Landlording Headache
So I'm investing in some pretty lucrative deals and looking to take this money and put it into some properties. Knowing this I talk to some friends of mine about buying more properties... One of my friends is a mortgage broker. They in turn tell me that I do NOT want to get into properties because managing them is a headache. I thought I heard that single family homes typically manage themselves pretty well. However people who live in multifamily until buildings tend to expect more management. Am I off my rocker? Is this true? Can I expect to buy single family homes and pretty much have them manage themselves?
[addsig]
A rental property never "manages itself".
I find that the single family homes in nicer neighborhoods tend to be more passively managed (put the tenant in, deposit rent check every month), while multi-unit properties are more management intensive.
I have a single family house and a triplex. The house is great. I get a check every month, 10 days early. The triplex requires me at least once a month. At first I was discouraged but now I kind of like "oiling the money making machine."
It's always minor stuff, and I think my presence there is good for the tenants, bless thier hearts, should they try any shenanagins. I gotta admit, though, the calls come at the WORST times.....
So far my duplex hasn't had any calls. I live next door. Its like having a next door neighbor who pays your mortgage and gives you a little extra. But I don't want to think this is typical. I've only owned the property for 7 months. We'll have to see how it continues to go...
[addsig]
Your posting has jar'd my memory. I had this little house up in the Big Bear Country. Cute little place, two bedroom and one bath, lovely brick fireplace that had a great draw. Of course the best part was the really big workroom. About 400 sq. feet all paneled.
A man came by and rented it and give me six months in front. He moved in with his wife and young daughter. They were unbelievable. Yes, they paused at the door and joined hands and said a prayer thanking the almighty for finding them this beautiful little house in the mountains.
Time passed and at the six month mark in he comes and lays another full cash payment for the next six months. I am transported, I am in landlords heaven. He even tells me about the frozen water pipe he thawed all by himself. The small leak in the roof, he cut out and patched correctly. Oh I am impressed.
About two months latter, at about eleven oclock in the evening I get a call from the local Sheriff. There has been a fire and best I get there right away. So I climb into my truck and make the two hour ride and there I am.
Not much left and the tenants are long gone. Nobody knows where. They are not victims of the fire. But, my nose wiggles and the Sheriff his nose wiggles.
Yes you guessed it a Meth Lab. Somebody left the mix on too long and up she went.
The Morale: All property needs management. Even the best of situations are subject to violent and sudden change. Whenever the tenant is too perfect and the payments always way in front. The Great God of Landlords is about to arrange a small rain storm on your life's parade. So thus it was everso. Look out oh mortal there below. For here it comes, the snow, the snow..
(Snow a street word for a narcotic substance.)
Lucius. <IMG SRC="images/forum/smilies/icon_cool.gif"> <IMG SRC="images/forum/smilies/icon_cool.gif"> [ Edited by Lufos on Date 01/15/2004 ]
Dale, my experience is about the same as the others. I have a huge rental house that has been rented out since last May. There were quite a few calls at first, but after getting all the little things ironned out, it is much calmer now. Its actually nice to go pick up cash every month just for owning a property and my renters told me that they are planning to stay for another 8 years or more. Managing property is not necessarily hard, but it will test your character!! Wish you well!![ Edited by MikeWood on Date 01/15/2004 ]
I have single families, duplexes, triplexes and fourplexes. I have found that the single families are the easiest although I currently have one challenging tenant. You can train the tenant to "be their own manager" in terms of maintenance and repairs. These people are likely payin more and may eventually own a house themselves in the near future. For me duplexes are not that much more difficult than SFRs. The management intensity starts for me with triplexes and I have fourplexes professionally managed.
Do not let your friend talk you out of investing because of management headaches. I put a post up about a month ago asking if anyone really got calls at 3 A.M. to fix a toilet. Essentially no one had although some acknowledged rare episodes requiring prompt attention. I hope this helps.
Regards,
Ed
I expected as much. I've heard time and time again that SFR will need the smallest amount of management. There will always need some management however they are the least. The one person is trying to get me to invest in his endevors. Thanks for your reply.
