Rental Property

[347Mike]

Anyone own a few rental properties that wouldn't mind answering a few questions for me? I am looking for an entry into this and plan on renting my house in another two years. I am just looking for someone to bounce some questions off of and answer some general questions for a newbie.

Thanks.

[Frank]

Anyone own a few rental properties that wouldn't mind answering a few questions for me? I am looking for an entry into this and plan on renting my house in another two years. I am just looking for someone to bounce some questions off of and answer some general questions for a newbie.

Thanks.

I am curious as well. None of the houses around me appear to be selling. The one next door to me has had several upgrades and placed back on the market over and over, yet 2 years later it is still empty. I'm thinking if I want to move without incurring two house payments, I'm going to have to become a landlord.

[jw33]

I am curious as well. None of the houses around me appear to be selling. The one next door to me has had several upgrades and placed back on the market over and over, yet 2 years later it is still empty. I'm thinking if I want to move without incurring two house payments, I'm going to have to become a landlord.

me 3...

From what I gather it is hit or miss with finding decent tenants. Some folks who rent in my area really take care of the place and other just have their shit everywhere and you know they are trashing the house. Pretty scary to think you can have people destroy your shit and you may not get even.

[slow99]

Renting to tenants gives you pricing power. Great way to capitalize from inflation if you're financing with a fixed rate note and can leverage the spread.

[347Mike]

Sure would be nice to have an investment forum! Kidding of course....

On a more serious note, my neighborhood has been up and down but don't think any of the houses have been on the market too long. There was a foreclosure late last year and it is sold and already has renters in it as of recent.

My goal is to get some exposure to this and take baby steps. I wouldn't mind having one property, get a feel for it and then possibly start expanding. What I want to know is the specifics apart from the obvious normal expenditures and repairs you will have. I have done a little research and compared to houses in my area that are for rent and it looks like I can get almost $400 more than what my current escrow payment is. Now being the novice I am, I have no idea if this is decent, good, or terrible when you factor in all the costs associated with renting.

[bcoop]

I don't know if Brad (Stanggt40) made it over here or not, but I'd check with him. He has several properties, and lots of experience.

[slow84lx]

The key to being a successful landlord is to carefully screen your tenants before they move into your house. There are companies that will run background / credit checks on your prospective tenants for a fee (charge your prospective tenant an application fee to cover this) and it will be worth every penny to you.

Get a good deposit.

Be a good listener when the tenant has a complaint. Address the concern as well as possible if it is realistic.

Get the rent on time. Give notice immediately if it is late.

Price competitively. You don't really want to have the highest rental price on the block...you want a house that is rented and stays that way. Be a little lower than your competition. Every day that your house is empty costs you $$$$.

[347Mike]

The key to being a successful landlord is to carefully screen your tenants before they move into your house. There are companies that will run background / credit checks on your prospective tenants for a fee (charge your prospective tenant an application fee to cover this) and it will be worth every penny to you.

Get a good deposit.

Be a good listener when the tenant has a complaint. Address the concern as well as possible if it is realistic.

Get the rent on time. Give notice immediately if it is late.

Price competitively. You don't really want to have the highest rental price on the block...you want a house that is rented and stays that way. Be a little lower than your competition. Every day that your house is empty costs you $$$$.

Do you own any rental properties?

[slow84lx]

Do you own any rental properties?

Not currently but I've owned several in the past. I had 5 for a couple of years during the '90's before my divorce.

[347Mike]

Not currently but I've owned several in the past. I had 5 for a couple of years during the '90's before my divorce.

Care to elaborate on how you figure property value for each property? What are the expenses like providing you have decent tenants? Did you manage them yourself or have someone run that part of it?

[slow84lx]

Property value is determined by comps of recent sales in your area. Many realtors are willing to provide them for you or you can pay an appraiser.

Expenses - plan to paint and clean carpets at every vacancy. Carpets will need to be replaced if worn. Most of your expenses will be holding costs due to vacancy. Normal home expenses will still be there. Small things you can let the tenant be responsible for. Bigger things will be your responsibility. It is a house with many working systems. There will be maintenance needed at times.

It is helpful to have a working relationship with a couple of resources who can provide cost effective plumbing, hvac repairs, and home fix it maintenance unless you plan on doing those things yourself. You will hate being a landlord if you do go the do it all yourself route though. I did this along with managing the houses myself and will not repeat that mistake again.

Your tax return will cost a little more but it will be worth it. You will need to keep good records on your properties.

[347Mike]

Sorry, im getting sleepy. I said that backwards. I knew I had to many "properties" in there. I meant to say how do you figure the rent you charge a tenant. I heard it could be 10-15% of the houses value and of course also take into consideration surrounding property.

[347Mike]

Care to elaborate on the increased tax return?

[slow84lx]

Care to elaborate on the increased tax return?

You won't be able to file a 1040EZ. Your accountant will spend more time on your return which will cost you more $$$ at that time. Your accountant will also factor in depreciation of your properties to the IRS which you will like.

[Treasure Chest]

You won't be able to file a 1040EZ. Your accountant will spend more time on your return which will cost you more $$$ at that time. Your accountant will also factor in depreciation of your properties to the IRS which you will like.

Taxes aren't really that much more difficult, if you already file your own. Keep EVERY damn receipt, as well as a notebook outlining your mileage every time you set foot on the property. Everything associated with the property can be amortized, depreciated, or deducted (including fees for tax preparation and credit checks).

We always priced our rental about $100 less than what other rentals were going for. The only time it sat vacant for more than a week was because the wonderful tenants who always paid on time and NEVER complained were hoarders.

Open a separate checking account for the rental, and don't get tempted to use the security deposit as a rainy day fund. Most importantly, document everything; every exchange with the tenants, every conversation with repair men. If it has to do with the rental, don't underestimate it's importance in the future. If you have to ask for rent, notify of a bad check, or make any correspondence regarding the lease terms, do so by certified letter, not by phone.

In the event you have to take them to court, can present clear and concise documentation of phone calls, trips on site, copies of letters with the certification return, and everything else, it makes the case process much nicer.