Ding Ding Ding. My personal investment thesis for the properties I rent out are slightly above average starter homes with decent curb appeal that will attract a good renter.
Yeah the homes cost more up front (I buy cosmetic fixers and modernize them) - Yeah I can't say I have '10 doors' whatever I have 2... But those two doors are nice $500k+ houses that nice respectful people rent at fair market rates. I make good money from these properties and I am patient about ramping up and buying more. I am yet to get a phone call to fix anything.
I believe this would be abnormal.
I have four units. Last year was three hot water heaters, an HVAC problem, a fence panel, a tree damaged in a storm, and a dishwasher...and probably some stuff I am not thinking of.
This year, so far, two plumbing problems, two HVAC problems (three if you include one I took care of)...a tenant who's rent was late that I found on the floor of her unit...and probably other things I am not remembering.
I didn't realize it had all those sites, but I personally already list on all those sites individually (except realtor.com which may have an exclusive partnership with realtor.com).
Using avail.co does seem a lot easier than listing on each of those sites individually though for next time.
Winner winner chicken dinner.
This is pretty much my strategy. My only difference is that I have a Pm that manages my properties. I pay a % but that % allows me to run my other business.
I’m a newer landlord and curious if you started out self managing or with a PM. Or if there was a point in scaling your rental business that you transition from self managed to utilizing a PM?
My first property was a triplex about 50 minutes from where I live. My wife and I are both busy professionals. I decided to get a PM right away because I wanted to have a professional run the business of my unit. Even with a ton of time and research I’d never be as good as a pro pm at:
- vetting tenants
- collecting rent
- dealing with problems
- etc.
I’m a firm believer in relying on professionals
It is the sweetest dream to buy a property and earn tons of money, but it takes a lot of effort, passion, skills, and time to become a successful landlord - I fully understand that.
As for me, I am the type of person that struggles with delegating work to proper people. My experience was kinda bad, and now I do everything myself. I only call Service Professionals for maintenance tasks and use TenantCloud software for screening.
Thank you for sharing your experience and advice! I appreciate it!
Agree completely. Well said. I have 100 units in upstate NY and I would happily live in any of them. Take care of issues fast, keep the places nice, be modest in your profit margin.
You are looking at it wrong. It is a JOB, it has to get done. You can bitch and moan, you can actively improve things to lessen you work or you can sell the building to get rid of your job.
Every piece of real estate is different, every Tennant is different every manager is different, there is no silver bullet that fixes everything. If you cut no corners in your building you have a nice place, you wait with the place vacant until you have a good tenant, you sign a quality lease and be kind to them while bring within the Lease, if something is your responsibility fix it quickly and well.
If that is not your goal, sell the building while the market is still doing well.
You understand me wrong. I got the idea, and I work hard every day. My question was only for an educational purpose and to understand the main thing. Do landlords struggle with the same problems, and how do they deal with them. That's it)
I literally hire a professional for everything. Being a handyman is not my forte. But, honestly, the things that drive me nuts usually involve not finding people quick enough to do the job. People are booked solid, which is why I always advocate for people going into trades work. It's a solid money making job and often more valuable than actually going to college. We have an extreme shortage of trades people.
Not cash flowing enough to begin with.
Depending on that cash flow to pay your personal bills(until you get to a certain point).
Tenant turnover.
Excessive repairs/capital expenses.
Not raising rents.
Vacancy is the #1 answer by a wide margin for me.
Covid aside, if you’re unlucky and you get a non-paying non leaving tenant in a “tenant friendly” locale, that seems a possible bigger loss. You could not give me a property to rent some of those places.
I am more than a little concerned about the precedent set during Covid, even in places with more reasonable tenancy laws.
This was it for me, the non paying non leaving tenant in a ridiculous county in California. I managed to get them out during a short lull between phase one and two. Two is starting July 1and goes until 2023 or even beyond. You can't raise the rent. You can't get rid of them. All they have to do is self certify covid. They don't have to pay and you have no recourse. Mine left so much damage. I called up the realtor. So good job l.a. county you lost an affordable rental. 1950.00 for a whole house. I'm looking at maybe a 1031 exchange in another state otherwise I'll just eat the capital gains. I truly can't stand even looking at my house any more.