Quote:
On 2004-01-15 22:51, edmeyer wrote:
I have single families, duplexes, triplexes and fourplexes. I have found that the single families are the easiest although I currently have one challenging tenant. You can train the tenant to "be their own manager" in terms of maintenance and repairs. These people are likely payin more and may eventually own a house themselves in the near future. For me duplexes are not that much more difficult than SFRs. The management intensity starts for me with triplexes and I have fourplexes professionally managed.
Do not let your friend talk you out of investing because of management headaches. I put a post up about a month ago asking if anyone really got calls at 3 A.M. to fix a toilet. Essentially no one had although some acknowledged rare episodes requiring prompt attention. I hope this helps.
Regards,
Ed
[addsig]
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I had this little house up in the Big Bear Country.
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Big Bear Country or Big Bear Mountain?
I strongly prefer the SFRs also. With multis you have the yard to take care of so you have to frequently go by to check on the grass, pick up any trash, etc. Also, you are more likely to get shorter term tenants who don't treat the unit as well. I have also found that I get a number of older individuals on SS in the multis, They make excellent tenants but frequently the have diffculty doing simple maintenance tasks which will normally be taken care of by someone in a SFR.
I like low-end multi-family units. We have 3 duplexes and 2 SFR's....all low-end with a couple Section 8 tenants mixed in for good measure. I like low-end because the properties are cheaper to buy due to deferred maintenance usually. The only thing I can say is make sure you (or in my case, my husband) can be a when need be. You hear lots of stories involving sick kids and other basic hard-luck stuff, but you have to be tough (but fair) when sometimes you want to let things slide. One trick I learned was that when you buy a property, tell the existing tenants and any new tenants that you are not the new owner...you are the new property manager. Sometimes it's a lot easier to be a hard-ass when you can say something like, "Hey, if I owned this place, I could give you a break, but I don't. And the owner can be a real hard-ass. I wish I could help you." <IMG SRC="images/forum/smilies/icon_wink.gif">
But like I tell many people about this business....if managing the property is preventing you from investing, don't let it. Read and learn and do. Join your states Apartment Association. (In California, the website is http://www.caanet.org) They are advocates for owners, property managers, and landlords. They have all the legal forms and law publications you could possibly need. You can also call their attorney for free. Membership is under $100 per year in California. For after-hours calls, I have all calls go to my cell phone with a message that says if their need is urgent and can't wait until normal business hours, to call my after-hours line (my office line in my house) I have also checked recently with answering services. They will take messages for me for about $30 per month.
Oh, and screen those tenants!! Lots of places will do credit and eviction checks. Do it every time! Paralegals can do your evictions if need be (I get them for around $300 and she does my credit and eviction checks too) And check all references. Chances are, if they haven't been evicted and you have good references from at least the last TWO landlords, you will be ok. I stick plenty of clauses in my rental agreements that they are responsible for things like clogged drains, toilets, broken windows, etc.
And if you still don't like managing them, pay the 5-10% to a property management company to do it for you! <IMG SRC="images/forum/smilies/icon_biggrin.gif">
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'If I am not for myself, who will be for me? If I am for myself alone, what am I? And if not now, when?' - Hillel
[ Edited by joel on Date 01/20/2004 ]
Lufos
You are soooo correct about the landlording. I cringe when people too easily try to give me too much cash. They think that cash can hide a world of sins but it just makes me want to find a reason not to accept them as tenants because I know that something is up. A normal, hard working person does not feel the need to pay 6 months in advance because they should qualify on their own merits. But then again, normal and hard working isn't all that normal.
Having said all that - I am having lunch with a tenant who is giving me $11000 in advance. It is a L/O with $5000 going towards the down and $6000 to the rent. I am letting them pay 4 months in advance and the other $2000 will go to the last 2 months. Believe me, I will be having bi-monthly then quarterly "safety and maintenance" inspections.
And hey - I once bought an old burnt down meth lab. Rehabbed and made some good money. Wonder how I can market to this niche?
Brenda