Renting out houses

(don't think this fits in any other category, so I'll just post it here in the lounge)

Does anyone here rent out houses or apartments for extra money? I have a few questions...

- Once you get the house purchased (and fixed up, if necessary) how much work is actually involved with renting it out? Is it kind of a "set it and forget it" thing, where all you really do is some business paperwork and collect the rent every month?

- If it is a lot of work to do, is it easier to hire someone to manage it for you?

- Which is more profitable: renting out several houses all over town, or just buying an apartment building and renting out the apartments?

- Is it possible to make a full-time income from this, and not have to do anything except some paperwork now and then and check up on your property manager (if you hired one) to make sure they're doing the job?

Thanks!

ButcherPete said:

(don't think this fits in any other category, so I'll just post it here in the lounge)

Does anyone here rent out houses or apartments for extra money? I have a few questions...

- Once you get the house purchased (and fixed up, if necessary) how much work is actually involved with renting it out? Is it kind of a "set it and forget it" thing, where all you really do is some business paperwork and collect the rent every month?

It's not a set it and forget it. You can either hire a property management or do it yourself. PLEASE LISTEN CLOSELY. If you ARE going to hire someone, make sure they know what the hell they are doing. My Grandma paid a company and still ended up doing all the work anyways because they were too busy and kept putting her off. If they don't treat you like a priority, make sure you ditch them and ditch them fast.

- If it is a lot of work to do, is it easier to hire someone to manage it for you?

See above.

- Which is more profitable: renting out several houses all over town, or just buying an apartment building and renting out the apartments?

Apartments are going to be easier as it's a centralized location, but you also get more tenants that...how do I put this...seem to give less of a damn about the rental/paying on time than home renters most of the time. The only thing you save here is driving over town.

- Is it possible to make a full-time income from this, and not have to do anything except some paperwork now and then and check up on your property manager (if you hired one) to make sure they're doing the job?

Yes, if you have a lot of rentals AND they pay on time AND they don't tear up your shit to hell and back. My Grandma has had renters to where she lost money renting to them. They didn't pay and they tore up several thousand dollars worth of property.

Here's the tips I have for you that I've learned from watching my Grandma. (Even she still ignores half of them.)

1. Make sure you don't just rent out to the first yahoo with cash in hand. It's better to wait a while doing background checks and references than it is to just get first month's rent a week quicker.

2. Make sure that you clearly state the fees associated with not paying the rent on time. My Grandma charges a ridiculous rate. It's like $5 a day starting after 5 days being late. I'd charge as much as I legally could. I'd try to start it at like $25 every day that it's late so they know that rent is priority.

3. Make sure if you allow pets that the deposit is high enough to replace all the carpet. Even if you say no pets in the house, some people will let them in and they'll piss everywhere. Unless you want to rent out a stinky house, the carpet will need to be replaced, an it isn't cheap.

4. Don't forget that property taxes aren't cheap so take that into account as well.

5. You'll always have to come out of pocket when the renter moves out, so budget for drywall repairs, paint, caulk, etc for when they do. Even the best tenants will put wear and tear on a house.

6. Most importantly, make them sign a lease. You'll never make a profit if you're just renting out 2-3 months at a time for the reasons just mentioned.

Thanks!

Click to expand...

My Grandma owns several nice rental homes and I've asked her a million and one questions about her properties. I'll share what I've learned from asking and observing over the years and hope it helps. My comments in green. layball:

At one time years back I was involved in this for a fairly nice living (not wealthy, but comfortable).

marusia has included some great advise above.

Some extra things to consider that cost me personally,

- In many states of the US, you will be tagged as a "Real Estate Broker" once you hit a certain level of activity (ie number of units, frequency of signings, and in some states you will need to be licensed just to negotiate more than one lease in a year. WI and OR and WA come to mind, though it's been a long time) and will need the correct license status to continue. Check out your state requirements or risk all later.

- estimate your financials using around 10% vacancy to stay financially liquid.

- take "nothing" from the business until it will support you full time, and reap the benefits of others paying for your investments later.

There is plenty of info on this from back in the late 70's and early 80's when the US economy sucked like it does now. (that was when I was in). Search on "zero down real estate" and others as a start. Start with some research there and apply today's methods and some IM how to from here creatively, and the gold days could be yours. ..... or not.

Good luck

If you're UK based, shoot me a PM and i'll answer any questions.

It's simpler than you think and the only tricky part is tax; but that can be put off initially due to legislation and can use money generated to pay for an accountant.

My Advice; know your numbers. know your strategy. know your market.

I was thinking of buying in the USA or Canada with a loan from the bank and 20 k down payment but

Damn, after reading that thread, that sounds like a lot of work... I think I'll pass.

