Owning rental properties for income-good idea?

Discussion in 'Homesteading Questions' started by oz in SC, Dec 20, 2004.

  1. oz in SC

    oz in SC Well-Known Member

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    Our plan has always been to remain here in SC and build up funds to develop the land in NC that we will move to in the next few years.

    The land in NC is pretty much undeveloped beyond a driveway and power to the property line and a little clearing of some areas.

    While on a long drive to visit friends in the DC area we discussed what should be our next step and came to the conclusion that it would be best for us to get rid of the chickens and dog,sell the house and rent a place here while we build up more money.

    WELL the dog 'helped' out by killing all the chickens while we were away :( and we then found a new home for her when we returned so we are going ahead with the rest of the plan.

    NOW(sorry for the long post) would it be best to buy some rental properties in the town up there to provide additional income/security OR take that money from selling our house here and start developing the property we will live on?

    Small homes are relatively cheap(compared to here) and rent would provide an income while developing the land would not...BUT it would get us closer to our goal....

    Any thoughts?
     
  2. Cyngbaeld

    Cyngbaeld In Remembrance Supporter

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    Rentals are about the biggest mistake a person can make. Been there, done that, got the tshirt. I've been renting my house out while trying to sell it and it has been nothing but trouble. I'm just not mean enough to make a good landlord, so get taken advantage of, big time. My vote is to live on the prop and do something like pastured poultry to make your cash.
     

  3. Steve

    Steve Well-Known Member

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    Life's short. Nuff said?

    No? The rental properties will seriously tie you to the area that is not your homesteading goal. I've learned in recent years (job loss, house loss, tornado, DW's major illness and surgeries) that if you have a long term goal like setting up a homestead, you better get moving on it. At best, life's goals are like trying to hold mercury in your hands.
     
  4. oz in SC

    oz in SC Well-Known Member

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    Sorry if I was confusing,the rentals would be int eh surrounding small towns where our land is located.

    The area is a few hours away from where are now but pretty much the only reason we are still here is we own a house...

    Well THAT and we make pretty good money...

    IF we sold our house,rented a place here and saved our money we would be able to have an extra $500/month or so to put into developing the land.

    Another reason we look at buying rental properties is it can be a nest egg for the future..hopefully.

    And I understand the life is sohrt bit...I REALLY feel the need to get moving...
     
  5. rambler

    rambler Well-Known Member Supporter

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    It's important to do what you are good at. If you can manage properties & be a good (from the business side) landlord. It's a tough business. A good one if you are good at it, but we ain't all good at it. I would not be.

    --->Paul
     
  6. ed/IL

    ed/IL Well-Known Member

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    I could not get my renters to pay. Once in it was hard to kick them out. The few that did pay trashed the place. I had to get a dumpster every time someone moved out. I had an old guy that did pay in one unit but he died. The next tenant was bad. Made me think very bad things so I got out with a large $ loss. Better then jail for killing someone. Perhaps buying fixer up houses, repair and selling them might be a better option.
     
  7. oz in SC

    oz in SC Well-Known Member

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    Yes there is always that...

    Around here,most people use management companies that vet the renters and take care of all the little stuff,and of course take a cut of the rent.
     
  8. Siryet

    Siryet In Remembrance

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    My 2 cents:

    I had renters destroy my house and I lived next door. Couldn't collect rent and had to file police charges against them for vandalism to get my insurance company to pay for damages.

    Next renter at another house stole my pump.

    Renter at wife's rental house ruined the inside walls and carpets doors, windows and that was a three thousand sq ft city house in a subdivision and the renters were professionals. $15,000.00 worth of damages yes $15,000.00

    For One of my houses I had a management company take care of everything:
    They moved a single lady in with 5 kids, 5 dogs and no job. The kids broke every storm window stored in the basement and I was lucky to get her to move quickly

    The choice is yours and Good Luck but I wouldn't recommend it. Buy and sell farm machinery for the extra income, you have more control and less headaches.
     
  9. Alex

    Alex Well-Known Member

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    When we first started homesteading, we had four rental units in Redwood City, CA. My brother helped, rented, and collected the rents for about two years for us, we were in Canada. We owe him.

    And we made $300 a month more than we paid ($300 in 1972 equivalent to $3,000 today).

    Then about eight years ago we wound up with 49 units in a small town. It was the WORST. We want to love and see the best in each person, and owning a rental business does NOT bring out the best (or make it visible) in either Tenant or Landlord.

    The most terrible situations and events filled our lives for four years, until the economics of the town, and Canada (due to the USA position on the softwood lumber deal) went even worse.

    Not only did we have to put up with damage, skipping on rents, some very bad people (some good - a few), but also 60% vacant buildings, which still needed heat, insurance, upkeep, etc. It was a disaster. Lost a lot.

    OWNING RENTAL PROPERTY IS A BUSINESS!. If you know about it and set it up SECURELY and DO NOT over extend, then it can be just awful. If you do not know anything about it, start too big, or do not have enough money - it can be a nightmare. Owning residential rentals is not relaxing - it is a bear - lots of work.

    BE CAREFUL, there are advantages - it can work out great if you do it right - and it can be dangers if you don't know what you are doing - find out all about it if you do start - and, as I said realize it is a business if you do it.

    Have you looked at commercial real estate (which takes a lot of money - because it can be vacant for awhile).

