCo District Court to finally get my tenant evicted. Oh, court meets only on Mondays, at 9am. If you can't make it then, the court rules for the tenant since you didn't show up. I once arrived from a trip to Asia the night before, and overslept.. had to re-file and wait another 6 weeks to get a court date.

There are professional deadbeats out there who ride the float of a slow court system and even slower sheriffs (they do evictions in MD). Average time from eviction order to sheriff showing up is 6 weeks. Of course, my tenant moved out 2 days before the sheriff turned up.

Did you do a credit and employment check and get references?

Of course, in 15 years of being a landlord, it's the one time I didn't. The property was due to be taken off the rental market in 6 months (for large renovations), and I needed to fill it that short time, and I was leaving the country the following day, and had no luck renting it for 2 months. Lesson learned.

Tenant was gainfully employed, and was a family man in his 50's. Just had real trouble paying bills I guess due to a recent divorce. It came to light later he did it at his previous place also.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have several rentals, including part ownership in an office bldg. for the rental unit in the dc area, we manage it ourself. Management companies here wanted to take WAY too much. I spent money before I first rented it: hardwoods put in on first level, steam cleaned carpets, painted the entire inside ($2k alone for inside painting), etc. I list it on Craig's list each time it is vacant and have never had a problem. I do have a credit check run, check jobs and then current rental history. So far I've never had a problem. I owe very little on it now and probably net $1k/ month. I have had expenses come up and each time it is vacant I know I will need to spend about $2500 to get it ready to rent again. Still, I have had a great experience doing it. All tenants have been 2 yrs or more.

Do you have any legal protections on yourself like putting the house in an LLC? Did you hire a lawyer or accountant? What area do you own a rental in?

I am thinking of purchasing in PG County.

They are all in llc's. we did it ourselves, however for full llc protection, I think even the mortgage needs to Be in the llc's name.

You did it yourselves? How so? What state is your LLC in? Did you use a book or something? Do you have an accountant? I am a JD but I am a little hesitant.

I am an attorney also. We didn't use any books. Our llc's are in the states our properties are in.

[Anonymous]

Best investment i ever made. Cash flow positive for 5 years, sold the house for 300k over the original purchase price and the tenant paid down a significant portion of the principal. I never used a management company. Had toe tenants, i was very particular. Both families were military. Both left the house in the same condition the got it. To get good tenants you must chose wisely and discriminate (not on raxe, but other factors). Type of job, family structure, credit, income, andnthen gut.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I own some rental properties and one major con is is large unexpected bills for things that break, or just wear out over time, surprise tax bills, vacancies, etc. So make sure you have a large cash reserve to spare.

Another is the time spent on it, even if you have professional management.

The big pro is the opportunity for returns far greater than index funds.

The Bigger Pockets website and podcast is a good way to start educating yourself.

I have been reading Bigger Pockets for quite awhile now, it partly seems too good to be true to me.

Have you been successful as an investor? How much time did your "learning curve" take? Do you have a manager or do you manage yourself? I am afraid of making a very costly mistake.

I'm the PP you quoted. We've done OK with it so far. We own two older duplexes in a midwestern college town and live in DC. We break even on a cash flow basis, more or less, but there have been a few expensive repairs that have required us to pay for out of our savings. We also refinanced one of the properties to a 15 year note, which affected our cash flow situation. Our motivation isn't purely financial, I should add. We've considered moving to the town, and if our professional lives had turned out differently, we'd probably be there now.

I think the most important thing to do before you take the plunge is to familiarize yourself with the various ways to calculate your ROI (return on investment), and to spend a lot of time evaluating what your expenses and cash flow situation will be for each property you are considering. It's not that easy to do, because you have to make assumptions about rent, vacancies and expenses, but you have to do it. Once you've done it a few times, it gets easier.

As far as property management, we did hire a property manager because we are far away and had no other choice. I don't think I would make the same decision if I was buying something where I lived. It's expensive, and you don't have as much control over repair costs.

[Anonymous]

to people who have rentals:

How much of your own time per week do you spend on your rental(s)? Not op, but this thread is helpful

[Anonymous]

Are you thinking of buying a commercial or residential rental property? I can't offer too much insight on commercial properties, but my husband and I each own residential condos that we rent out, and both of our tenants moved out at the end of this year. It took my husband several months to find a tenant for his property, and its been about a month and a half and I'm still looking for a tenant. They are both located in the North Bethesda area, and we are finding that there have been SO many new rental buildings built over the past few years and its my view that they are making it difficult for us to find tenants. Both of our previous tenants stayed for almost 5 years, and we found them in under a week, so we were super lucky then, but I'm worried that this could become a big problem if they sit empty for several months everytime we need to find a new tenant.

[Anonymous]

Anonymous wrote:to people who have rentals:

How much of your own time per week do you spend on your rental(s)? Not op, but this thread is helpful

I have two rentals. The average week I don't even think of them until the check comes in. But then once in a while something will come up and you will have to spend time on them depending on what the problem is. Also, when you are in between tenants is when the biggest time commitment is, because you have to fix everything, clean it up, show it off, and vet tenants. As someone else mentioned, choosing your tenant is key and another factor I have is how long I think they will live there. Longer the better, and I incentive them to stay by keeping rent increases minimal.