I'm a single mom and I work full time. Im looking to purchase my first home and I am looking into purchasing a two family home. Im a bit worried because everything I read says that having tenants is not worth it. Is that true?
It depends what you're reading. Asking people on this site of real estate investors or aspiring investors will likely give you the conclusion that having tenants is definitely worth it.
If you are a softie and believe hard luck stories and have a difficult time saying no .Then being a landlord isnt for you .
Could you file an eviction notice on a single mom with 2 young children because she cant pay the rent
Then being a landlord isnt worth it .
Its a business plain and simple
Im willing to do whatever takes, I guess my biggest worry is that when expenses arise I wont be able to cover them. I can definitely pay the mortgage on my own if the unit is vacant, but what about expenses like having to evict tenants, got to court, fix damages to the property etc. I will of course do a background check on potential tenants. Im also wondering for current landlords do you get more good tenants than bad. As far as my goals, stop working eventually and purchase more properties. Also once I purchase the home I wont have much in reserve until maybe 6 months, can you take out a HELOC for the amount of your down payment?
Is having a job "worth it"? I mean, you have to get up, deal with bosses, idiot workmates, commuting, etc. My point is nothing worthwhile is all upside. My wife and I rolled a $60k downpayment 21 years ago into current equity around $4m today. Hell yes, it was worth it! We could never have done that just by working.
thank you guys so much for your responses
I've had good tenants and bad. What I've learned is we are what we tolerate. We literally teach people (tenants) how to treat us. Have a strong lease with open, honest expectations. Buy the duplex and rent it out. You'll know in six months if you like it. All the best!
Anytime I hear tenant horror stories, I always ask , do they have a pre-screening process before approving the tenant to move in. Did they verify income and call previous landlords for reference?
You can always outsource everything to a property manager. Any dispute will go through them.
Finding a quality property manager, that's another story.
Is it worth it? I don't know yet.
My tenant is moving out soon and I will be pre-screening and placing a tenant myself. Scary as hell because I also work full time.
It was overwhelming at first but I broke it down day by day and start building my procedures and questions to ask. Also I'm looking for a Landlord/tenant lawyer to draw up a lease and handle any future disputes
@Anita Muhammad Where are you looking to purchase? Will you house hack?
One of the big mistakes beginning investors make is spending their last dime to purchase an investment. Three months later the furnace goes out and they can't afford to purchase a new one. This stuff happens all the time.
Be patient. Ensure you have enough to buy an investment property and also enough for a safety net in case something goes wrong shortly after purchase.
One of the reasons why I picked real estate investing and self-managed local landlording as my way into real estate investing is that I was kind of born into it -- my grandfather ran apartments this back in his day and I grew up on stories told by my mother about the life. I am also an immigrant to this country. In both my wife's culture and mine, landlording is much, much more common as an investing strategy than speculating on the stock market. You put some money together, you buy houses or apartments with it or you start a business. Stock market? Bah! Are you crazy? Better to have tenants!
I also entered the business as a passably good lifelong handyman with some basic house-fixing skills. Working on properties is not always a lot of fun, but I derive a great deal of personal satisfaction from it. Doing a high-quality maintenance job by myself for a fraction of what I know I would have to pay a local tradesman (whom I am also sure would do an inferior job, sometimes an unsound job, as a matter of course to maximize his profit and minimize his time expenditure) also gives me immense satisfaction.
Finally, I live in a city where outdated yet sound properties in passable locations can be had for very little money, fixed up for minimal cash outlay (as long as you do it yourself), and rented for competitive rates. Of course these properties are old, and require more maintenance than others somewhere else would.
What I'm getting at is that my skill set, my area, and my mindset regarding investing complement each other in what I've chosen to do within the field of real estate investing. If I lived in an apartment in Queens in New York City or in half a duplex in Pacifica, California, would I have a few thousand bucks invested in tools to fix houses and spend my day like today, where I worked on refinishing the oak strip floor of a bedroom and took a break to go to a tenant's house to change out a showerhead? Of course not, not in a million years. The market doesn't reward that kind of real estate investing there as it does here in the Burgh. I'd do something else.