    Alex
     
  10. gccrook

    gccrook Well-Known Member

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    You were not just taken advantage of by renters, you were taken advantage of by a supposed management company. The whole point of a management company is to protect your interest. My brother uses a management company and while it is not perfect, they do take care to make sure the renters are the best. It can be a good income, but there are headache possibilities and YMMV.
     
  11. MorrisonCorner

    MorrisonCorner Mansfield, VT for 200 yrs

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    I have one rental unit, the cottage on our farm. In the 10 years I've been renting the property I've had 7 tenants up there.. usually couples or two people sharing the place.

    If they're not married, for sure and certain they'll break up within months of signing the lease and the one left behind will either be unable to pay the rent or be betting off the lease.

    If they're a single parent, whistle for the winter rent, because you're not going to get it.

    If they're decent in every respect when they move out you'll discover they didn't want to "bother" you with "minor" repairs and the roof has been leaking for months.

    If they pay their rent on time and have not financial worries, they'll be weird in other ways (one decided her "rental" covered everything she could see from her windows and she didn't like my husband cutting wood in her line of sight).

    Rentals suck. However... rentals are also the small farmer's dirty little secret. Even with the ups, downs, lost rent, and odd lawyer's fees... the rental still pays all our property taxes and a little bit besides. We can farm because we don't have to worry about the property taxes.

    But would I own rental property that was several towns away? Heck no. I want to be right there, looking over my investment.
     
  12. mikell

    mikell Well-Known Member

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    I have rental and manage some property do pretty well. hard to get good renters unless you go upscale and charge lots. Clear over 3 k per month but a couple of move outs and thats gone.

    mikell
     
  13. GREEN_ALIEN

    GREEN_ALIEN Sunny, Wet, Tornadoey SD!

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    The best thing I ever did was sell my rentals off and I only had two. With all of the credit and background checks in the world I still worked way way too hard for to little return. In this I did find out how to make money though.

    Buy up those cheap little fixers and don't do a darn thing to them. Turn around and sell them BY OWNER and carry the note. Hire a RE attourny to close the deal, about 500$ but include that in the down. Keep in mind there will always be an element of society that will never see a bank loan and they are your customer base.

    How it works.
    First find a buyer, it won't be hard once you advertise OWC.
    Get an RE lawyer to write it up, in your favor within the extent of the law.
    Collect a down and then monthly payments.
    You might get lucky and get a keeper but if you don't it is far easier to forclose then it is to get a renter out.
    Resell as needed.

    We sold one house 4 times in 3 years and figure we made far more money than renting.

    GA
     
  14. Mudwoman

    Mudwoman Well-Known Member

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    Sell the house you are in.

    YOU move into a rental property

    Put the money you make on the sale of your house into your property.

    Do not buy rental property to be a landlord. Too much risk right now and ties up your money.
     
  15. Ed in S. AL

    Ed in S. AL Well-Known Member

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    If you do decide to rent out. DO NOT rent to a relative. Every month there will be an excuse as to why they are short again on the rent money. We let 2 relatives live in a house we used to rent. Finally just got fed up and moved them out and sold the place.
     
  16. Mrs_stuart

    Mrs_stuart Well-Known Member

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    I have managed up to 4 sets of apartments at one time, i have have to agree with the negative comments here. It is hard to find a good tenant that is willing to stay and take care of a place. BUT with that said, i personally would still do it with my own property. I would have certain thing that a renter must have or do and not waiver from that...they must make over a certain amount of money, have been working a job for over a certain amount of time, have at least 2 good references and so on. But i would also make sure that the area i was looking at was a growing area, with not to much rental property in it already, rental are renting for a decent amount, property values are stable, and such. Weight out the pros and cons then decide...
    I would also remember that anytime, any place your tentant may need you, that makes leaving for vacations, or such a problem too. They will call you when you least expect it...Thanksgiving day to say the toilet is overflowing, Your birthday to say the screen door fell off, and at 2 a.m. to see it they can be late with the rent...
    you just have to weight it all out and see if it is for you.

    Belinda
     
  17. oz in SC

    oz in SC Well-Known Member

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    Well,thanks for all the replies...

    It looks like almost everyone has had bad experiences with rental properties...

    With just a few good.

    The reason we thought it would be good is that property is cheap enough up there(compared to here) and it would hopefully make money more than land...

    We could also buy land and sit on it....nothing comes in and it would cost us in property taxes BUT if we held it for twenty years it would be worth something...

    I like the idea of buying houses and carrying the note,it would be possible on some of these properties as they are quite cheap....

    Mudwoman,we WILL be selling our house down here but won't be moving to our land for a few years,we make good money here(well Mrs Oz does...LOL)and it will enable us to do a lot more to the land while we have the money-fencing,outbuildings,pastures,etc.

    I appreciate all the responses and it gets the thought processes going.
     
  18. rambler

    rambler Well-Known Member Supporter

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    Generally if the property is cheap, there is a reason - like no one wants to live there, soft market, no one to rent, cheap rent.

    Give that some thought. No free lunch, if buying housing is cheap, so is rent, and so is the quality of most of the potential renters.....

    --->Paul
     
  19. oz in SC

    oz in SC Well-Known Member

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    Well like I stated,cheap compared to here...

    Around here,houses start at around $130,000 or so.

    Up there,homes are still available for less than $45,000.
     
  20. CraftyDiva

    CraftyDiva Is anybody here?

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    Have you given any thought to commercial/residental mix properties?

    Something on the order of main street store front with apartments above. If the store front remains vacant for a period of time you still have apartment rental bringing in cash. Of course this up's the anti on price, but your returns are at a better percentage then a stand alone rental.