Being a Landlord Sucks

Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes

@Caleb Johnson A lot of people think they want to become an active investor but soon find out that it is a lot of work, a ton of details, and dealing with tenants, toilets and termites. They realize it is not as glamorous as it initially sounded. So investing as an LP in a deal becomes a lot more lucrative...and you can depend on professionals who know the market, the comps, the business plan, the finances, and all the other details that can take a person away from a good paying job or spending time away from the family.

There is no one answer, though. Everyone should do what they think is best for them.

5 Reply

Todd Rasmussen

Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes

5y

@Caleb Johnson

The only expense I have never complained about is property management!

13 Reply

JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes

5y

Hmmm. I've been a 'landlord' for a long time and I've never done any of those things. Perhaps the problem is more with your system?

With everything you listed, I don't think the answer is at all clear that it should be "investing in commercial real estate as the operator or limited partner". You can invest in SFHs or duplexes, hire a property manager, and get all the benefits you listed without having to get your hands dirty, so to speak.

Not that I'm against MFH or commercial investing. But your post sounds like an advertisement based on the idea that if you own anything else you're going to be catching mice with your bare hands.

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23 Reply

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

5y

The "cash flow high" only sustains you a few years. If you don't develop systems to prevent problems or hire people to deal with problems, you burn out. Ever heard of "tired landlord" syndrome? It is a real problems and it is the reason many people don't last five years in this business. Some tired landlords last longer, but become old bitter landlords. They give up and let their properties fall into disarray, riding that cash flow wave until it ends.

You are regurgitating all the old talking points for why owning rental properties have advantages, but miss the most important point. Rental properties are a business and you have to treat them like a business. That means effective tenant screening, developing processes, hiring professionals and working ON your business. It won't suck if you do those things.

10 Reply

Caleb Johnson

OP

Investor · Mesa, AZ · Member since 2019 · 53 posts · 63 votes

5y

@JD Martin

Hey JD, thanks for the feedback.

It really depends on what you want to do. When I started, I wanted to go through the trenches and learn what it took to rehab my own property. Catching mice just so happened to be part of that. Some people just want to be passive and you can absolutely do that with SFH or small multifamily.

0 Reply

Matt R.

Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes

5y

If you could find one good and trusted storage units syndication, one good deal could set up real passive income essentially for life.

Good luck!

2 Reply

Tony Kim

Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes

5y

Originally posted by @Caleb Johnson:

While investing in the past 2 years, I have been threatened, I’ve caught mice with my hands, called the police on tenants, done cash for keys and many more interesting things. All this has taught me that I don’t want to be a landlord. However, I do know that I want to be a real estate investor.

Tax Benefits

First, being an investor in real estate gives great tax benefits. (Depending on the type of strategy you use) Some strategies require you to pay capital gains tax if you sell it before you have owned it for 2 years. (Flipping) But as a passive investor in a syndication, gives you the ability to use bonus depreciation. This can give you a majority of your investment as a loss via a K-1 statement all while receiving positive cash flow.

Appreciation

Second, is capitalizing on appreciation. Now there's 2 kinds of appreciation that you can use. Forced appreciation and market appreciation. Forced appreciation is when you increase the NOI of a commercial asset which directly affects the value of the asset. Then market appreciation is like the market we are in now in New Mexico and other parts of the US. There are too many renters coming into the market and with there being a shortage of apartments, that makes the rent go up.

Leverage

Third, is leverage. You are able to buy something that is worth, let’s say 100k, for only 25% down if you use a conventional loan. That’s only 25k. Now, I don’t know about you, but I can’t ask my financial advisor for 100k of Apple stock and only give him 25k and expect to get a 100k invested. That just won’t go over well. Sometimes, you don’t even need your own money. You can find someone who wants to partner with you and they will be the money.

Principal Pay Down

Fourth, principal pay down. When you get a mortgage on a rental property, you pay P&I. So every month, you pay down your principal loan amount. But it isn’t you paying that off. It is your tenant. Some loans that you can get IO (Interest Only) at the start of the loan. This means that you won’t be paying towards the principal. But these loans serve their own purpose.

