Becoming a Landlord, was it worth it?

General Landlording & Rental Properties
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Becoming a Landlord, was it worth it?

Larry Johnson
Virginia Beach, VA · Member since 2017 · 7 posts · 2 votes

Hello,  I'm nearing retirement age and I'm considering buying a rental property.  Am I insane!  Was it worth it to you financially?  Did you lose money your first year?  I've heard horror stories and success stories.  Do most people lose money like first-time flippers, or do most become successful?  Is becoming a landlord more risky than flipping homes?  Thanks much.

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Bettina F.
Investor · Post Falls, ID · Member since 2016 · 606 posts · 699 votes
8y

Yes, we have been very pleased with our investment.  We moved from a high cost area to a lower cost area to retire.  When we sold our paid for house, we were able to use that money to purchase a 6 unit apartment.  We are healthy, active retirees and do our own management, maintenance and landscaping.  We hire out the bathroom remodels and replacing rotted subfloors. For the first two years, we used the profits to fund building improvements and build up a contingency fund.

We are now able to take $3000 a month out of our LLC. Since we have low fixed costs, we do not stress if we have a vacancy, since we have plenty of cash flow. We do not put up with bad tenant behavior because we are not afraid of vacancies. We have not had to take much out of our 401Ks -- we are covering our day to day living expenses on Social Security and money from the apartments. We spend about 4 hours a week at the property.

As we get older and frailer we will have to hire more out, but for now it is very manageable.  My plan is to have my daughter inherit the apartment building (on a stepped up basis) when we die.  We are fortunate to have decided to settle in an area with rising property values and rising rents.  

I am a retired RN and my husband is a retired mental health counselor.  Our former jobs both focused on working with people, and setting limits.  This has served us well as landlords.  Life experience also has it rewards  -- my husband and I were timid landlords when we were in our 20s and rented out a house we could not sell.  With experience comes self confidence,less willingness to put up with tenant shenanigans, and an overall lower level of landlording stress. 

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  • Patrick M.
    Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    @Joshua May that is right- there is potential for the new law to depress home values in the coming year. (It is difficult to evaluate because of all of the hyperbole surrounding the bill.)

    But I think it is important for someone new to consider if they may wind up looking to unload the home if things don’t work out. For the buy and holder with experience- this could be a great new year.

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  • Ron Flatt
    Investor · Hillsboro, TX · Member since 2017 · 358 posts · 245 votes
    8y

    Depends on what you like.  

    I love my rentals, yes I have mainly C properties with a couple of Bs in the mix. (Work - Yes) Sometimes aggravating- Yes   Worth it for me- definitely) 

    I also have some owner finance notes where I sold the property.  It is less hassle, checks come in regular and fewer headaches, but you do have the occasional late pay or out right default (I try to get these back to paying or get them to give me a deed in lieu)

    I am beginning to look for some performing notes, but most notes I found have been an extremely low rates, and they were asking more than I felt they were worth.  I am still looking and think I will find a gem, in the pile sooner or later, until then I will buy a few more rentals, sell some properties carrying the paper.  

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Ron Flatt the notes that we get involved with ware 50 to 65% LTV non owner occ 2 to 3X debt service coverage and return 8 to 10% to the investor.. we call it mail box money.. 1500 plus notes in service over the last 5 years less than 10 defaults.. Its a niche and program that I created out of a need for this type of funding.. its uber fun.. I look at it like the bed rock in a portfolio. or like a stock broker puts you in safe stable then you go for medium growth and then you can try your aggressive growth.. most of our investors use their 401ks to buy these notes.. and being one note one investor you don't need to be accredited like the note funds.. I really like were your going selling on terms.. as long as you adhere to Dodd frank that is a great way to transfer your management of tenants to management of notes and cash flow.. great job.

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  • Larry Johnson
    OP
    Virginia Beach, VA · Member since 2017 · 7 posts · 2 votes
    8y
    Originally posted by @Jay Hinrichs:

    @Ron Flatt the notes that we get involved with ware 50 to 65% LTV non owner occ 2 to 3X debt service coverage and return 8 to 10% to the investor.. we call it mail box money.. 1500 plus notes in service over the last 5 years less than 10 defaults.. Its a niche and program that I created out of a need for this type of funding.. its uber fun.. I look at it like the bed rock in a portfolio. or like a stock broker puts you in safe stable then you go for medium growth and then you can try your aggressive growth.. most of our investors use their 401ks to buy these notes.. and being one note one investor you don't need to be accredited like the note funds.. I really like were your going selling on terms.. as long as you adhere to Dodd frank that is a great way to transfer your management of tenants to management of notes and cash flow.. great job.

    Jay Hinrichs, please keep on topic.  This discussion is about being a landlord.  If you want to discuss how to purchase notes, then please start a new discussion.  Thanks.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Larry Johnson  duly noted sorry bout that.. I guess after I sold my 350 plus sfr Portfolio I took my focus off of landlording.. carry on...

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