ButcherPete said:

(don't think this fits in any other category, so I'll just post it here in the lounge)

Does anyone here rent out houses or apartments for extra money? I have a few questions...

- Once you get the house purchased (and fixed up, if necessary) how much work is actually involved with renting it out? Is it kind of a "set it and forget it" thing, where all you really do is some business paperwork and collect the rent every month?

- If it is a lot of work to do, is it easier to hire someone to manage it for you?

- Which is more profitable: renting out several houses all over town, or just buying an apartment building and renting out the apartments?

- Is it possible to make a full-time income from this, and not have to do anything except some paperwork now and then and check up on your property manager (if you hired one) to make sure they're doing the job?

Thanks!

Click to expand...

i rent out. so your questions
it is more work than a website . if it runns well there are times when you just collect the rent but then some stuff break and you have to fixit or they move out. Then its really work because you always have to renovate after people moving out there.

hireing a real estate manager for taking care of i would not recomend. they are idiots and will steal your money. each renovation will be much more expensive compared to organizing yourself. they will put persons in your apartmant which you dont like to have and so on ...

so do it yourself - or dont consider buying some stuff.

go for appartment houses. it is better to have one place than several in different locations to manage. If you finace it i would say that you make ok money you need a 10% return of investment on used real estates. if it much less with low interest rate its ok as well but that can change over the time. Investments of less then 8% dont provide a sufficien cash flow. you can hope on better selling prices later to realize profit.

full time income ...yes. but you have risks as well. a big credit at the bank and if you buy crap you maybe cant rent out. or rent is not paid and so on.

if you buy .... buy location. buy where you can take care of and buy for a good price.

I appreciate everyone's input, and hit the Thanks button.

Sounds like renting could be a lot of work; maybe more than I'm looking to do.

What does everyone think about flipping houses? I know there's been a craze lately because of that TV show where people flip houses and make it look fun and easy, but I'm interested in doing that. It SOUNDS much easier, albeit not as profitable.

If I were to buy a house, hire some reliable contractors to renovate and fix it up, do you think I'd have enough money left to sell it for a profit?

I'm a Realtor and have been since 2000. Flipping houses is a fucking art. That's all there is to it. Some people can do it, others lose their asses. My clients that flip houses successfully are RUTHLESS. They will not negotiate their bottomline.

If you see a home you want to flip, you need to know EXACTLY what it will cost to buy, fix, and flip. Including Realtor fees if you use an agent, contractor fees, remodel fees, and how much you can sell it for when it's ready to be put on the market. You can make money, but right now it's hard as hell. I used to work with 11 investors, I now only work with three, and the others I told to get out of the business 3 years ago before they lost their asses in the market.

The other three are extremely good at it and can still make money. They do their own work (they don't hire contractors) so they still have room for a nice profit.

IMO, if you can't do the work yourself to fix the home up, don't even bother depending on the market you're in. Find a Realtor who has been in the business 20+ years and talk to them about investors they work with. You don't have to use the Realtor, but they should be able to tell you if they still have investors in your local market or if they've gone away. If they've gone away, there's a good reason, it's not possible right now to make money in that market. Good luck.

One thing you need to understand is, it all depends on where you are investing.

Where I'm at, there are neighborhoods less than one mile apart that I use for completely different purposes. North of "Street A" I look for houses to flip. South of "Street A" I buy houses to hold and rent. Still further south, I wouldn't touch the houses because they're too risky.

What you need to do, if you're really interested in real estate and not just kicking the tires, is to do REAL market research. Find some REO's, look at the demographics, pull comps in the area, research contractors (price and speed, flipping renters or homes is all about speed / holding costs), etc. You need to know EXACTLY what you're doing with a property before offering on it.

That said, can you make a killing doing it? Absolutely. I personally prefer single family homes as rentals, because tenants stay longer and treat the units with higher care. And for flips, I prefer upper-middle class area. I can flip an REO at 60-70% ROI in less than six months in those areas, and for most people, two flips a year is "Full Time" income.

A great idea in any market.
Lots of money making tips and strategies in this thread.

Not sure if it was mentioned but a large percentage of the time
a person who will rent his home to you wouldn't mind selling it if he
or she could get their price.

That leaves the door open for you to create a lease with option to buy
(also known as rent-to-buy) which is very valuable on the buyer renter's
end. Lots of free info about how to do that for all over the net.
The benefits about options is renters and buyers REALLY, REALLY want them
and you can make money a few different ways on one deal instead of just
one way.

No matter what, renting or optioning, check everyone's credit professionally
and never give a slacker a deal. Especially when they're nice!