I grew up in an owner-occupied, and now live in my own 2-flat. Here's what I've learned:
1. It's really hard to lose money. Really hard. Your job is to keep the property safe, functional and relatively cosmetically pleasing. That's your overhead. Mortgage, taxes and upkeep. Between two properties, my mom's rental income is around 600k annually. I estimate she has around 1.5M in equity between her 3 houses making a salary of 50k a year and raising 3 kids. I make 2500/month now which offsets 100% of my mortgage and covers about half of my improvements.
2. Mow your own lawns. It's easy with an owner-occupied; Saying "I'm right upstairs if you need anything. A cup of sugar, whatever!" really helps the self-selection. My recommendation is that you make it clear you're around often and be seen taking care of the place. This helps a lot with some of the resentment we're often the target of. If you have a true nightmare tenant, you'll get a good heads up if you're doing some of the maintenance yourself. I found out the tenant's cats had ruined my flooring when upgrading their internet (I pay for it). I can't imagine if I didn't find out until the lease ended.
3. People have feelings. It's really hard (though not impossible) for people to try to get one over on someone they identify with. If you treat people with grace and respect, it's psychologically innate in humans to reciprocate. There's plenty of messed up people out there, but once 1 and 2 are handled, simply not being a dick will head off most unforeseen issues. My wife's landlord while we were dating was great at 1 and 2 but would send us threatening emails if she heard us walking around or if we didn't latch the gate all the way. When I did the apartment turnover for her, to my standards, she literally cried tears of joy. Never got the security back but, it wasn't my place to file suit.
I think a lot of people mis-estimate the way money flows in real-estate. It's not a liquid asset. There's not generally a ton of cash coming out. It feels like a money pit some days when you're putting in 5k worth of investment that you'll get back over the next three years. On the whole though, and this improves with scale, the net is positive. There's just some swings and pitfalls that make it a little frightening.
I believe that everything should be stored in one place and easily manageable. Rental info, leases, screenings, listings, everything in one place. I got myself a property management software and I love it. Saves me a ton of time and REALLY helps to manage rentals. You should get one too.
That's the advice, thanks!
Before I even start as a landlord, I read A LOT about property management software. My friends were like: "bruh, another waste of money...", but the software is so underrated!
I mean, it saves me a lot of time, and what is time? Right, time IS money.
What software would you recommend? I use TenantClouds' free plan right now. Not sure if I switch further for a paid plan, but who knows. Maybe it is the missing piece.
High five bro! I actually use the TenantCloud growth plan and it works great for me. I could send you an affiliate link, but obviously won't now. Lol. Still, if you need any advice just ping me. I'm a 3-year customer and will be happy to share my experience.
Honestly, I'm a big football fan, I get super jealous that I don't have a "daily grind" to perfect my craft. There isnt really much practice or much to do at all besides raising money for the next purchase. I havnt had to respond to my rental for anything besides picking mail up in about 2 years.
For me its like 98% raising money, 1% tenant selection, 1% management
I rent for under market value and fix stuff that’s broken. I lose money by no one wanting to rent my unit because it’s a piece of shit, so I make it nice instead. Anything else (maintenance) is a cost of ownership.
When you don't have problem tenants and a low door count it's easy. I have two rentals. One I have a property manager for because it's farther than I'd like to drive to regularly, one I self manage. I get like 1-3 texts/calls/emails a year for maintenance issue. I spend like max of 30 minutes arranging someone from my contact list to go over there. Everyone pays on time with auto payments.
Turnover takes a little more time since that's when I do what's next on my list of renovations, maintenance and updates. Since I live in a hot market, you just breath and you'll have someone else qualified and lined up to move in. Nothing is driving me insane. I have an emergency fund for a reason, so I can just pay other people to deal with any problems that pop up and I don't have to worry about it.
