Fears of landlording for the first time

18 Replies

Good day!  Husband and I have a 1100 square foot home we are trying to sell.  It is a 3BR, 2BA single family home with attached garage and full basement  with potential for at least 1 BR to be added downstairs.  Needs lots of updates.  Not many lookers and barely any offers.  We are thinking about renting.  I have read many forums and watched webinars.  Very interested in renting, but heard many horror stories.  Very poor RE selling market here.  60 homes on market.  We live in a town of approximately 5,000 people.  Not much industry for decent jobs.  Therefore not many people that may qualify to rent at $600/mo.  I realize that the unknown fears are what holds many people back in the landlording realm.  Any words of encouragement or ideas would be greatly appreciated!  

@Rene Brown in my experience landlording wasn't as bad as I thought. I dreaded the late night phone calls and the overflowing toilets and in 3 years of managing a 24 unit building I think I had 3 actual emergencies. IMO, I'd much rather manage a larger unit than just one or even a couple because if you lose one unit of 24 its not as painful as losing 1 of 1 units. 

I think the key is to screen your tenants well. Spend the money on a screening process and then make yourself stick to being a business person as opposed to a good friend of the tenant. If you keep yourself from becoming a buddy of the tenant its much easier to retain that business relationship.

Originally posted by @Rene Brown :

Good day!  Husband and I have a 1100 square foot home we are trying to sell.  It is a 3BR, 2BA single family home with attached garage and full basement  with potential for at least 1 BR to be added downstairs.  Needs lots of updates.  Not many lookers and barely any offers.  We are thinking about renting.  I have read many forums and watched webinars.  Very interested in renting, but heard many horror stories.  Very poor RE selling market here.  60 homes on market.  We live in a town of approximately 5,000 people.  Not much industry for decent jobs.  Therefore not many people that may qualify to rent at $600/mo.  I realize that the unknown fears are what holds many people back in the landlording realm.  Any words of encouragement or ideas would be greatly appreciated!  

Before you even consider being a landlord, you need to run the numbers on the house. 

How much did you pay? How much did you put down? How much is your mortgage payment? How much are your taxes? How much is your insurance? How much are your other expenses? What kind of rents would you be able to get in your market for the home? Will you get any appreciation from the home?

Even if this home used to be your primary residence, you need to act like it is an investment at this point. If the numbers do not make sense for renting, then you need to sell it. 

If the home needs lots of updates like you said, that could be the reason it is not selling for the price you want. Do you have a link to the MLS listing?

402-965-1853

Are you advertising on the MLS? May we have the address to look it up on our computers? I would like to see the subject property

Thank you @Steven J. I totally get the importance of the tenant screening.  I am just not sure there are enough qualified applicants in my town.  I have no close landlord association that I can attend to get involved in to rub elbows.  So the fear is totally the unknown.  There is only so much reading to do before we just need to try it.  The house is sitting there...just step out and do the landlord thing...getting help along the way with questions that pop up from bigger pockets forums and people like you Steven.  I appreciate your input.  

Rene - Since you're just starting out, I would recommend reading 'Landlording: A Handymanual for Scrupulous Landlords and Landladies Who Do It Themselves'.  This is a tome, but it's worth the read, and answered many of my questions when I started out.

Biggest key is screening your potential tenants, and filtering out all the crew with bad records as early as possible.  Your tenants will be 95% of your success or failure.  Review their eviction histories, background records, credit histories.  Check out the state of their current place if possible.  The shape it's in now will be the shape your property eventually.

Have you given thought to who is going to manage the property - as in, who will take the phone call when something that is both important and urgent (say, the furnace in December) breaks?  Does that 'needs lots of updates' extend to, say, the state of the roof or the water heater?  This might increase the frequency or urgency of those calls, so might consider updating a few things.  Fresh paint and new carpet can go a long way for both potential renters and potential buyers of course.

You could be right on the rent qualifications, I have no clue of your market.....but rather than assume there will be no tenants, try scrolling around in Zillow in your area for a bit *as a renter*, and checking out what's currently for rent for a 3/2, if anything.  This should give you some idea of what properties can really rent for in your market.  I have not found that Zillow's 'monthly rental cost' data on a single house to be too helpful or on point, as a warning.  

Best of luck.  Yes, you can do this.  Keep asking questions and reading.  Personal experience is a great teacher but a very, very expensive one.

Originally posted by @Anthony Gayden :
Originally posted by @Rene Brown:

Good day!  Husband and I have a 1100 square foot home we are trying to sell.  It is a 3BR, 2BA single family home with attached garage and full basement  with potential for at least 1 BR to be added downstairs.  Needs lots of updates.  Not many lookers and barely any offers.  We are thinking about renting.  I have read many forums and watched webinars.  Very interested in renting, but heard many horror stories.  Very poor RE selling market here.  60 homes on market.  We live in a town of approximately 5,000 people.  Not much industry for decent jobs.  Therefore not many people that may qualify to rent at $600/mo.  I realize that the unknown fears are what holds many people back in the landlording realm.  Any words of encouragement or ideas would be greatly appreciated!  

