I have extra monthly income beyond my mortgage payment and 401k contributions. I was thinking about buying a condo to rent it out. I was thinking condo because it is less maintenance.
I have extra monthly income beyond my mortgage payment and 401k contributions. I was thinking about buying a condo to rent it out. I was thinking condo because it is less maintenance.
The profit margins aren't as high because you have to pay association fees. Not having to do maintenance is dope though. I started with one and now own three condos and make a good profit.
Do you like fixing things because tenants break things and then want them fixed. If you don't like fixing things, do you mind paying for getting things fixed?
Do you like unexpected calls in the middle of the night for stupid reasons because the tenant's smoke detector is beeping and they don't know how to change the battery?
Will you be okay with a tenant having lived in a place for a year or two and upon moving out realizing you'll have to replace carpeting and repaint the whole property just because they are careless slobs?
Do you have money to cover the lost rent and expenses associated with getting the place ready every time there is a turnover?
Will you have the money to cover a new HVAC or water heater should that suddenly fail?
Are you prepared to mentally deal with a call when you are on vacation 2000 miles away and your tenant tells you that the hot water heater is spewing out water and it's leaking into the unit below and the tenant doesn't know how to turn the water off even though when they moved in, you put a big mark on the valve and told the tenant "if there's one thing you need to know how to do, it's to turn off the water, and this is how you do it"
How are your state and county deadbeat laws. If you have a non paying tenant, will it be easy to kick them out, or will it require a lawyer and 3 to 6 months of no rent being paid in order to kick that tenant out.
All of this (except the last) and more has happened to me. Being a landlord can be great when you have a good tenant, but the expenses can skyrocket out of nowhere at times and there can be a lot of frustration involved.
Why do it then?
I did it because the market was flat when I wanted to move out. My last tenants just moved out a couple of months ago. I just spent 18k renovating and it's going on the market this weekend. I'll be VERY happy not to be a landlord anymore. During the time I rented, after all expenses and tax breaks, I might have broken even. When I sell, after all expenses and fees are paid, I'll probably net 20k. Not a whole lot for all the hassle it's been.
seikosha wrote:
Do you like fixing things because tenants break things and then want them fixed. If you don't like fixing things, do you mind paying for getting things fixed?
Do you like unexpected calls in the middle of the night for stupid reasons because the tenant's smoke detector is beeping and they don't know how to change the battery?
Will you be okay with a tenant having lived in a place for a year or two and upon moving out realizing you'll have to replace carpeting and repaint the whole property just because they are careless slobs?
Do you have money to cover the lost rent and expenses associated with getting the place ready every time there is a turnover?
Will you have the money to cover a new HVAC or water heater should that suddenly fail?
Are you prepared to mentally deal with a call when you are on vacation 2000 miles away and your tenant tells you that the hot water heater is spewing out water and it's leaking into the unit below and the tenant doesn't know how to turn the water off even though when they moved in, you put a big mark on the valve and told the tenant "if there's one thing you need to know how to do, it's to turn off the water, and this is how you do it"
How are your state and county deadbeat laws. If you have a non paying tenant, will it be easy to kick them out, or will it require a lawyer and 3 to 6 months of no rent being paid in order to kick that tenant out.
All of this (except the last) and more has happened to me. Being a landlord can be great when you have a good tenant, but the expenses can skyrocket out of nowhere at times and there can be a lot of frustration involved.
This is a great post for anyone considering being a landlord. All of the above HAVE happened to me on a long-distance condo rental. I've owned it for about 12 years and finally got a good tenant who is willing to work with me on the above type issues. I keep the rent well below market value so the guy won't move. It's worth it. If you're not willing to deal with the above then get a management company and likely kiss any profits goodbye.
You guys must be doing it wrong then. If being a landlord really sucked that much nobody would do it.
thats what I've been saying about meth for a long time
Property manager takes 1 month of rent as the fee - and responds to any problems.
As for problem tenants - the manager also handles the interviewing and background checking of a potential tenant.
We have had the same tenant in a condo we own for 5 years .... not a single problem with him. Yes - the hot water heater went and that had to be replaced.
But the rent we charge more than covers the mortgage + insurance + property management fee + condo association fee.
All you need to do is break even and then it's like free equity. I'm shocked more people don't do it.
rentit wrote:
I have extra monthly income beyond my mortgage payment and 401k contributions. I was thinking about buying a condo to rent it out. I was thinking condo because it is less maintenance.
You would be buying at a market top. Foolish really.
hire a property manager wrote:
Property manager takes 1 month of rent as the fee - and responds to any problems.
As for problem tenants - the manager also handles the interviewing and background checking of a potential tenant.
We have had the same tenant in a condo we own for 5 years .... not a single problem with him. Yes - the hot water heater went and that had to be replaced.
But the rent we charge more than covers the mortgage + insurance + property management fee + condo association fee.
+1
if you are going to rent a place, hire someone. it's totally worth not getting up in the middle of the night o fix a leaky toilet.
I've thought about this, but based on the replies wouldn't it be easier and more profitable to invest in index funds? Just a few clicks of the mouse and no people or issues to deal with.
Yes, probably. Passive investing is great.