landlord 101

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We estimate about 30 hours a year each, sometimes 30 minutes at a time, sometimes a few hours.
For 2 residentials and my 23 unit "shop complex".
...and up to 3 weeks when we have to turn over from a long term or particularly destructive tenant.
Although usually it's a couple of weekends, or a weekend a a few nights after work.

It's MUCH better as a "second job" that actually working a second job with set hours in the evenings and/or weekends and someone else dictation what gets done and pocketing the lion's share of the profits.
 
My experiences with renting and rentals; I always treated any place that I was renting as if it were my own, including doing any repairs that were not structural, those were the landlord's responsibility. I remember when I was looking to buy a house, every single house that I viewed that had tenants was a complete mess and usually stunk of cat urine. That was enough to turn me off the idea of ever having a rental property myself, and I also had the pleasure of having to evict a tenant from my stepson's house once. A royal pain in the *** due to the 'rights' of the tenant. Good luck.
 
For the most part, we had great renters, mainly cuz we researched them.
Part of the bold print on the rental application stated, "the insurance company demands a walk-through of the property every 90 days."
They sign it, and you do it.
Good tenants, We seldom increased rents, and if we did, we'd show our tax bill, insurance etc.
Rent increases were in-between tenancies, to current rates.
When they moved in, We'd put $100 on the counter to "cover any cleaning we may have missed".
If they wanted to paint, keep the receipts for paint etc.
NEVER PAINT WITHOUT CHECKING WITH US ABOUT COLOR CHOICE. (that's another story, circus tent kitchen, lol)
 
I would make the security deposit at least two times the rent. That way you are not holding the bag when they don't pay the last month rent, saying the security deposit will cover it. Then you have nothing to cover any damages. Remember if the tenant stops paying rent, and you give them notice, and they don't leave, it will take a minimum (depends where you live) of 30 days for the eviction. Do you think you will collect that rent? Plus figure it will cost you at least $500 (probably more) to do an eviction.
 
Charrlie_S said:
I would make the security deposit at least two times the rent. That way you are not holding the bag when they don't pay the last month rent, saying the security deposit will cover it. Then you have nothing to cover any damages. Remember if the tenant stops paying rent, and you give them notice, and they don't leave, it will take a minimum (depends where you live) of 30 days for the eviction. Do you think you will collect that rent? Plus figure it will cost you at least $500 (probably more) to do an eviction.
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or 5 months. Past lady friend had that happen with her tenants. Once out, we found they were growing cannabis inside the house. That odor is difficult to get rid of.
 
Unconventional said:
or 5 months. Past lady friend had that happen with her tenants. Once out, we found they were growing cannabis inside the house. That odor is difficult to get rid of.
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The house we looked at a few years ago had tennants that did that

They were not very welcoming to us
 
Inertia said:
If they wanted to paint, keep the receipts for paint etc.
NEVER PAINT WITHOUT CHECKING WITH US ABOUT COLOR CHOICE. (that's another story, circus tent kitchen, lol)
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Paint it however you like; if you do not first obtain our approval for your colours, we reserve the right to require a repaint before move-out, or the cost of same deducted from deposit.
 
You already have a lot of great info from other members. I'll give you my two cents owning a few properties over the years and still having a few. I love being a landlord and having passive income is always a plus. My family has always owned properties and it's always the same with most landlords, you only hear when the property/tenant costs them money. You don't hear about the countless months of cash just coming in to their accounts. You only hear when they move out and damage the place or in the rare occasion you have a tenant that won't leave. I've experience it all and had a woman in PA that didn't pay a dime for 2 years (partially thru Covid) and had free legal representation, and every time we would go to court we'd have to pay. With all that, almost all of our tenants want to live in a nice property, with heat and a toilet that works but some times they have difficulties just like everyone else. I try to look at all our rentals like that and for the most part it's true and has worked out for us. If you can look at the property as a thing and have no personal attachment, you'll be fine renting it out. People get attached to properties and take it personal when things break or get damaged. Things break and if people live somewhere for any period of time things will be damaged, that's just the reality.