Before you even consider being a landlord, you need to run the numbers on the house. 

How much did you pay? How much did you put down? How much is your mortgage payment? How much are your taxes? How much is your insurance? How much are your other expenses? What kind of rents would you be able to get in your market for the home? Will you get any appreciation from the home?

Even if this home used to be your primary residence, you need to act like it is an investment at this point. If the numbers do not make sense for renting, then you need to sell it. 

If the home needs lots of updates like you said, that could be the reason it is not selling for the price you want. Do you have a link to the MLS listing?

@Anthony Gayden I think our number on this property are probably pretty good actually. Costing us approximately $500/month to keep it on the market for sale. Purchased at well below fair market price. Bit nervous about giving out the MLS info. Will that actually give you the info you need to give more opinions?

The book I recommend is Every Landlord's Legal Guide by NOLO. It's written by attorneys but is very easy to read and full of practical advice, sample forms, and specific laws for each state. I've never seen a better book for someone just starting out.

I'm sure there's someone that handles property management in a town that size, though I can't vouch for the quality. Have you talked to the real estate offices to see if they can recommend anyone?

Originally posted by @Rene Brown :
Originally posted by @Anthony Gayden:
Originally posted by @Rene Brown:

Good day!  Husband and I have a 1100 square foot home we are trying to sell.  It is a 3BR, 2BA single family home with attached garage and full basement  with potential for at least 1 BR to be added downstairs.  Needs lots of updates.  Not many lookers and barely any offers.  We are thinking about renting.  I have read many forums and watched webinars.  Very interested in renting, but heard many horror stories.  Very poor RE selling market here.  60 homes on market.  We live in a town of approximately 5,000 people.  Not much industry for decent jobs.  Therefore not many people that may qualify to rent at $600/mo.  I realize that the unknown fears are what holds many people back in the landlording realm.  Any words of encouragement or ideas would be greatly appreciated!  

Before you even consider being a landlord, you need to run the numbers on the house. 

How much did you pay? How much did you put down? How much is your mortgage payment? How much are your taxes? How much is your insurance? How much are your other expenses? What kind of rents would you be able to get in your market for the home? Will you get any appreciation from the home?

Even if this home used to be your primary residence, you need to act like it is an investment at this point. If the numbers do not make sense for renting, then you need to sell it. 

If the home needs lots of updates like you said, that could be the reason it is not selling for the price you want. Do you have a link to the MLS listing?

@Anthony Gayden I think our number on this property are probably pretty good actually. Costing us approximately $500/month to keep it on the market for sale. Purchased at well below fair market price. Bit nervous about giving out the MLS info. Will that actually give you the info you need to give more opinions?

Nervous about giving out the MLS info? Why?

When you are trying to sell a house, you should want to advertise it in as many locations as possible. I recently sold a home and posted it here, Facebook, Zillow, Trulia, Craigslist, etc.I received many calls from people on this site interested in buying the home.

Also why don't you give us the numbers so we can help evaluate if it would make a good rental? Many inexperienced investors think that the numbers on their properties are good but forget some expenses and costs. Just as an example you said the house needs "lots of updates". Putting a new roof on a house could kill all of your profits for a year or more.

The market you are describing and the property that you described in your first post does not sound like it is a great place to invest. Many people turn their former primary residences into rentals and find out later that they were not good investments.

402-965-1853
Originally posted by @Nathan G. :

The book I recommend is Every Landlord's Legal Guide by NOLO. It's written by attorneys but is very easy to read and full of practical advice, sample forms, and specific laws for each state. I've never seen a better book for someone just starting out.

I'm sure there's someone that handles property management in a town that size, though I can't vouch for the quality. Have you talked to the real estate offices to see if they can recommend anyone?

 Thank you @Nathan G.  There is very minimal property management options here.  Not like you know it as.  I think we would be the managers which I know adds more to the potential headaches.  We both work full time and know this can add to our already busy lives.  We do also own a small storage unit facility.  Comparably it seems that is a direction we would rather go but location here is saturated so adding more is not a good option.

Originally posted by @Anthony Gayden :
Originally posted by @Rene Brown:
Originally posted by @Anthony Gayden:
Originally posted by @Rene Brown:

Good day!  Husband and I have a 1100 square foot home we are trying to sell.  It is a 3BR, 2BA single family home with attached garage and full basement  with potential for at least 1 BR to be added downstairs.  Needs lots of updates.  Not many lookers and barely any offers.  We are thinking about renting.  I have read many forums and watched webinars.  Very interested in renting, but heard many horror stories.  Very poor RE selling market here.  60 homes on market.  We live in a town of approximately 5,000 people.  Not much industry for decent jobs.  Therefore not many people that may qualify to rent at $600/mo.  I realize that the unknown fears are what holds many people back in the landlording realm.  Any words of encouragement or ideas would be greatly appreciated!  