Cashflow

Finally, cashflow. Which should be number one. This is the first thing we should be looking at as investors. If the market drops and the value of the property drops, you want to be sure you can pay the rent and hold it for the long haul while the market turns. This also is what gets you financial freedom so you can spend time with your family and give your time to charities and serving at your church.

With all this said, what should you invest in?? I think the answer is pretty clear and that is investing in commercial real estate as the operator or limited partner. As the operator, you get to be in charge of what the asset does. As the investor, you get to collect a check. Now what’s better than that?

I don't mean to be harsh, but with the exception of getting a K-1, aren't the benefits above pretty much the same benefits that can be said about direct ownership? There are probably hundreds of posts here that go into granular detail over the specific benefits of LP ownership vs direct ownership. As an example, with LP ownership, you get access to commercial financing without affecting your personal DTI. I can probably list ten other benefits that are exclusive to syndications and probably ten benefits that are exclusive to direct ownership. But I gotta say that I don't think any of the items you listed are exclusive to either type.

1 Reply

Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

5y

Originally posted by @Caleb Johnson:

While investing in the past 2 years, I have been threatened, I’ve caught mice with my hands, called the police on tenants, done cash for keys and many more interesting things. All this has taught me that I don’t want to be a landlord. However, I do know that I want to be a real estate investor.

Tax Benefits

First, being an investor in real estate gives great tax benefits. (Depending on the type of strategy you use) Some strategies require you to pay capital gains tax if you sell it before you have owned it for 2 years. (Flipping) But as a passive investor in a syndication, gives you the ability to use bonus depreciation. This can give you a majority of your investment as a loss via a K-1 statement all while receiving positive cash flow.

Appreciation

Second, is capitalizing on appreciation. Now there's 2 kinds of appreciation that you can use. Forced appreciation and market appreciation. Forced appreciation is when you increase the NOI of a commercial asset which directly affects the value of the asset. Then market appreciation is like the market we are in now in New Mexico and other parts of the US. There are too many renters coming into the market and with there being a shortage of apartments, that makes the rent go up.

Leverage

Third, is leverage. You are able to buy something that is worth, let’s say 100k, for only 25% down if you use a conventional loan. That’s only 25k. Now, I don’t know about you, but I can’t ask my financial advisor for 100k of Apple stock and only give him 25k and expect to get a 100k invested. That just won’t go over well. Sometimes, you don’t even need your own money. You can find someone who wants to partner with you and they will be the money.

Principal Pay Down

Fourth, principal pay down. When you get a mortgage on a rental property, you pay P&I. So every month, you pay down your principal loan amount. But it isn’t you paying that off. It is your tenant. Some loans that you can get IO (Interest Only) at the start of the loan. This means that you won’t be paying towards the principal. But these loans serve their own purpose.

Cashflow

Finally, cashflow. Which should be number one. This is the first thing we should be looking at as investors. If the market drops and the value of the property drops, you want to be sure you can pay the rent and hold it for the long haul while the market turns. This also is what gets you financial freedom so you can spend time with your family and give your time to charities and serving at your church.

With all this said, what should you invest in?? I think the answer is pretty clear and that is investing in commercial real estate as the operator or limited partner. As the operator, you get to be in charge of what the asset does. As the investor, you get to collect a check. Now what’s better than that?

I’ve been a landlord for 40 years managing my own places. Have never had anything even close the what you have experienced in 2 years

i wonder why?

5 Reply

Jacob Davis

Member since 2021 · 5 posts · 3 votes

5y

I don't know the full background of your tenants but it sounds to me that you might want to change your vetting process, haha.

3 Reply

Jill F.

Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes

5y

@Caleb Johnson I LIKE being a landlord. I can guarantee you that *I* will never, ever catch a mouse with my bare hands but did inherit a crazy cat-killer tenant once-- so many stories... you're going to be way more boring at parties when your in a LP ;)

9 Reply

Lynnette E.

Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes

5y

Originally posted by @Michael Plante:

Originally posted by @Caleb Johnson:

While investing in the past 2 years, I have been threatened, I’ve caught mice with my hands, called the police on tenants, done cash for keys and many more interesting things. All this has taught me that I don’t want to be a landlord. However, I do know that I want to be a real estate investor.

Tax Benefits

First, being an investor in real estate gives great tax benefits. (Depending on the type of strategy you use) Some strategies require you to pay capital gains tax if you sell it before you have owned it for 2 years. (Flipping) But as a passive investor in a syndication, gives you the ability to use bonus depreciation. This can give you a majority of your investment as a loss via a K-1 statement all while receiving positive cash flow.

Appreciation

Second, is capitalizing on appreciation. Now there's 2 kinds of appreciation that you can use. Forced appreciation and market appreciation. Forced appreciation is when you increase the NOI of a commercial asset which directly affects the value of the asset. Then market appreciation is like the market we are in now in New Mexico and other parts of the US. There are too many renters coming into the market and with there being a shortage of apartments, that makes the rent go up.

Leverage

Third, is leverage. You are able to buy something that is worth, let’s say 100k, for only 25% down if you use a conventional loan. That’s only 25k. Now, I don’t know about you, but I can’t ask my financial advisor for 100k of Apple stock and only give him 25k and expect to get a 100k invested. That just won’t go over well. Sometimes, you don’t even need your own money. You can find someone who wants to partner with you and they will be the money.

Principal Pay Down

Fourth, principal pay down. When you get a mortgage on a rental property, you pay P&I. So every month, you pay down your principal loan amount. But it isn’t you paying that off. It is your tenant. Some loans that you can get IO (Interest Only) at the start of the loan. This means that you won’t be paying towards the principal. But these loans serve their own purpose.

Cashflow

Finally, cashflow. Which should be number one. This is the first thing we should be looking at as investors. If the market drops and the value of the property drops, you want to be sure you can pay the rent and hold it for the long haul while the market turns. This also is what gets you financial freedom so you can spend time with your family and give your time to charities and serving at your church.

With all this said, what should you invest in?? I think the answer is pretty clear and that is investing in commercial real estate as the operator or limited partner. As the operator, you get to be in charge of what the asset does. As the investor, you get to collect a check. Now what’s better than that?

I’ve been a landlord for 40 years managing my own places. Have never had anything even close the what you have experienced in 2 years

i wonder why?

'Cuz in Florida the roaches eat the mice!

4 Reply

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

5y

A person can buy Walmart stock and pretend they own Walmarts so I guess you can invest in a Syndication and imply you own 50% of 9000 units like another poster on Bigger Pockets..

Quite frankly I would have to get very bored to become a LO at this point in my investing. I am very active and can make more as an active investor. It’s not for everyone I’m sure, but to say the only logical choice is to be an LP or an operator is not so logical.

6 Reply

Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

5y

Originally posted by @Lynnette E.:

Originally posted by @Michael Plante:

Originally posted by @Caleb Johnson:

While investing in the past 2 years, I have been threatened, I’ve caught mice with my hands, called the police on tenants, done cash for keys and many more interesting things. All this has taught me that I don’t want to be a landlord. However, I do know that I want to be a real estate investor.

Tax Benefits

First, being an investor in real estate gives great tax benefits. (Depending on the type of strategy you use) Some strategies require you to pay capital gains tax if you sell it before you have owned it for 2 years. (Flipping) But as a passive investor in a syndication, gives you the ability to use bonus depreciation. This can give you a majority of your investment as a loss via a K-1 statement all while receiving positive cash flow.

Appreciation

Second, is capitalizing on appreciation. Now there's 2 kinds of appreciation that you can use. Forced appreciation and market appreciation. Forced appreciation is when you increase the NOI of a commercial asset which directly affects the value of the asset. Then market appreciation is like the market we are in now in New Mexico and other parts of the US. There are too many renters coming into the market and with there being a shortage of apartments, that makes the rent go up.