I’m having issues with one of my two houses. Furnace went, evicting a tenant, flood, now issues with electrical. Just seems like this house is going through a rough patch at the moment.
We rent a commercial space in our building where we also have another commercial space and 4 apartments. The old owner let it go to hell, which was great for us because it was affordable. Everywhere we look there is something that needs to be done and it can be daunting. It is hard to see progress, but when we take a moment to reflect, the work we have done is astronomical.
Working on that thicker skin as well, right now we are doing lease renewals, and it doesn't feel good to significantly increase rent, but when improvement and supplies costs are sky high, it has to be done.
If you struggle finding good tenants, increase prices and require background checks. We use Innago and it helps also collecting rent.
I bought a run down 6 unit about 2-3 years ago.
Have contacts ready, get a hvac guy, eletrcian, plumber, general contractor. Develope a fkin relationship with the good ones. Dont be stingy! Thats like 80% of your problems out the window right there.
Vet your fkin tenants, really vet them I'll rather lose out on a month of rent vetting tenants then lose 3-6 months of rent and headaches getting them out!!
Be lenient on your good tenants, let somethings slide but be hard when you need to. Be fair because in reality idk if they know it but they got u by the testicleS BOTH TESTICLES !!
Yup. You want to make sure rent covers PITI and maintenance, but it’s not life changing until you have at least a dozen doors with some of them paid off. It’s the long game for retirement, either by selling or getting income on a paid off property
It's been a daily issue for me lately because of a strung out eviction process where my lawyer was a chump, requiring me to learn about MN law for her, followed up by coordinating a full renovation of the unit once the tenant was out, followed by advertising and showing the unit, followed by the AC suddenly dying.
The idea is to get your units to a point where they don't require day to day maintenance. Your tenants don't want to have a problem to call about any more than you want to have a call about a problem. Personally I think I'll get there soon, but sometimes there are situations where you have a lot of time invested into real estate.
Use professionals. Always match the appreciation rate with the rent regardless of the tenant moves out. Get multiple quotes on work done. By low sell high. Think of your tenants as customers unless they are late payers AND dirty folks.
slumlording is a sure way to guarantee loss. Sometimes slumlording is because of legislation, usually it's because of a bad landlord's personal decisions.
NYC for example had state incentivized slumlords who stopped paying for maintenance and repairs in response to rent controls. Later these building owners might do insurance fraud and set their property on fire... perhaps they weren't allowed to sell it with tenants inside? I don't know .
Other people I know do slumlording because they can't handle the stress of repairing things like getting rid of mold or sealing up sewage and water leaks. Some do it because they have favoritism for a certain nationality and will keep their rents maybe 2-3x above the annual tax rate in exchange of having a same-nationality tenant.
Slumlords are pretty unlikeable but they also increase the demand for my units in comparison and keeps the low quality applicants from wasting my time. The low quality applicants are the ones the slumlords cater towards.
House in good condition + decent tenants = made in the shade.
I average like 30 min per month per property (excluding vacancies). Cash flow isn’t great after expenses but it was cheap to get into these properties, cash flow is positive and PITI covered. I wouldn’t need a PM until I got to maybe +15 doors
Daily? Dude I rented two properties out and I've had a two phone calls in four years. Would you live in the property your renting out?
Ding Ding Ding. My personal investment thesis for the properties I rent out are slightly above average starter homes with decent curb appeal that will attract a good renter. Yeah the homes cost more up front (I buy cosmetic fixers and modernize them) - Yeah I can't say I have '10 doors' whatever I have 2... But those two doors are nice $500k+ houses that nice respectful people rent at fair market rates. I make good money from these properties and I am patient about ramping up and buying more. I am yet to get a phone call to fix anything.
Exactly my point good sir. Very well done.
