Friday, July 5, 2013
Want to be a Landlord?
Way back when I had a really good job, I decided that buying rental houses or a duplex would be a great idea. It all started when I got divorced and bought my first house. I was ready to move to a nicer house in about a year and I was convinced that I should keep my first house as a rental. It worked pretty good, my second batch of tenants took pretty good care of the house and when I was ready to sell it, purchased the house from me. They had lousy credit and the only way they could own is to take over my mortgage and get a second one. I took a balloon mortgage from them for a certain length of time and made out pretty well with the interest.
During that time, I was ready for more experimentation with being a landlord. I had a friend who was a real estate broker who would call me when he had a property he thought I might be interested in. I had a real estate license myself, but never worked at it. I did know quite a bit about the area I was in and the values of properties there. I figured I could buy properties, paint, recarpet or tile and make them look a lot better than what I'd been seeing. So, I bought a duplex. Started fixing up one side, got it rented out. Fixed up the other side, got that rented.
Most of my tenants were single moms and I had a couple long-term ones in that duplex, after I weeded out a few deadbeats. If people didn't pay rent on time, I charged a late fee. I would work with them if I saw any indication they would be paying soon. If they didn't pay after my written warning, and I had a bad feeling about not seeing any money, I could go to the county office and start eviction proceedings. While those proceedings are going on, they are living in your house/apartment without paying rent. You know that they're not taking care of the place, in most cases, they're damaging it. To make things worse - even though you'll never see any money from them, you have to pay to have them evicted - and wait a certain length of time before the officials actually go out and physically move the people out. Most of my non-paying renters knew exactly how many days they had until the officials showed up - and left the day before.
Even so, I had a positive cash flow on this property, so I bought the house next door and fixed that up, rented that out. And a year or so later, I bought another one in another area of town. Still the same problems, but all of these had good cash flow. Tenants would break things and expect immediate response to their problems. My response to their problems was determined on their prompt (or otherwise) payment history.
After every tenant left, I would have to repaint the entire place. It wasn't too bad, since these were small units. I became a very good painter. Sometimes I had to replace carpeting, sometimes I could just get it cleaned. After one couple left, there was a large hole in the drywall where it looked like he shoved her head through it - just the right size and height. One dog chewed up one of my doors and there were other unsavory damages and leavings.
One young couple was very good with paying rent - and as a bonus, they would bring big bags of bagels, since they worked in a bagel restaurant. One month, they were late and I thought it was odd, since they had always been on time. I drove up to the house, knocked on the door, no answer. Looked in a few windows and saw that all their furniture was gone. They left with no notice, but at least they didn't do much damage. I was kind of disappointed with them, because they had been so nice.
When I left to go cruising, I sold all the properties because I knew no one would manage them like I would. I did try a management company for a few months, but there were always excuses for no cash flow and they were making my mortgage payments late.
Yes, I made money while I had them, made a little when I sold them because I bought them right. No, I won't do it again. It was way too much of a hassle and I just don't want to deal with it. But, every once in a while, I see a fixer-upper house and my mind starts telling me I could make some bucks if I just bought it, repainted, recarpeted....... NO!!