I would research your states laws on evictions and renters rights. You can call a property manager and simply ask how long does it generally take to get a tenant out of a property and get an idea of what it is like. I will NEVER own another property in PA (more specifically Philadelphia) and try to be a long distance property owner. I would NEVER own a property in LA or SF but that's just me. I believe a good management company is worth every penny and that wouldn't be a bad idea to start, if you decide to rent the property.

I believe most people who are fearful of being a landlord/property owner either have had one bad experience or run with the rumor mill of terror stories that are floating around. In fact most landlords/property owners that I know, love it and for the most part have had great experiences. One couple I know has had 1 family in his property for over 30 years here in CA, that is an exception but it can happen.

It's not for everyone. Good luck.
 
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YY1 said:
#4- Review your lease at least annually, and any time a "trigger" occurs. The last clause we added was "tenant must report any and all fires to landlord within 24 hours".
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oh wow... there must be a fantastic story that lead to the creation of that clause!
 
On the plus side, my rental house doubled in value over the past five years. The ~125K house is now 250k. I had a stable tenant through Covid, so it made me a bucket load of money. The lower end of the housing market has got jerked up hard since there has been a housing shortage. Diversification of your investments can be a great thing.
 
I own a rental in Ohio. I used to be partners on a 12 unit 3 floor apartment building. My partner used to say I was to strict with the application process. He bought me out and we went our different ways. I saw Eric a year or so after the buy out. He was telling me that a tenant we had on the third floor lost his job, stopped paying rent. Eric started the eviction process and the day of the set out, the tenant poured 3 bags of quikrete down the toilet, kitchen sink and bathroom sink. Eric said he had to evict everyone, because the drains were clogged. Said it cost north of $20K to repair on top of lost income and fees to move people out. I still have a small two bedroom house that rent out. I own it outright. I have a renter in it now, after I had to almost completely remodel it. New floors, re-did the bathroom entirely, had to replace cabinets about $30K in work total.
I had to do that because the lady that was in there before turned into a dirt bag during COVID. When the no eviction moratorium came down, she decided that meant she didn't have to pay rent. When that was lifted, I couldn't get to the court house to evict her *** fast enough.
I'm part of a forum for landlords. What I've learned is, there are states that you don't want to be a landlord in certain states. Michigan and Illinois are definitely two of those states.
Before you you decide to become a landlord, I would look into the eviction process as well as the leasing process. You should have a good long talk with an attorney before you do this. You need to ask yourself how long you can go without income when you find yourself in an eviction situation. I say when, because it's going to happen.
I'm fortunate, Ohio is a landlord friendly state, but you live in the land of socialist governors and judges.
I'm not going to tell you not to do it, but there is no way in hell I'd be a landlord in Michigan.
 
Calipag said:
You already have a lot of great info from other members. I'll give you my two cents owning a few properties over the years and still having a few. I love being a landlord and having passive income is always a plus. My family has always owned properties and it's always the same with most landlords, you only hear when the property/tenant costs them money. You don't hear about the countless months of cash just coming in to their accounts. You only hear when they move out and damage the place or in the rare occasion you have a tenant that won't leave. I've experience it all and had a woman in PA that didn't pay a dime for 2 years (partially thru Covid) and had free legal representation, and every time we would go to court we'd have to pay. With all that, almost all of our tenants want to live in a nice property, with heat and a toilet that works but some times they have difficulties just like everyone else. I try to look at all our rentals like that and for the most part it's true and has worked out for us. If you can look at the property as a thing and have no personal attachment, you'll be fine renting it out. People get attached to properties and take it personal when things break or get damaged. Things break and if people live somewhere for any period of time things will be damaged, that's just the reality.

I would research your states laws on evictions and renters rights. You can call a property manager and simply ask how long does it generally take to get a tenant out of a property and get an idea of what it is like. I will NEVER own another property in PA (more specifically Philadelphia) and try to be a long distance property owner. I would NEVER own a property in LA or SF but that's just me. I believe a good management company is worth every penny and that wouldn't be a bad idea to start, if you decide to rent the property.