Before you even consider being a landlord, you need to run the numbers on the house. 

How much did you pay? How much did you put down? How much is your mortgage payment? How much are your taxes? How much is your insurance? How much are your other expenses? What kind of rents would you be able to get in your market for the home? Will you get any appreciation from the home?

Even if this home used to be your primary residence, you need to act like it is an investment at this point. If the numbers do not make sense for renting, then you need to sell it. 

If the home needs lots of updates like you said, that could be the reason it is not selling for the price you want. Do you have a link to the MLS listing?

@Anthony Gayden I think our number on this property are probably pretty good actually. Costing us approximately $500/month to keep it on the market for sale. Purchased at well below fair market price. Bit nervous about giving out the MLS info. Will that actually give you the info you need to give more opinions?

Nervous about giving out the MLS info? Why?

When you are trying to sell a house, you should want to advertise it in as many locations as possible. I recently sold a home and posted it here, Facebook, Zillow, Trulia, Craigslist, etc.I received many calls from people on this site interested in buying the home.

Also why don't you give us the numbers so we can help evaluate if it would make a good rental? Many inexperienced investors think that the numbers on their properties are good but forget some expenses and costs. Just as an example you said the house needs "lots of updates". Putting a new roof on a house could kill all of your profits for a year or more.

The market you are describing and the property that you described in your first post does not sound like it is a great place to invest. Many people turn their former primary residences into rentals and find out later that they were not good investments.

 https://www.zillow.com/homedetails/434-W-17th-St-C...

Purchase price $50,000

Mortgage pymt $284.00

Taxes $1700.

Ins $756

Updated 4 months ago

Anyone have input on my numbers listed here? Good investment for a rental? Or sell it? Thank you.

Updated 4 months ago

$10,000 down

Updated 4 months ago

Now owe $38,850 Will need new roof as it is old. Furnace water heater are both fairly new...2012 for both.

@Rene Brown I'm sorry; I didn't realize you were staying in the area. In that case, I would definitely recommending educating yourself and doing it yourself.

1. A local attorney should be able to provide you with a decent lease. It won't be perfect but it will be legally binding and should cover 90% of what you would expect.  If the attorney is worth their salt, they will spend some time going over it with you. Take notes and research what you don't understand.

2. Learn how to screen applicants. Proper screening will cut the risk of future headaches by 80%.

3. Set policies, put them in writing, commit them to memory, and do not waive them:

  • All adults must pass your screening;
  • Nobody moves in without proof utility accounts are established, rent and deposit are paid in full;
  • Rent is due on or before the 1st, period.
  • Late fee is applied on day X, period.
  • 3-day Notice to Pay or Quit is filed on day X, period.
  • Eviction filing (forcible entry and detainer) is filed on day X, period.
  • Be prepared to handle lease violations (unauthorized pets or tenants, vehicle parked on lawn, not mowing grass, etc.)

A little education and preparation will go a long way. Try to find other people in your area that manage rentals and ask them for help. And you can always call on us to help out when able!

Originally posted by @Brandon Battle :

Are you advertising on the MLS? May we have the address to look it up on our computers? I would like to see the subject property

 Hello @Brandon Battle.  

https://www.zillow.com/homedetails/434-W-17th-St-Concordia-KS-66901/91114513_zpid

Originally posted by @Nathan G. :

@Rene Brown I'm sorry; I didn't realize you were staying in the area. In that case, I would definitely recommending educating yourself and doing it yourself.

1. A local attorney should be able to provide you with a decent lease. It won't be perfect but it will be legally binding and should cover 90% of what you would expect.  If the attorney is worth their salt, they will spend some time going over it with you. Take notes and research what you don't understand.

2. Learn how to screen applicants. Proper screening will cut the risk of future headaches by 80%.

3. Set policies, put them in writing, commit them to memory, and do not waive them:

  • All adults must pass your screening;
  • Nobody moves in without proof utility accounts are established, rent and deposit are paid in full;
  • Rent is due on or before the 1st, period.
  • Late fee is applied on day X, period.
  • 3-day Notice to Pay or Quit is filed on day X, period.
  • Eviction filing (forcible entry and detainer) is filed on day X, period.
  • Be prepared to handle lease violations (unauthorized pets or tenants, vehicle parked on lawn, not mowing grass, etc.)

A little education and preparation will go a long way. Try to find other people in your area that manage rentals and ask them for help. And you can always call on us to help out when able!