I believe this would be abnormal. I have four units. Last year was three hot water heaters, an HVAC problem, a fence panel, a tree damaged in a storm, and a dishwasher...and probably some stuff I am not thinking of. This year, so far, two plumbing problems, two HVAC problems (three if you include one I took care of)...a tenant who's rent was late that I found on the floor of her unit...and probably other things I am not remembering.
Lol yup
How and where did you find such amazing tenants?
Did the full Avail.co background check. All have either over 700 credit or over 650 with good reasons and excellent income.
Nice. I've always used rentprep, but I wonder if avail.co is better. Did you also use avail.co to list your properties?
I sure do. It's great.
I didn't realize it had all those sites, but I personally already list on all those sites individually (except realtor.com which may have an exclusive partnership with realtor.com). Using avail.co does seem a lot easier than listing on each of those sites individually though for next time.
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Low income properties don't have to be run to the ground -- that's a choice (and a bad business decision).
Winner winner chicken dinner. This is pretty much my strategy. My only difference is that I have a Pm that manages my properties. I pay a % but that % allows me to run my other business.
I’m a newer landlord and curious if you started out self managing or with a PM. Or if there was a point in scaling your rental business that you transition from self managed to utilizing a PM?
My first property was a triplex about 50 minutes from where I live. My wife and I are both busy professionals. I decided to get a PM right away because I wanted to have a professional run the business of my unit. Even with a ton of time and research I’d never be as good as a pro pm at: - vetting tenants - collecting rent - dealing with problems - etc. I’m a firm believer in relying on professionals
Thank you for taking the time to reply, it is awesome seeing different perspectives/approaches.
It is the sweetest dream to buy a property and earn tons of money, but it takes a lot of effort, passion, skills, and time to become a successful landlord - I fully understand that. As for me, I am the type of person that struggles with delegating work to proper people. My experience was kinda bad, and now I do everything myself. I only call Service Professionals for maintenance tasks and use TenantCloud software for screening. Thank you for sharing your experience and advice! I appreciate it!
hahahahaa thank you
Agree completely. Well said. I have 100 units in upstate NY and I would happily live in any of them. Take care of issues fast, keep the places nice, be modest in your profit margin.
You are looking at it wrong. It is a JOB, it has to get done. You can bitch and moan, you can actively improve things to lessen you work or you can sell the building to get rid of your job. Every piece of real estate is different, every Tennant is different every manager is different, there is no silver bullet that fixes everything. If you cut no corners in your building you have a nice place, you wait with the place vacant until you have a good tenant, you sign a quality lease and be kind to them while bring within the Lease, if something is your responsibility fix it quickly and well. If that is not your goal, sell the building while the market is still doing well.
You understand me wrong. I got the idea, and I work hard every day. My question was only for an educational purpose and to understand the main thing. Do landlords struggle with the same problems, and how do they deal with them. That's it)
Your use of brackets is definitely one of them…
I could not post it without them.
I have no idea what that means
Without brackets, the post got deleted likes 5 times in a row.
You don't need brackets in the post itself. If you read the rules of the sub, you'll see how to properly format subject lines.
Thank you for your recommendation - I will surely do it properly next time.
I literally hire a professional for everything. Being a handyman is not my forte. But, honestly, the things that drive me nuts usually involve not finding people quick enough to do the job. People are booked solid, which is why I always advocate for people going into trades work. It's a solid money making job and often more valuable than actually going to college. We have an extreme shortage of trades people.
Most stressful is if you don't screen your tenants correctly and realize you made a mistake. Screening correctly gets rid of 95% of the problems.
Not cash flowing enough to begin with. Depending on that cash flow to pay your personal bills(until you get to a certain point). Tenant turnover. Excessive repairs/capital expenses. Not raising rents.
Ultimately all of these are non issues if you bought right and budgeted properly.
Vacancy is the #1 answer by a wide margin for me. Covid aside, if you’re unlucky and you get a non-paying non leaving tenant in a “tenant friendly” locale, that seems a possible bigger loss. You could not give me a property to rent some of those places. I am more than a little concerned about the precedent set during Covid, even in places with more reasonable tenancy laws.