I believe most people who are fearful of being a landlord/property owner either have had one bad experience or run with the rumor mill of terror stories that are floating around. In fact most landlords/property owners that I know, love it and for the most part have had great experiences. One couple I know has had 1 family in his property for over 30 years here in CA, that is an exception but it can happen.

It's not for everyone. Good luck.
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Been there done that. Lost my ***, my time and wore out my body. Just pigs out there and they will never pay, never leave and xxxx you over and over.
 
Mike69cuda said:
On the plus side, my rental house doubled in value over the past five years. The ~125K house is now 250k. I had a stable tenant through Covid, so it made me a bucket load of money. The lower end of the housing market has got jerked up hard since there has been a housing shortage. Diversification of your investments can be a great thing.
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You're lucky, my COVID tenant decided that she didn't have to pay rent anymore. She also didn't pay the water bill, or mow the grass. I ended up mowing grass to keep zoning off my ***. It was during COVID when she went all in and decided that she also needed a dog that the lease prohibited.
When I finally got her out (she swore I couldn't do it) the house was so damaged that it took me nearly a year to rehab and remodel.
 
toolmanmike said:
Ask high enough rent that the "bad renters" can't afford. I wouldn't be a landlord for any amount of money. People get in that you can't turn away and you can't get them out. They destroy your property and you have to pay to rebuild it. Good luck.
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Had that problem myself, got in trouble for killing the power and shutting off the gas.
 
I had the quick Crete once, used kitty litter in all the heat ducts, once, - pot grow, (didn't complain, I'd grown it there when I lived there), doors kicked in, attic filled with garbage, dead cars left behind.
I kept saying "they" ain't gonna win .
They didn't.
I'm very much farther ahead.
Inertia .
 
toolmanmike said:
Ask high enough rent that the "bad renters" can't afford. I wouldn't be a landlord for any amount of money. People get in that you can't turn away and you can't get them out. They destroy your property and you have to pay to rebuild it. Good luck.
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High enough? Around this area the drug dealers have a lot more money than the average working class family....
 
1WildRT said:
High enough? Around this area the drug dealers have a lot more money than the average working class family....
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Or a group with a dozen people living under 1 roof. Occupancy numbers on a contract will help with that.
 
toolmanmike said:
Or a group with a dozen people living under 1 roof. Occupancy numbers on a contract will help with that.
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Well, maybe where you live that's true... Not here.... Renters have rights.. And more pro-bono lawyers than any of us care to meet...
 
Do the math first.

What goes out?
Tax
Insurance
Set aside for repairs
Percentage of income tax that won't be withheld on a W2/1099
Renovation costs (one time or generally non-regularly recurring)
Down payment (if new purchase)
Payment (if financing)

What comes in?
Rent
Deposit (to be held in a non-comingled, non-interest bearing account)
Separate non-refundable pet deposit

For our math to work out, if we aren't clearing 50%, it's not worth it.
That rules out a very large percentage of potential properties.
I have a spreadsheet that calculates all that and can be adjusted for different interest rates, loan terms, down payment amount, and rent.
I can see the potential in several different scenarios in about 5 minutes.

Calculate how long it will take to get back the down payment and any initial renovation costs.
Be sure to keep books in such a way that the property is "in use as a rental" from the beginning, so renovation and repair costs are deductible.
 
The rental income on our two, 1150 sf 3/2 houses across the street from each other pays all of our bills.
All of them. Both rentals and primary residence.
All house payments
All insurance
All taxes
All utilities on our primary residence-
Electric
Water
Cable

We had a 9 year tenant in one house that basically bought that house for us.
It is paid in full, free and clear.
Cost just over 5K to remodel after they moved out including tiling throughout.
Chump change for that house "we" paid 85K for that is currently valued at 250K and rents for 1800 a month.
 
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Also, it puts you on the "supply side" of the economy.

YOU can "pass costs along to the consumer".
YOU can "adjust pricing according to market conditions".
YOU can benefit from reductions in taxes or increased write-offs for business expenses.

It's a nice buffer from always being on the demand side.
 
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