Advice on handling a rental property

[jfrog]

Short story is that my dad doesn't live nearby but owns a house he wants to rent out and has offered me a pretty good deal for overseeing the property.

anyone have any advice on this sort of thing?

[aegsm76]

I have some experience with this.
My best advice would be to price the rent at lower than the market value for the property. This will give your renters an incentive to want to stay.
Carefully screen your applicants for good job history.
Make them responsible for repairs under $100 or so.
My uncle used to have 30+ rental houses that we helped him with.
These were his basic philosophies.

[Scott Pitta]

Our family has been in the rental business for many years.

Sell the house and put the money on Wall Street.

I refuse to be a landlord. Too many bad memories.

[Monterrey]

Originally Posted by Scott Pitta

Our family has been in the rental business for many years.

Sell the house and put the money on Wall Street.

I refuse to be a landlord. Too many bad memories.

Ooooooooooooooooh where is the thumbs up button?


That is wisdom for the day folks!!!!!

Been there and done that!!!

No more Landlord!!!

[jfrog]

Originally Posted by aegsm76

I have some experience with this.
My best advice would be to price the rent at lower than the market value for the property. This will give your renters an incentive to want to stay.
Carefully screen your applicants for good job history.
Make them responsible for repairs under $100 or so.
My uncle used to have 30+ rental houses that we helped him with.
These were his basic philosophies.

I was planning on keeping the rent slightly below market value. From my research the most expensive part is getting the house ready to rent out again between renters and so incentivizing them to stay is important.

The screening process is the most important part imo. Getting someone that can and will pay the rent every month is key.

I have never heard of having them be responsible for repairs less than $100. I didn't know if that was possible but I love the idea. I'll have to think about the pros and cons a bit more but it sounds promising.

Any other pieces of advice?

[jfrog]

Originally Posted by Scott Pitta

Our family has been in the rental business for many years.

Sell the house and put the money on Wall Street.

I refuse to be a landlord. Too many bad memories.

I know one can't avoid all bad headaches but aren't there some good strategies to help mitigate those risks? Surely if your family has done it so long you have some good advice?

[jfrog]

Originally Posted by Monterrey

Ooooooooooooooooh where is the thumbs up button?


That is wisdom for the day folks!!!!!

Been there and done that!!!

No more Landlord!!!

Tell me about your experience?

[Godsdrummer]

In order to make rental properties work you must have the right frame of mind. Best to put some of the rental money aside for repairs because this will be a constant occurrence regardless how good of renters you have. Being responsible for repairs over $100 means that they can take that off the rent legally. At least that has been my experience.

Being in construction I know several that have rental properties, one of them made a comment to another that was getting out of being a land lord because of always having to repair and maintain when renters moved. It was said you got to just expect things and go with the flow.

[Esaias]

Originally Posted by jfrog

I was planning on keeping the rent slightly below market value. From my research the most expensive part is getting the house ready to rent out again between renters and so incentivizing them to stay is important.

The screening process is the most important part imo. Getting someone that can and will pay the rent every month is key.

I have never heard of having them be responsible for repairs less than $100. I didn't know if that was possible but I love the idea. I'll have to think about the pros and cons a bit more but it sounds promising.

Any other pieces of advice?

Screen the tenants. Have them complete a credit report application before leasing. Require them to have good credit, make it clear beforehand. All minor repairs are tenant's responsibility, explain it clearly and put it in writing. Everything must be in writing, period. If their kid flushes a baseball down the toilet, their responsibility. If they break a window, their responsibility. Require a security deposit up front. Keep the deposit money separate, no commingling of funds, and return it to them if they end the lease satisfactorily.

Set the rent at a competitive rate. Don't go cheap, you'll regret it, not just income wise but you'll wind up with damage to the property. Late on the third, default by the tenth, out by the end of the month or whatever your state allows. No return of deposit if in default.

Maintain insurance on the property for certain. If you can, make sure the appliances are in GOOD working order, if not new. This saves on having to do repairs.

If you own the house free and clear, after 6 months of having it leased out refinance it for the equity and use that money to buy another house to lease out. From what I've seen average returns here in Texas run about 250-400 per month after paying mortgage, taxes, and insurance. Ten houses nets you around 3 grand or so a month in income, write off depreciation, pay no income taxes. After ten houses, bundle them into a sale, jumbo loan refinance, etc for about 150000-200000 and start investing in multi-family units aka apartment complexes. Cash on cash return for multifamily run a bit less than single-family but net incomes and especially capital gains on a good value-play scale astronomically. Did I mention pay no income taxes due to depreciation?

Whoever said put money in wall Street is probably still working a job.

[Esaias]

Originally Posted by Godsdrummer

In order to make rental properties work you must have the right frame of mind. Best to put some of the rental money aside for repairs because this will be a constant occurrence regardless how good of renters you have. Being responsible for repairs over $100 means that they can take that off the rent legally. At least that has been my experience.

Being in construction I know several that have rental properties, one of them made a comment to another that was getting out of being a land lord because of always having to repair and maintain when renters moved. It was said you got to just expect things and go with the flow.

Being successful REQUIRES* being around people who do this for a living AND are successful themselves. Otherwise, it's 'taxes, tenants, toilets, and trouble' lol. If you structure the lease agreement correctly, and you have the best property for the best price, you will wonder why you didn't do this sooner. If you DON'T structure it properly you will wonder why anybody does this and how anybody possibly makes any money doing it.

*By 'requires' I mean a sine qua non, a 'not without which'. It is just about impossible to make money consistently in real estate without having a mentor or mentors who have been there and done that successfully themselves. Unless you're a genius or a natural born tycoon of course.

Stay away from late night infomercials and dvd/book sales, too.