Palm Harbor, FL · Member since 2016 · 50 posts · 8 votes
I have decided as an RN for 30 years and tired of punching a clock, to invest in real estate. I bought a brand new town home a year ago, but tired of big payments. Now decided to sell, and get serious into real estate. I thought buying rentals would be easier to start and maybe do some flipping later when I have some cash. I have heard horror stories about being a landlord. Is it really that hard? And any advice on how to start in this investing.
I buy condos and cash flow great and the Assoc takes care of just about everything so in 5 years I think I have gotten 3 calls with an issue with a unit and those where all very minor things. I suppose it's more involved with Muti unit properties though.
Thank you for your answers. The other thing is that most of the multi units are in not so nice areas. I definitely wouldn't live there. I know inventory is low right now, so I will keep searching.
Buy in desirable neighborhoods, rehab to a standard that you would want to live in the rental. Treat you tenants honestly with respect. If you follow these 3 rules, good renters will be searching you out.
Thank you for your answers. The other thing is that most of the multi units are in not so nice areas. I definitely wouldn't live there. I know inventory is low right now, so I will keep searching.
You hint 'I wouldn't live there' -- GREAT RULE for success IMO -- I use that rule of thumb for everything I did with REI, including the maintenance. If you would not, then how the heck can you expect the tenants to???
War zones and nasty sections of town - - I formed a marketing plan to rent to families with children. Object was to get long term tenants with reasons to stay put - - this worked for me. The high school was nearby, desirable and many move-ins were related to this fact. I could have located on the North Side far more cheaply, but it looked cheap and was once a housing project.
Look for amenities that other rentals can't offer. I found a 6-plex with LOCKABLE, 1-car garages!!! They seldom held cars, but were used as storage units. Could have charged extra, but elected to view it as my marketing advantage.
It can be great but also work and sometimes stress. If you own properties that cash flow, compare the hours spent making that money instead of a 9-5 job. It can be quite a bit more per hour income and you get other great benefits: tax benefits, appreciation, etc and the ability to sell when the time is right and defer all your gains. If you are going to do buy and hold properties, learn your state laws (in Florida chapter 83). Screen tenants and don't be in a hurry to accept the 1st applicant. Treat them all respectfully but don't bend the rules for them. It is a business and treat it as such. I have had to do two evictions: one was easy and the other was a real pain. I got both properties back in good condition and was able to lease them again immediately. Don't let fear stop you! Be SURE and remember: you make your money when you buy. If a deal doesn't make sense, don't fool yourself into believing it does! Stay on BP and also increase your knowledge by reading. I recommend "hold" as well as "the millionaire real estate investor" for starters.
Um, FortuneStealers is a ripoff. You paid (probably) $197 to "drink from a firehose" for three fairly grueling 9 hour days. What you have yet to discover is that it's really a three-day upsell. They will devote the bulk of the weekend to attempting to enroll you in a roughly $37,000 program which actually is not intended for beginners, anyway - it's a business development program better suited to established REI businesses. They'll even present it to you in terms of a franchise.
That said, of course, forewarned is forearmed. Ignore the upsell, stay in the main room and either see if you can find a way to have your cellphone record audio covertly or take a laptop along and type like mad taking notes.
...and THAT said, yes - you WILL hear a lot of terms and concepts you've probably never heard before, most of which will not be explained in much detail. They've only got 27 hours of your time, after all. Little or no Q & A.
As for HOAs, you need to consider them as an additional operating expense just like property tax. Depending how onerous the fees is, it will reduce your NOI (Net Operating Income) on a rental. Make sure your attorney reviews the covenants and conditions documents, also. There may be some special restrictions on rental units.
From that perspective, they're not necessarily bad. It just reduces your NOI which is not good.
My home here has an HOA. The fee is $47 / year.
Yes, you read that right PER YEAR!
I've seen condo and up-scale townhome HOAs as high as $600 a month!
Good to know. I won't be buying that for sure. There are things that I already learned about flipping ect. They have this really good profit analyzer tool I like too. So yes I will be taking notes. Thank you for the heads up!
well that's sounds like a good plan for when I'm soon wealthy! For starters I need torin it conservatively. I will definitely have a manager in a couple of years!
People who place no value on their time try to manage their own properties. This is the W2 mentality: trade time for dollars.
The entrepreneurial mentality is to trade dollars for time and hire the management out. You can always get more money. Time? Not so much.
Personally, I would NEVER self-manage - my time is FAR too valuable.
Good ideas, but... you EAT the decisions of the PM and have liability for the results.
With absentee ownership, you may have no choice but to use a PM, but 19yrs being 2hrs , 120 miles away, I created a local team to do the heavy lifting and I did the screening and decision making - - seems to have worked out well (see profile).
How much do management companies typically charge? Isn't it better when starting out to self manage and then later when you have many up and running hire a management?
Yeah. Me and my Son will be the PM for a while to start up.
Need to save money for more rentals : ) Our challenge is going to be finding rentals. There aren't many around where I live. I live in Palm Harbor, Florida. At least not many in the MLS right now.
People who place no value on their time try to manage their own properties. This is the W2 mentality: trade time for dollars.
The entrepreneurial mentality is to trade dollars for time and hire the management out. You can always get more money. Time? Not so much.
Personally, I would NEVER self-manage - my time is FAR too valuable.
Good ideas, but... you EAT the decisions of the PM and have liability for the results.
With absentee ownership, you may have no choice but to use a PM, but 19yrs being 2hrs , 120 miles away, I created a local team to do the heavy lifting and I did the screening and decision making - - seems to have worked out well (see profile).
I think I might word that a bit differently, J.
You take responsibility for the actions of your agent(s), PM(s) and other team members and also the liability. It's all part of being a responsible REI professional.