It is getting tougher to be a small-time landlord

General Landlording & Rental Properties
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It is getting tougher to be a small-time landlord

Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes

I see the day coming when you can't afford to manage a small portfolio of rental properties.

The tough part for me has been getting maintenance done for little stuff. I have had so many handymen over the years, some licensed, most not. You keep hearing about what a threat it is to use non-licensed $20 an hour guys who might come and repair a wall a tenant's kid knocked a hole in. The sheetrock professional can't afford to come out for a job worth $25. It is not like the GC's of the world are getting robbed because of the unlicensed handyman. The guys (sorry ladies not come across any Jill of all trades ladies) I talk to won't bother with a small job. Just had a licensed guy say I couldn't afford to pay him what he wanted for a little project I proposed; he, and rightly so, needs a good profit to show up and the little stuff doesn't have that potential.

Having several places is ideal for people that want to have additional retirement resources but don't plan on having rentals be their business... but lots of PM's in my area won't touch single family and don't want small portfolios. My experience with property managers was one that would quickly put the small guy out of business.

I spend a considerable amount of time and money staying educated because the tenant/ landlord laws are a land mine for unsuspecting and uninformed small landlords. The most dangerous situation is the landlord that owns 1 property.

If you are midway between residential and commercial (5 properties) the insurance companies start considering you a risk and will only cover you with more expensive commercial policies that require you to go to LLC's while LLC's might not be appropriate for someone getting new mortgages and has existing mortgages.

What is the saying-go big or go home? Don't want either but...

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Mike F.
Investor · Denver, CO · Member since 2015 · 570 posts · 521 votes
11y

Well, in regard to the repairs and such, I'd simply forfeit the idea that you need to make repairs such as a hole kicked in a wall by your tenant's kid for $25, and realize that whatever it takes to repair it, it doesn't matter since you would be passing the cost on to your tenant. I'd get out of the $25 mindset and realize it will be $300 and bill the tenant. Might make them manage their kids a bit closer once they get tired of paying for their tantrums. The reality of the market rates are the reality and your tenant should be the one lamenting the high cost of repair labor not you.

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  • Dave Fontana
    Rental Property Investor · Western Carolina · Member since 2010 · 144 posts · 66 votes
    11y

    There is a lot that an unlicensed person can do, at least in NY. You could check with your local building department. In NY, change of structural, egress, plumbing and electric behind the walls are no-no's for unlicensed contractors. But changing a door, sheetrock replacement, Spackle, etc. Is ok. There should be some printed material with guide lines. I wouldn't ask someone there. Most folk really don't know , even the folks that work there.

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  • Jeff S.
    OP
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    11y

    @Terri Pour-Rastegar

     that is the right way to do it IMO. Have kind done things as rent comes in. That model was my only choice because when I started I had no money and very little income. Bought from a slumlord and just carried on until places could be slowly upgraded with rental income. My places just keep getting better but slowly. My last purchase was rented with paint and clean-up with the intent to redo in 2-5 years, again partly from the income.

    That is really cool how you are transitioning from w2 to rental. It is a beautiful thing. I pay myself a management fee and let the rest ride-but that isn't much-retired but still building.

    The way I managed 20 years ago would make most people squirm...things, they are a changin'.  

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  • Jeff S.
    OP
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    11y

    @Account Closed I know but some people shouldn't touch power tools. For some reason ever since I quit my w2 job I just don't have much time. Go figure.

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  • Jeff S.
    OP
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    11y

    @Account Closedall for that idea. It is cash intensive though and you are dealing with some that aren't always a good risk. Have come to a place where working with sketchy credit people isn't worth it for me. There is considerable risk with guaranteed outflow but not so guaranteed inflow.

    Would do it if all things were right though.

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  • Account Closed
    Austin, TX · Member since 2015 · 102 posts · 33 votes
    11y

    You do need cash or cheap access to cash that's true. Depends on the market as far as the buyers go. My buyers have zero credit, I dont really care because they have proof of job, 5k down and documented income. 

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  • Jeff S.
    OP
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    11y

    Last time I checked the bank wouldn't finance that kind of operation @Account Closed

     Are you saying one could finance this business model or are you doing owner finance on the buying end? Lease option?

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  • Jeff S.
    OP
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    11y

    @Dave Fontana pretty much the same here. A homeowner can do quite a bit on his own home. It is the question of what happens if an unlicensed worker gets hurt. According to some of the agents on here you are not covered. My agent says yes. Over the years I have never had anybody get hurt. That doesn't mean that going forward I will be as lucky. 

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