Leverage

Third, is leverage. You are able to buy something that is worth, let’s say 100k, for only 25% down if you use a conventional loan. That’s only 25k. Now, I don’t know about you, but I can’t ask my financial advisor for 100k of Apple stock and only give him 25k and expect to get a 100k invested. That just won’t go over well. Sometimes, you don’t even need your own money. You can find someone who wants to partner with you and they will be the money.

Principal Pay Down

Fourth, principal pay down. When you get a mortgage on a rental property, you pay P&I. So every month, you pay down your principal loan amount. But it isn’t you paying that off. It is your tenant. Some loans that you can get IO (Interest Only) at the start of the loan. This means that you won’t be paying towards the principal. But these loans serve their own purpose.

Cashflow

Finally, cashflow. Which should be number one. This is the first thing we should be looking at as investors. If the market drops and the value of the property drops, you want to be sure you can pay the rent and hold it for the long haul while the market turns. This also is what gets you financial freedom so you can spend time with your family and give your time to charities and serving at your church.

With all this said, what should you invest in?? I think the answer is pretty clear and that is investing in commercial real estate as the operator or limited partner. As the operator, you get to be in charge of what the asset does. As the investor, you get to collect a check. Now what’s better than that?

I’ve been a landlord for 40 years managing my own places. Have never had anything even close the what you have experienced in 2 years

i wonder why?

'Cuz in Florida the roaches eat the mice!

What about NC and NY?

same reason?

0 Reply

Lynnette E.

Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes

5y

Originally posted by @Michael Plante:

Originally posted by @Lynnette E.:

Originally posted by @Michael Plante:

Originally posted by @Caleb Johnson:

While investing in the past 2 years, I have been threatened, I’ve caught mice with my hands, called the police on tenants, done cash for keys and many more interesting things. All this has taught me that I don’t want to be a landlord. However, I do know that I want to be a real estate investor.

Tax Benefits

First, being an investor in real estate gives great tax benefits. (Depending on the type of strategy you use) Some strategies require you to pay capital gains tax if you sell it before you have owned it for 2 years. (Flipping) But as a passive investor in a syndication, gives you the ability to use bonus depreciation. This can give you a majority of your investment as a loss via a K-1 statement all while receiving positive cash flow.

Appreciation

Second, is capitalizing on appreciation. Now there's 2 kinds of appreciation that you can use. Forced appreciation and market appreciation. Forced appreciation is when you increase the NOI of a commercial asset which directly affects the value of the asset. Then market appreciation is like the market we are in now in New Mexico and other parts of the US. There are too many renters coming into the market and with there being a shortage of apartments, that makes the rent go up.

Leverage

Third, is leverage. You are able to buy something that is worth, let’s say 100k, for only 25% down if you use a conventional loan. That’s only 25k. Now, I don’t know about you, but I can’t ask my financial advisor for 100k of Apple stock and only give him 25k and expect to get a 100k invested. That just won’t go over well. Sometimes, you don’t even need your own money. You can find someone who wants to partner with you and they will be the money.

Principal Pay Down

Fourth, principal pay down. When you get a mortgage on a rental property, you pay P&I. So every month, you pay down your principal loan amount. But it isn’t you paying that off. It is your tenant. Some loans that you can get IO (Interest Only) at the start of the loan. This means that you won’t be paying towards the principal. But these loans serve their own purpose.

Cashflow

Finally, cashflow. Which should be number one. This is the first thing we should be looking at as investors. If the market drops and the value of the property drops, you want to be sure you can pay the rent and hold it for the long haul while the market turns. This also is what gets you financial freedom so you can spend time with your family and give your time to charities and serving at your church.

With all this said, what should you invest in?? I think the answer is pretty clear and that is investing in commercial real estate as the operator or limited partner. As the operator, you get to be in charge of what the asset does. As the investor, you get to collect a check. Now what’s better than that?

