All Forum Posts by: Deanna O.

You get the tenant behavior you put up with. 

If you are OK with a smoking/druggie property, do nothing but collect the rent. If these activities are NOT acceptable you need to give these tenants notice.. Hopefully a simple 30 day "no reason given" notice is an option in your area (do NOT give a reason  - if you say it's because they were smoking & selling drugs they will only argue endlessly and deny it. "I don't want to rent to you" is a non-arguable statement. Text only, so you have a record of what you and they said). 

If they only have several months on their lease & aren't too obnoxious you might give them written notice you will not be renewing their lease. Maybe offer that they will be allowed leave early without penalty. Make it clear that if the house is left in good shape they will get their deposit back (but if it's in bad shape or rent is due that will be deducted). 

I really like that you appreciated what you were getting. A property owner before you spent hundreds (thousands?) of hours maintaining that property, & you are the beneficiary, as is his widow. My parents have maintained their properties very nicely, and have been rewarded by very long-term tenants & being able to be very picky about who they allow to move into their properties (while they budget for vacancy, the actual spend is very low). 

Congrats on being in a good position financially AND thinking about the future!

I second the person who suggested purchasing a multi-family, if that's a feasible option for the area you want to live in (1-2 years should put you in a position to have a pretty solid downpayment on a decent place). If you don't already have an 800+ FICO you might start jumping through all the silly little hoops the banking industry likes to see (sometimes it's as simple as paying the balance on your credit card earlier, so it shows a 0 balance when it is reported). 

Reading your post I did have one thought. You and your girlfriend are not spouses, which does affect some tax/ownership things that you'll want to sort out before you purchase property together. Maybe consult with a GOOD tax/finance person about setting up an LLC or something? It protects your assets if she should ever get sued, and vice versa (this is also a good time to discuss wills, power of attorney, etc if you haven't already).

BTW, everyone uses the word "eviction". It's only an eviction if the courts force the tenants out. If you give them notice and they leave (or if they give you notice and leave) it's just normal business, not an eviction. Rent control changes everything of course.

Let's rephrase something, she didn't "lose" her last month's rent, she is already BEHIND one month compared to all your other tenants.  

Maybe have a discussion that you are afraid she can't afford the rent, and you are considering giving her notice because of this (this nips off the "I'm a bit short" excuses)  along what would be necessary for you to be comfortable allowing her to remain as a tenant (catch up on the behind rent, maybe over 3 months period  AND all occupants PASS background check) . 2-3 working adults SHOULD be able to come up with the rent -- I don't imagine that you are gouging anyone.

It is possible that if there is a wide open door in front (no 30 notice required if you move in the next 45 days!) and nothing but the extra expenses (catching up on the back rent) & "unreasonable" rules (no pot, no smoking, & no extra people) she might chose to leave.

BTW, being in San Diego (like the OP), I'll echo what other posters have mentioned -- there's is a huge disconnect between our rents and our property values that make investing in rental RE here questionable (San Francisco Bay area & LA have similar issues). While our rents may be high ($1500-2,200/mos for an average 2 bedroom apt), our housing prices are even higher. 

For perspective, $500k is a pretty deluxe house in most of the country-- you should be able to at least get a run-of-the mill place for that in San Diego, right?

Hah!  Here that $500k might get you an unimproved 1950s bungalow in a moderate area of town (say a 2/2 or 3/2  in Allied Gardens or Clairemont Mesa). You'll be looking at 1,000sq ft, no view, small lot, 10'x10' bedrooms, 1.5 car garage. Hopefully everything tidy and well-taken care of, but no discount on price if it isn't, unfortunately. It's a seller's market. 

Other $500k options here might be mixed neighborhoods - Most neighbors are OK, but a few are dealing drugs. 1980's 3/2 tract homes, so-so schools,  gang tagging, and the crime maps show a lot of petty theft, car break-ins & a few home invasion.  Looks OK in the day, but distinctly uncomfortable at night. Still nothing at all under $450k, but likely to be larger houses.

Nice neighborhoods and larger homes and you are in the mid-to-high $500s-700s, depending on neighborhood, bedrooms, lot size, condition, etc. In that range you still aren't talking deluxe homes, just nice middle-class places (teacher, cop, nurse, middle-management types. The cars are Toyota, Honda and a few beloved restored classics, not Mercedes).  

The rent where I live is less than an even interest-only loan on the value of the property. The owner has gotten the (significant!) appreciation, and a steady monthly income off their investment. If their children inherit they get a valuable asset with no capital gains. If they sell while living they have to pay capitol gains on a 900% profit, but still it's a 900% profit, after years of rent dividends. I get to live in a house I couldn't afford to purchase.  

IMHO people are confusing ASSET (thing of value) with INVESTMENT (thing producing increasing value). Generally most homes are worth more than the mortgage (so they are an asset), though they may not cost less than renting a similar rental home. Long term home ownership has a lot of things going for it -forced savings, inflation-proofing your housing costs, and long-term appreciation. Primary homes also have certain legal protections against seizure that other investments do not, which is worth being aware of as one gets older. 

IMHO house prices vs incomes are out of whack (ie the average family can't afford the average house). I think we've had a spiral going on (high property prices drive high rents which drive high property prices), with a good economy but limited new housing coming onto the market. 

The only way I think buying right now makes sense is if you;

a) have a very good, stable, recession-proof job

b) would be comfortable with holding for a very long time if needed

c) can figure a way to make the house profitable -- renting rooms, or dividing part of the house into another unit (or an area that functions as one). As far as I know, nothing prohibits you from partitioning off a portion of your home & renting that to a "roommate" with whom you share no living space  (a bathroom, bedroom, & den that are accessed via the patio, with a kitchenette with microwave, for instance).

I've been using MySmartMove (Transunion) for awhile -it's pretty good, though occasionally a pain to use. 

My rule is if you tell me about I'll consider the issue pretty leniently if it's minor, a long time ago, and not likely to happen again. A 6 month spat of domestic dispute charges 15 years ago, not that big an issue. LYING about the charges because you "didn't think they would show up" = no deal. Landlording is hard enough without dealing with someone who has proven that they are a liar.

As far as the "divorcee", at this point it's no. With all that much money avail she won't have any problem finding a different landlord to rent from.

"Why is owner selling" is always my first questions when I buy a used car from a private party -- makes sense that it should be the first question for an investment property too.  That, and "would I want to live here", and "would I want these tenants as my neighbors".