Thinking of buying a big 4BR house and living in it and becoming a landlord. One issue with me though is I am too nice and am a bit of a pushover, but understand I will have to put my foot down in some situations. Have you ever been a landlord - how was it? Did you live in or did you live outside the place?
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Don't do it in NY or CA. Will be impossible to evict anyone.
Ohhh damn forreal was thinking about CA... I guess would just have to be super selective with people?
I think you have to evict within 30 days or they can stay a long time until after a court hearing which takes a while right?
So maybe AirBnB would be advantageous? Short term people who already plan to leave?
Watch out I've heard nightmares in Atlanta, Boston, NYC and SF of people squatting after doing a 2-4 week STR in a AirBnB
Yes, I sublet my place in NYC for a bit years ago. I'll post a more comprehensive post later when I have time, but this Monty Python clip sums up my thoughts succinctly:
;You never came back to post your story....
Sorry, it's been a busy vacation.
I had a small (700sqft) 3br rent stabilized apartment way uptown. Initially it was with a friend, but he moved and I became the sole lease-holder. I got a job with a start-up in Philly, which was my big break, but the pay at that time wasn't amazing, and I wasn't sure how solvent they were. Because of how cheap the apartment was ($1700/mo) and this uncertainty I decided I wanted to hold onto it. With rent-stabilized places, if you sublet for more than the main rent, the sub-tennants can sue you for 3X damages, so I rented out two bedrooms for $850 a piece, and left the third (smallest) bedroom empty as my little NYC crash-pad.
I tried to rent to friends, or people who seemed trustworthy, because the rent was a steal. I still can't count the number of times I had to bug people for the rent or got stiffed for it when they moved out. This is beyond covering the cost when a bedroom was empty, and going through the effort of finding someone. When you put up an ad on Craigslist that's way below market you'll get some oddballs. One guy wanted to sleep in the room for a night before he decided if he wanted to rent it or not, and that's just the beginning.
The craziest was this girl who did something menial for Goldman. I rented her the room furnished. When she moved out she left her room a mess, and I had to replace the mattress, which was massively stained by blood. While I was doing this The super ended up coming up and talking to me. It turned out that she disposed of everything she didn't want by throwing it out the window. We were on the 5th floor.
Thankfully we were in back, so there was nobody down there, but I had to give him a really nice xmas gift that year because of that.
I would do it and only rent to rich hot chicks. And if any of them fall behind on the rent, you can compromise with “alternative” payment methods.
Seriously though, I rent out three apartments in the nyc area and it’s kind of a hassle, I can’t imagine how messy it would be if I lived with my renters.
My advice would be to not tell any of them you are the actual owner and hire an intermediary to play the landlord.
And I would honestly let all your prejudices and stereotypical beliefs prevail. I never ever rent to poor people, uneducated people, etc. I would rather let the apartment sit empty a month than rent to anyone with any type of red flag.
It’s so hard to evict people, it’s like the government wants to support losers.
Thanks for the feedback. I do recall you renting out your $8K/mo place in lower Manhattan. Do you basically require proof of income and proof they make 40x rent?
I'm not opposed to renting out to hot chicks. lol
So I really do act elitist / racist just because I’ve had issues of drama in the past.
I won’t rent to certain races (including my own!), won’t rent to someone who never went to college, doesn’t have a strong resume, doesn’t have a well funded retirement account, etc.
I also try not to rent to single parents or super young or super old people. And I do require 35x rent / income ratio.
But at this point, it makes more sense for me to hire a good agent and pay him a month’s rent to find me good candidate to screen.
Just go into this endeavor knowing that even though it’s good to buy real estate and build equity, dealing with renters is always drama and living with them can be super awkward. If you tell them you’re the actual owner, it’s gonna cause issues for sure down the road.
Why would a rich chick fall behind on rent lol, I think you meant 'poor'
I said to rent to a rich chick…
Dude don’t you have a wife and kids? Why tf are you on an anonymous forum joking about having sex with random women?
Nasty comments always make me smile, as I love arguing…but I can’t post on a forum and make jokes cause I’m 35 with a wife and kids? Huh? I guess you can post since your young and single? Ok I guess.
Yes, but I would never do it with them in the same house unless I was like 22 and they were all my buddies. Business & my daily life are separate.
