UPDATED: So, now I'm a landlord to a deadbeat

Getting laid off means I had to uproot my family and take a job about 1,000 miles away. We bought our house just before the housing bubble burst and didn't get any offers that were realistic when we put it on the market (I was willing to take a $15K loss, but not a $40K loss on a house that cost me less than $200K to begin with).

So we found a tenant. We tried to be smart by using a Realtor to handle showings, gather rental apps and run credit checks and settled on what appears to be a great young couple who have nearly perfect credit. They signed a two-year lease and are already talking about buying the place. So far, so good.

But I've never been a landlord before, and maybe someone else here has. Is it worth it to hire a property management company to keep an eye on the place? Are there other pitfalls to be wary of?

 

Re: So, now I'm a landlord

I've considered investing in real estate as a landlord, prior to some life circumstances that have hit me. Moddy is correct in terms of the research I've done. Unless it's a short drive, you're better off with a management company.

Generally, the company will charge 10 percent of the gross rent per month. Depending on the company, they may charge more to rent the place out, or to perform evictions. If you have a weak stomach, you may want to hire a company. I know a guy who had to evict tenants with children for non-payment of rent. He felt terrible about kicking out the kids, but he wasn't about to let them stay there for free.

 

Re: So, now I'm a landlord

My wife and I have had two rental properties for three years now. It's a giant pain in the ass and we hate it but the cash flow's good and the mortgage balance on our house is shrinking nicely. If you have good tenants and only the one rental property you don't need a property manager. The tenants can wire you the rent money and if problems arise you just need phone numbers of a good plumber and electrician. If you have a trusted friend who lives in the area, get them to keep an eye on the place for you. You can tell by the condition of the yard whether the tenants are losers or not.

 

Re: So, now I'm a landlord

being a landlord is a risky proposition. i'm a lawyer and i'm currently defending a landlord who got sued. he got sued because his tenant allegedly had a large dog. a wacko in the neighborhood was driving his motorcycle down the street with his four year old son. both were helmetless. and, of course, there was no seat belt or restraint on the kid. the dog wandered into the street and crashed into the bike. dad and kid went tumbling. kid went to the ER, lost two toes. now, a couple years later, the landlord is being sued because he allegedly allowed a large dog onto the property. i can't imagine that i will lose this case but it's still a major pain in the ass (and costly) for the landlord to defend himself.

 

Re: So, now I'm a landlord

I have a townhome that I only rent to teachers or other like professionals. I rent it for almost the exact price of the mortgage (housing bubble burst) and the key has to be the good renters.

 

Re: So, now I'm a landlord

This is the key. It's all a matter of to whom you're renting, and of being reasonable, yourself, as far as the profit-margin expectations. Don't make it unnecessarily hard for your renters.

Whatever they do, financially, if they're paying the rent, they're doing you a favor, and that's what you need to realize.

I rent out a condo I own to a young couple who have been dream renters so far. I charge them just enough to cover the monthly mortgage, and that's it, and oftentimes, a week before the rent is due, they're calling me up, wanting to know if I want to come pick up the rent, or would I like for them to stop by and drop it off to me?

I have been floored every time I've gotten these calls. But I'm thankful this young couple -- whom I, admittedly, took something of a chance on (this is their first place, they're very young, and they're making just enough to get by) -- has been so good about trying to be responsible.

Basically, they put aside the rent money first, every month, no matter what else comes up, or whatever other expenses they have, and that's how they've done it.

For me, it has worked out well, especially considering that I've worked with them throughout without a management company. The plumbing needed fixing once, but I just called someone in to take care of it, and there have been no other issues.

Knock on wood...

 

Re: So, now I'm a landlord

I'm very close by -- like, within a couple miles away, and it's easier/quicker for us to just drop by each other.

Plus, it keeps me in touch with them and the condo, and gives me an excuse to stop by once a month.

 

Re: So, now I'm a landlord

We have a couple rental properties that I handle. They've been a godsend in the recession. We haven't missed a single's month of rent in the last eight years.

If you're a good distance away, I would hire someone, but it's expensive, usually 10 percent of your rent.

 

Re: So, now I'm a landlord

If you're gonna be a landlord, don't rip off your tenants. I just got done collecting a judgment from my ex-landlord for illegally withholding my security deposit over a rent dispute, and I got an extra month's rent in punitive damages out of it. Sure, the four month legal battle and the costs associated sucked, but I got over and made some money. Make sure you know what the legal window for returning the deposit/detailing expenses withheld is in your jurisdiction. And show up to your first court date.

I'm officially 4-0 in Superior Court if anyone is interested in retaining my NON-LEGAL services.

 

Re: So, now I'm a landlord

Dear Det. McNulty

How in the hell do you ever find a new place to live? Doesn't anybody call your previous landlord for a reference check? No offence, but who in their right mind would ever rent to you?