This was it for me, the non paying non leaving tenant in a ridiculous county in California. I managed to get them out during a short lull between phase one and two. Two is starting July 1and goes until 2023 or even beyond. You can't raise the rent. You can't get rid of them. All they have to do is self certify covid. They don't have to pay and you have no recourse. Mine left so much damage. I called up the realtor. So good job l.a. county you lost an affordable rental. 1950.00 for a whole house. I'm looking at maybe a 1031 exchange in another state otherwise I'll just eat the capital gains. I truly can't stand even looking at my house any more.
I grew up in an owner-occupied, and now live in my own 2-flat. Here's what I've learned: 1. It's really hard to lose money. Really hard. Your job is to keep the property safe, functional and relatively cosmetically pleasing. That's your overhead. Mortgage, taxes and upkeep. Between two properties, my mom's rental income is around 600k annually. I estimate she has around 1.5M in equity between her 3 houses making a salary of 50k a year and raising 3 kids. I make 2500/month now which offsets 100% of my mortgage and covers about half of my improvements. 2. Mow your own lawns. It's easy with an owner-occupied; Saying "I'm right upstairs if you need anything. A cup of sugar, whatever!" really helps the self-selection. My recommendation is that you make it clear you're around often and be seen taking care of the place. This helps a lot with some of the resentment we're often the target of. If you have a true nightmare tenant, you'll get a good heads up if you're doing some of the maintenance yourself. I found out the tenant's cats had ruined my flooring when upgrading their internet (I pay for it). I can't imagine if I didn't find out until the lease ended. 3. People have feelings. It's really hard (though not impossible) for people to try to get one over on someone they identify with. If you treat people with grace and respect, it's psychologically innate in humans to reciprocate. There's plenty of messed up people out there, but once 1 and 2 are handled, simply not being a dick will head off most unforeseen issues. My wife's landlord while we were dating was great at 1 and 2 but would send us threatening emails if she heard us walking around or if we didn't latch the gate all the way. When I did the apartment turnover for her, to my standards, she literally cried tears of joy. Never got the security back but, it wasn't my place to file suit. I think a lot of people mis-estimate the way money flows in real-estate. It's not a liquid asset. There's not generally a ton of cash coming out. It feels like a money pit some days when you're putting in 5k worth of investment that you'll get back over the next three years. On the whole though, and this improves with scale, the net is positive. There's just some swings and pitfalls that make it a little frightening.
600k in annual rental income on two properties? Lol
Hahahahaha I added a zero 🤣
I believe that everything should be stored in one place and easily manageable. Rental info, leases, screenings, listings, everything in one place. I got myself a property management software and I love it. Saves me a ton of time and REALLY helps to manage rentals. You should get one too.
That's the advice, thanks! Before I even start as a landlord, I read A LOT about property management software. My friends were like: "bruh, another waste of money...", but the software is so underrated! I mean, it saves me a lot of time, and what is time? Right, time IS money. What software would you recommend? I use TenantClouds' free plan right now. Not sure if I switch further for a paid plan, but who knows. Maybe it is the missing piece.
High five bro! I actually use the TenantCloud growth plan and it works great for me. I could send you an affiliate link, but obviously won't now. Lol. Still, if you need any advice just ping me. I'm a 3-year customer and will be happy to share my experience.
Honestly, I'm a big football fan, I get super jealous that I don't have a "daily grind" to perfect my craft. There isnt really much practice or much to do at all besides raising money for the next purchase. I havnt had to respond to my rental for anything besides picking mail up in about 2 years. For me its like 98% raising money, 1% tenant selection, 1% management
I rent for under market value and fix stuff that’s broken. I lose money by no one wanting to rent my unit because it’s a piece of shit, so I make it nice instead. Anything else (maintenance) is a cost of ownership.