 Thank you @Nathan G. That should be easy enough I work at an attorneys office!  😀

Originally posted by @Matt Gdowski :

Rene - Since you're just starting out, I would recommend reading 'Landlording: A Handymanual for Scrupulous Landlords and Landladies Who Do It Themselves'.  This is a tome, but it's worth the read, and answered many of my questions when I started out.

Biggest key is screening your potential tenants, and filtering out all the crew with bad records as early as possible.  Your tenants will be 95% of your success or failure.  Review their eviction histories, background records, credit histories.  Check out the state of their current place if possible.  The shape it's in now will be the shape your property eventually.

Have you given thought to who is going to manage the property - as in, who will take the phone call when something that is both important and urgent (say, the furnace in December) breaks?  Does that 'needs lots of updates' extend to, say, the state of the roof or the water heater?  This might increase the frequency or urgency of those calls, so might consider updating a few things.  Fresh paint and new carpet can go a long way for both potential renters and potential buyers of course.

You could be right on the rent qualifications, I have no clue of your market.....but rather than assume there will be no tenants, try scrolling around in Zillow in your area for a bit *as a renter*, and checking out what's currently for rent for a 3/2, if anything.  This should give you some idea of what properties can really rent for in your market.  I have not found that Zillow's 'monthly rental cost' data on a single house to be too helpful or on point, as a warning.  

Best of luck.  Yes, you can do this.  Keep asking questions and reading.  Personal experience is a great teacher but a very, very expensive one.

 Thank you @Matt Gdowski!

Originally posted by @Anthony Gayden :
Originally posted by @Rene Brown:
Originally posted by @Anthony Gayden:
Originally posted by @Rene Brown:

Good day!  Husband and I have a 1100 square foot home we are trying to sell.  It is a 3BR, 2BA single family home with attached garage and full basement  with potential for at least 1 BR to be added downstairs.  Needs lots of updates.  Not many lookers and barely any offers.  We are thinking about renting.  I have read many forums and watched webinars.  Very interested in renting, but heard many horror stories.  Very poor RE selling market here.  60 homes on market.  We live in a town of approximately 5,000 people.  Not much industry for decent jobs.  Therefore not many people that may qualify to rent at $600/mo.  I realize that the unknown fears are what holds many people back in the landlording realm.  Any words of encouragement or ideas would be greatly appreciated!  

Before you even consider being a landlord, you need to run the numbers on the house. 

How much did you pay? How much did you put down? How much is your mortgage payment? How much are your taxes? How much is your insurance? How much are your other expenses? What kind of rents would you be able to get in your market for the home? Will you get any appreciation from the home?

Even if this home used to be your primary residence, you need to act like it is an investment at this point. If the numbers do not make sense for renting, then you need to sell it. 

If the home needs lots of updates like you said, that could be the reason it is not selling for the price you want. Do you have a link to the MLS listing?

@Anthony Gayden I think our number on this property are probably pretty good actually. Costing us approximately $500/month to keep it on the market for sale. Purchased at well below fair market price. Bit nervous about giving out the MLS info. Will that actually give you the info you need to give more opinions?

Nervous about giving out the MLS info? Why?

When you are trying to sell a house, you should want to advertise it in as many locations as possible. I recently sold a home and posted it here, Facebook, Zillow, Trulia, Craigslist, etc.I received many calls from people on this site interested in buying the home.

Also why don't you give us the numbers so we can help evaluate if it would make a good rental? Many inexperienced investors think that the numbers on their properties are good but forget some expenses and costs. Just as an example you said the house needs "lots of updates". Putting a new roof on a house could kill all of your profits for a year or more.

The market you are describing and the property that you described in your first post does not sound like it is a great place to invest. Many people turn their former primary residences into rentals and find out later that they were not good investments.

Hello @Anthony Gayden, when you have time I look forward to what you have to say about my numbers I posted last evening along with the zillow link to my MLS listing. Thanks.

Would someone please give me their opinion on the house I am considering turning into a rental?  Do the numbers make sense to do so?  Thank you in advance!!

It is not worth holding as a rental. Your expenses will far exceed your rental income based on your numbers. Additionally the damage tenants do will require work to repair when you do finally decide to sell. 

It will cost you money above your rental income to hold this property and will be more headaches than you expect. 

Keep trying to sell, drop your price if necessary.

Originally posted by @Thomas S. :

It is not worth holding as a rental. Your expenses will far exceed your rental income based on your numbers. Additionally the damage tenants do will require work to repair when you do finally decide to sell. 

It will cost you money above your rental income to hold this property and will be more headaches than you expect. 

Keep trying to sell, drop your price if necessary.

 Thank you @Thomas S.  That is exactly what I needed to hear.  

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