Experiences with Single Family Rentals
I am looking to buy an investment property, most likely a single family rental, and have no experience in doing so. Is there anyone out there with insight to the following topics/questions?
1.) Leasing - What are your experiences with leasing agents versus doing it yourself? From what I've read, paying out 1 month of rent is a common fee for these arrangements. What are the pros and cons of both beyond time saved and paying out the search fee to a leasing agent?
2.) Property Management / Rent Collection - Are property management companies worth the fee? Again, from what I've read, paying out approx. 1 month of rent is common in theses agreements. What mechanisms did you use to collect rent if you're doing it yourself?
3.) Eviction Process - I know this will vary state-by-state, but what are your experiences with the evicting tenants? What kind of costs did you incur? How long did the process take? What parties were needed to get involved?
4.) Other / Anecdotal Stories - I would appreciate any input to potential problems that are commonly overlooked, or any anecdotal stories that provide a bit of insight.
Just general advice on sfh rentals. If you are just getting started, do everything yourself the first year. Usually PM's can take a lot of your profits and it is good to have first hand experience into the process so you will be able to tell if you are getting BS'd by your PM.
Unless you are doing some sort of turn key style investment in which case a PM is needed, you should be able to handle everything that comes your way.
Screen your tenants well, credit checks, background checks etc. to limit the potential for an eviction.
Once you find a good tenant, learn how to keep them happy because in the long run it will save you time, money and headaches.
Hey, this is actually right up my alley. I do a lot of this stuff, have a circle of friends who do it, and we all learn from each other.
1) How much free time do you have? If you can reasonably show the place yourself- go solo. Im a licensed broker and Im saying for leases, we collect our fee just for showing the place and managing documents/ contracts. Most Realtors don't even do professional photography for leases. It is definitely worth the $100-150 investment for you to hire a photographer and post professional photos online. You can post stuff on Zillow and Craigslist now anyway.
2) If you can drive to the place, do it yourself. Most management companies charge around 5-8% of EGI. That will eat into your profits like crazy.
3) I'm in Southern California. The only way to evict someone is "cash for keys". Basically paying someone to move out, even if they haven't paid rent. Pretty ridiculous, so make sure you are well capitalized and do tenant screening diligently. Get their pay stub, tax return, bank statements, credit report.. the whole deal. And notice how clean/ unclean their car is when they pull up. Normally a good indicator of how they'll treat your house.
4) I actually built and use an excel model for this very purpose. You input your assumptions and it gives you a 10 year forecast, disposition breakdown, and your return summary. You also have a refinance tab in case you want to refi. PM me if you're interested. Look up "Graham Stephan" on YouTube. Some of his older videos go through in great detail about his rentals. He's legit too, personal friend of mine.
Share the model?
This may be a stupid question, but if you do the leasing yourself, how did you go about drawing up an actual lease agreement? Did you find a template available online somewhere?
What state are you in? Or looking to buy in?
Single family rental is time consuming, I strongly advise against it. It’s better to focus on your career and try make more money
Why not do both? I think the key is scale. Residential multifamily is a good spot to be in (2-4 units)
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