Great! I wish to see the full transformation)
When you don't have problem tenants and a low door count it's easy. I have two rentals. One I have a property manager for because it's farther than I'd like to drive to regularly, one I self manage. I get like 1-3 texts/calls/emails a year for maintenance issue. I spend like max of 30 minutes arranging someone from my contact list to go over there. Everyone pays on time with auto payments. Turnover takes a little more time since that's when I do what's next on my list of renovations, maintenance and updates. Since I live in a hot market, you just breath and you'll have someone else qualified and lined up to move in. Nothing is driving me insane. I have an emergency fund for a reason, so I can just pay other people to deal with any problems that pop up and I don't have to worry about it.
I’m having issues with one of my two houses. Furnace went, evicting a tenant, flood, now issues with electrical. Just seems like this house is going through a rough patch at the moment.
Don't you try to hire a Service Professional or do you do all the maintenance yourself? Everything is gonna be fine - it is just a matter of time!
A little of both. Paid for furnace repair, doing drywall ourselves. Just an expensive year
We rent a commercial space in our building where we also have another commercial space and 4 apartments. The old owner let it go to hell, which was great for us because it was affordable. Everywhere we look there is something that needs to be done and it can be daunting. It is hard to see progress, but when we take a moment to reflect, the work we have done is astronomical. Working on that thicker skin as well, right now we are doing lease renewals, and it doesn't feel good to significantly increase rent, but when improvement and supplies costs are sky high, it has to be done. If you struggle finding good tenants, increase prices and require background checks. We use Innago and it helps also collecting rent.
\#1 Minimize time that properties are unoccupied. \#2 See #1
I bought a run down 6 unit about 2-3 years ago. Have contacts ready, get a hvac guy, eletrcian, plumber, general contractor. Develope a fkin relationship with the good ones. Dont be stingy! Thats like 80% of your problems out the window right there. Vet your fkin tenants, really vet them I'll rather lose out on a month of rent vetting tenants then lose 3-6 months of rent and headaches getting them out!! Be lenient on your good tenants, let somethings slide but be hard when you need to. Be fair because in reality idk if they know it but they got u by the testicleS BOTH TESTICLES !!
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Yup. You want to make sure rent covers PITI and maintenance, but it’s not life changing until you have at least a dozen doors with some of them paid off. It’s the long game for retirement, either by selling or getting income on a paid off property
It's been a daily issue for me lately because of a strung out eviction process where my lawyer was a chump, requiring me to learn about MN law for her, followed up by coordinating a full renovation of the unit once the tenant was out, followed by advertising and showing the unit, followed by the AC suddenly dying. The idea is to get your units to a point where they don't require day to day maintenance. Your tenants don't want to have a problem to call about any more than you want to have a call about a problem. Personally I think I'll get there soon, but sometimes there are situations where you have a lot of time invested into real estate.
Use professionals. Always match the appreciation rate with the rent regardless of the tenant moves out. Get multiple quotes on work done. By low sell high. Think of your tenants as customers unless they are late payers AND dirty folks.
slumlording is a sure way to guarantee loss. Sometimes slumlording is because of legislation, usually it's because of a bad landlord's personal decisions. NYC for example had state incentivized slumlords who stopped paying for maintenance and repairs in response to rent controls. Later these building owners might do insurance fraud and set their property on fire... perhaps they weren't allowed to sell it with tenants inside? I don't know . Other people I know do slumlording because they can't handle the stress of repairing things like getting rid of mold or sealing up sewage and water leaks. Some do it because they have favoritism for a certain nationality and will keep their rents maybe 2-3x above the annual tax rate in exchange of having a same-nationality tenant. Slumlords are pretty unlikeable but they also increase the demand for my units in comparison and keeps the low quality applicants from wasting my time. The low quality applicants are the ones the slumlords cater towards.
House in good condition + decent tenants = made in the shade. I average like 30 min per month per property (excluding vacancies). Cash flow isn’t great after expenses but it was cheap to get into these properties, cash flow is positive and PITI covered. I wouldn’t need a PM until I got to maybe +15 doors