I would but I also wouldn't live there myself, too little separation betw personal and business. Plus it would be awkward if you had to put your foot down on something and then see them multiple times a day
Personally if it was just me, I can't really see myself owning more than 2-3 rentals on top of an existing home that I live in. Would just be too much of a hassle. My dad personally felt pretty tense handling 3 properties since my mom can't assist with it much, now they had 2 rentals and that's a very reasonable mix.
I guess one element is how intense is your day job? If intense, then you'd want maybe 2 rentals max if it was just you. If not then you could tack on more
That said, if you can split the responsibility with a spouse you could tag on a few more and if she's willing to do it full-time you could probably scale it up to ~10 before it becomes too much work. 10 would be a sweet spot if your wife wasn't working and could handle most of the load
If you want more than 10, then either someone must absolutely grind or you let a property manager handle it all
Sharing my $0.02 here ... if I had a similar plan in mind, I'd rent it out to the WSO/finance community only ... for eg. those who secured return offers (use the forums and qualify your candidates when you receive calls)
This reminds me of a funny post of the analyst who had an "interesting" roommate breaking into his room with crowbar (don't remember it)
Yes, currently a landlord. I do not live with tenants. If I did I would probably buy it with an LLC and try to keep the fact that I am the landlord a secret by using a third party but if they want to they will be able to find out, just be prepared for that. I will second the opinions to stay away from NY/CA. I would also recommend using a property manager, they are worth the extra cost. I have several rentals/apartments and maybe spend a couple hours a year on them total thanks to that. There is a 99% chance they know how to screen tenants and keep rents at market better than you do. Literally every single one of the rentals I have I got on discount from burnt out landlords doing it themselves who refused to use a PM company. I do not understand why people die on that hill. If you decide to do it I would focus on finding a landlord friendly state/area, good quality building/neighborhood, and make sure to vet and do your due diligence on selecting a PM company.
Yes, we owned some land for development and, prior to the construction phase, had a 2 family house on it and a single-family condo above a fully refurbished barn. nothing was nice and everything needed rehab. The second we acquired two tenants moved out. However, the third, who had the biggest part of the 2 family house, became a suing squatting machine. We took them to court on failure to pay rent, smoking on property, trash on the property causing a health hazard,and had to serve them at work as they were armed, and we had a long walk down the driveway to the house; the constable said we could go, but we didn't want violence on something we bought for land. It was a nightmare. Now, what you are considering doing is playing a different ball game with friends or just random people living with you. I'd suggest a duplex or quadplex, keeping it out of CRE and consider SFH loans. Then, live in a unit and start an LLC PM group so you have a veil. Or save up enough or bite the bullet if you have it and go full KP or Garuntor on some CRE
I owned some property in a red state that my wife and I had bought. We thought about renting it out but honestly it would be a very bad use of time for us given we weren't going to even be living in the same city as the place we had.
Personally, I think being a landlord is a VERY bad use of time for most people on this forum. There are easier ways to make money. IE some consulting on the side or something and just throw that in the S&P500.
Best to have a properly manager, never live with your tenants. You have been warned.
thx!
Please, let me know if you need any help. Especially, setting up your holding company etc.
It's more work than you think. Again, being a landlord is a job. When the shower stops working, you don't have the luxury of thinking "I'll use the shower at the gym for a couple days until I can get around to fixing mine." You have legal obligations to your roommates, and that can be difficult for a lot of reasons.
I've never lived with my tenants, but that must add a lot of interpersonal complexity as well. What happens when they refuse to leave? If you get a squatter, you're shit out of luck and almost certainly looking for a new place. What if they're filthy and destroy the place? You don't have any recourse.
Property management solves all those problems, naturally including vetting tenants etc. it really the taxes that is what you have to master.
You've obviously never been a landlord.
First off, property managers don't solve those problems. They need a ton of oversight and management if you want to get decent performance.
More importantly, all of that costs money. Yes, you can outsource everything to a third party, but if you don't have any scale then it won't be efficient. What's the point of being a landlord if you don't actually make any money out of it? Why not invest your capital somewhere else, find some roommates, and live like that?
If you want to be successful as a small landlord, you need to self-perform something. Otherwise all your revenue gets eaten up by your Opex
I'd rather invest my money is VOO than deal with real estate, minus my own house. You should check out biggerpockets.com they have a forum for people trying to get into the business.
thx Jonny
Ok guys you have WHOLLY CONVINCED me not to be a landlord, at least not a live in landlord. Thanks for helping me to avoid this land mine.
Thanks for starting the thread, great place for potential landlords to learn.
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