So much advice to not rent out places in my community

[Lucas A Davidson]

Hey!

I fully renovated an entire 3/1 home in a prime location (walking distance of everything), and will be renting it at an estimated $400 a month profit.

But, I have everyone - I mean EVERYONE in my community telling me to NOT rent and to flip it.

After capital gains, closings, etc, I would stand to gain far less than holding it...especially with an economic downturn coming.

My intent is a very rigid application process, including full background checks, references, and a $150 application few.

Knowing my goal is to build a portfolio of rentals for passive income, I'm seeking advice of my fellow BP'ers on if this level of resistance to renting is normal?

Thanks!

[Joe P.]

Don't take criticism from someone you wouldn't take advice from.

Usually the people who have done the least, tend to talk the most (as someone who has only 1 current rental, and had a max of 2...I'm violating my own rule).

If you're unsure, focus on the logic and optics of this. Have you accounted for all possible expenses? Are you being realistic on the expenses and rental market? Does the condition of the property line up with your expenses? Does your expected rent/applicant pool line up with the real world, e.g. what you see on Craigslist, Zillow, Rentometer -- is everything in range?

If so, then proceed as planned. You can always rent first and then sell if its not working out long term.

My own father called me a slumlord when I purchased my recent duplex. Frankly if you can spend 1000 for a 2 bedroom, I don't think that makes it a slum at all, but that's just my opinion. Negativity and inexperience comes from like...80% of people...they are also the people with no assets, high debt, and plenty of gum circumference to flap on topics they know nothing of.

My only comment to you is your application fee is going to scare off a lot of people. I think its absurd, but it also depends on your rent. If the rent is $3000 a month, maybe its a good application fee. But I think anything over $50 is pushing it. You shouldn't be making money on applications and at $150, you definitely are. Another good thing would be to run your process and rationale of screening with another investor, because that does seem out of range to me.