Owning Rentals
 

Hey CP, we've got a bunch of big dick bandits on here with cash flowing out of their ears, so how many of you own a rental? I may need some advice. I'm looking to gain some passive income without pimping... #pimpin'ainteasy

It's only good for a retirement, untl it's paid off it's all a bunch of hassle

We have two. We use property management companies for both. Both generate positive cash flow, but all money is saved in case of problems/maintenance. For example, last year we had to replace the HVAC system on our Texas house. Approx 6k. We had the money saved, so no big deal. Year before that, it was a fence that needed replacing. About 2k.

So...my advice is to not treat it as income and bank any "profit" for the inevitable problem.

We also own a Cabin in the Southern California Mountains, but we don't rent that. It's our getaway place. :)

Yup.

College town students or vacation rentals are your best bets. Regular rentals are the biggest pain in your ass and worthless ****s ever.

I would think that college students would be the worst... I wasn't great, that's for sure.

So, essentially, you are just building wealth and a retirement egg when you sell them?

buy cheap condos

This is completely opposite

They pay though or their parents pay. Your property is going to get tore up regardless - it's all about who pays their rental faithfully.

Yes.

Use a home warranty. We use those on our two rental properties, and they have been totally worth it. They help put an upper limit on some costs should something go wrong in a house (like blown A/C, water heater, etc.)

I should really qualify that: it depends how much you are able to charge rent. Our rentals are in a pretty decent neighborhood in a good school district. We are able to charge ~$1,300/month and be very selective about our tenants.

People who can afford to pay that kind of rent typically don't want to screw up their credit rating so they usually have both very good references and background checks.

I have had extremely bad luck with home warranty companies, but if you have had good luck...well, good on you. We had a home warranty on the Texas House, which is in a very good area, and we were denied on an HVAC issue early on when we bough the house (about 10 years ago) we let it expired and opted to do it on our own.

Our North Carolina house, well actually Town House, has been fairly solid. We had some minor roof damage due to the hurricanes this year, but we were able to fix it for less than the insurance deductible.

You will have quite a few costs involved to become a slumlord

you have to purchase the property
you have to pay personal property taxes and insurance on the property
if anything goes wrong (and it seems to often) you will have to fix it so keep a few thousand in a rainy day fund and hope it is enough

replacing carpet, drywall, painting the place all costs money

if you don't do good vetting your renters you end up with some deadbeats that can be a challenge to move out. You will be on the hook for lawyer fees along to sue them for the money you will likely never collect

if you have enough to buy a few units look into getting a property management company to assist. They will take a few dollars or a percentage but they can handle vetting renters and finding renters. They will be coming to you every time an appliance fails or you have to replace something. Property managers typically have connections into handymen and other services (plumber, hvac, etc) so they can help you a bit there but you still pay out.

overall you might make some money but it will take a while to recoup that investment.

I own several properties. All are good cash flowing. I started with a 4 plex. That worked out well and we added a duplex. Over the years we added several single family homes. The thing with the multi units is even if you have a vacancy typically everything is still covered expense wise.

I only manage one property and use property managers to handle all the rest. Using a good property manager eliminates a lot of headache.

I like that real estate helps diversify our portfolio of investments