I’ve been a landlord for 40 years managing my own places. Have never had anything even close the what you have experienced in 2 years

i wonder why?

'Cuz in Florida the roaches eat the mice!

What about NC and NY?

same reason?

No, 'course not! In NC the mosquitos keep the mice out of sight...and in NY who complains about mice? Rats are the problem there!

1 Reply

Nicholas DeCespedes

Real Estate Agent · Orlando FL, USA · Member since 2019 · 29 posts · 28 votes

5y

I just wanted to add that you can take out leverage on the amount of money that you put in, it's called margin. It depends on your brokerage, but the average amount of a brokerage like Robinhood is 1:2 on the amount that you put it. Some brokerages can give up to 6x the amount of leverage that you put in.

1 Reply

Corey Frank

Gillette, WY · Member since 2017 · 149 posts · 68 votes

5y

@Caleb Johnson Im a super newb but i do have a lot of experience with construction and have seen some nasty, disgusting flips. I do not know the context to your catching a mouse story but am I the only one who doesn't think catching a mouse sounds that bad? Im a hoping you are rehabbing a property when this even happens and if you are, that mouse is one tiny step to payday 🤑 they do make gloves haha 🤷🏼‍♂️

1 Reply

Elisabeth Lernhardt

Member since 2019 · 57 posts · 39 votes

5y

May be DSTs are better for you. Just have to accept a lower return. Or even more passive REITs.

1 Reply

Huiping S.

Homeowner · Tampa, FL · Member since 2016 · 358 posts · 65 votes

5y

Haha.

I got lots calls and messages from one old woman who wanted to rent one property of us but didn't submit an application. I replied her through Zillow already but she still called and called.... I am sick of the desperate calls so I blocked her phone and made the firm decision. Then her daughter called me and the message said I had discriminations against her.

Never touched one mice yet but felt mice maybe nicer than a desperate callers to push others on their loser way.

1 Reply

Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

5y

We were all born screaming, with blood on our hands. That is the human condition.

The sooner you stop lying to yourself about it, the easier it is to do what must be done.

4 Reply

Connor Cushman

Realtor · Cumming, GA · Member since 2018 · 158 posts · 127 votes

5y

@Caleb Johnson I invest in Class A real estate and find really good tenants and my residential landlord life has been a breeze so far (knock on wood).

6 Reply

Terrell Garren

Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes

5y

Have self managed my SFH rentals in NC for 12+ years. They cash flow life as I watch sailboats from a Connecticut beach on vacation reading your post. Life is good.

5 Reply

Allen L.

Rental Property Investor · Chicago and mainly invests in KS remotely · Member since 2018 · 360 posts · 314 votes

5y

I've watched my dad manage rentals for many years, and it's not something that I see myself ever doing. Find a market that cash flows after supporting property management and maintenance/capex costs, and start your portfolio there. People that invests in expensive markets are more likely to be mom or pop landlords that own 1-3 units and manage their own properties, whereas in higher cash flow markets you have many more people owning 20+ units and have a system where they only manage the managers.

1 Reply

Mark P Grimes

Rental Property Investor · Nashville TN (nashville, tn) · Member since 2020 · 5 posts · 6 votes

5y

@Connor Cushman

Totally agree. We buy new builds and find great tenants. We forget we have rental properties most days.

I would highly recommend, “The Book on Managing Rental Properties” by Heather and Brandon Turner. This helped us find great tenants!

1 Reply

Rose Walters

Member since 2018 · 20 posts · 10 votes

5y

@Caleb Johnson You have learned a valuable lesson something that no "guru" could have taught you in a 3 days workshop/seminar. I am sure you will find the right niche of REI for you and will find the right partners. Thanks for sharing. Happy investing.

0 Reply

Yolanda Washington

Member since 2018 · 8 posts · 2 votes

5y

With the moratorium it's really tough right now. But maybe some good deals this fall?

0 Reply

Being a Landlord Sucks

Being a Landlord Sucks

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