So I don't know if landlording is right for you, Anita, and I don't know what kind of landlording you're planning on and what kind of area you're planning on doing it in. I doubt that your road should be the same as mine, and I think you should spend some time coming to grips with what's best for your market and what's best for you.
Softie landlords can grow callousness but quick to react fly off the handle types do not LL well. Defeatists that use words like always, never and everything I've ever read (really?) can bring more drama to the table than is worth it. Tenants talk about always and never and everything, especially when it's sob story time or complain about the neighbor time.
My guess is- it's not for you. At least not yet. Nobody's gonna be there to hold your hand when 'everybody' says they told you so and your tenant is always late and never cleans up after themselves. We are a rare and independent bunch of realists that succeed at landlording.
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I bought my first Investment Property 21 years ago.
Just before that, I asked almost ALL my friends and Family to join in with me.
No one wanted to do it. The most common reason was that they didn't want to unclog toilets in the middle of the night.
There was one friend of a Brother that hung out with me. He was willing to go into the first investment.
We partnered up, bought it. That led into the next 6 more, all in Brooklyn, NYC.
Fast forward to today, I'm millions richer than all the friends and family that didn't want to unclog toilets in the middle of the night.
AND to this DAY, I have never had to unclog even ONE toilet! I call a service for that.
The biggest issue that holds people back is a low risk tolerance brought upon them by some paranoid delusion.
If you educate yourself enough, you can wind up living your dreams rather than dreaming to live.
You say you can afford the mortgage even if the other unit is vacant but that you don't have extra cash for the other expenses of being a landlord.
So...instead of buying a single-family home instead, can you buy the duplex, keep up with the mortgage, sit on the other unit for a while until you've saved up some cash, then rent it out?
Short answer...yes, it's worth it. But there's gonna be times when you wonder why you ever got involved in it, but the same goes for a regular 9-5 job. Even if you love your job, there's going to be bad days or just days you don't feel like going to work.
Buying a duplex is the easiest/best way to get your feet wet. Even if you bought a single family house, your furnace could die tomorrow or a tree could fall on the house or you could lose your job and have to figure out how to pay your mortgage. Instead of worrying so much about "what if this happens..." focus more on "what if it doesn't happen..."
And there's always going to be friends/family that say why you shouldn't get involved in RE. The "clogged toilet at 2AM" is my favorite line and the one that EVERYONE seems to know. I did property management for 10+ years and have owned 2 of my own rentals for 3-4 years and never once have I, nor has a plumber, unclogged a toilet at 2AM for one of my tenants.
If you don't have the reserve funds going into a investment property you are not in a position to invest. In your case I would say that being a landlord would definatly not be worth the risk.
There are many factors that will work against you. First you have no idea what you are doing in regards to tenants, maintenance, over all expenses etc. This is probably the worst possible starting position. I would also guess that you have not spent any time studying your state landlord tennat regulations. Good tenants out number bad by about 10 to 1. Regrettably investors like yourself are a prime target for the bad ones and it will only take one to break you.
Bottom line you are no where near ready to begin until you are fully educated and have saved up plenty of cash to start.
@Anita Muhammad not sure what CLUELESS book you are reading, but short answer to your question, YES. buy, refi buy more , do again and again. .Rentals provide freedom. good luck
Thanks for the responses, Im going to purchase a duplex and go for it.
Short answer is No!
Being a landlord is a lot of work that's why most of us on BP are real estate investors. Why deal with tenants when you can simply pay someone to handle all the headaches that comes with being a landlord.
Now if you asked is being a real estate investor worth it. The answer would be a definite yes. Do you want to retire early? Do you want other people to work for your income? Do you want to live in the best neighborhood and your children go to the best school? Then become a real estate investor not a landlord!
@Anita Muhammad , I agree with Clifford: become a Real Estate Investor! (ie. Pay someone else to Manage!)...
Rental properties are not a get rich quick plan. But it is worth it if you plan to be in for the long haul. You want cash flow and appreciation, not just one or the other.
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