X-Post: Does anyone here own rental property?

[gizmonic]

X-post from DIY/Home Improvement. (I would have posted in GD but I'm :scared: :nuke: )

The house next door to us is up for sale by owner. We had a look around over the weekend and are now mulling over the idea of buying the place for rental property.

It is about the same age as ours (built in 1971) but smaller.

Some of the pros:
proxmity, convenience, opportunity (next door to us). Not everyday that your neighbor's house goes up for sale.
price (asking 122,500)
land (big back yard/about an acre)
4 bedrooms

Cons:
electric and phone need to be updated/rewired
1 bathroom
price (122,500 as is) Naturally, we will negotiate.
bit of water damage in bathroom due to no fan/ventilation
gravel driveway
Rodent problem (i've seen squirrels enter under the roof)

Any DUer's out there w/rental property experience? What can we expect w/this venture? :shrug:

TIA

[Bunny]

1. I have absolutely no experience as a landlord, only as a tenant.

A few questions I would have:

Can you command the amount of rent you'll need to meet all expenses? What would a four-bedroom cost to rent in your area?
Are there tenants who would be interested in renting a house like that?
Can you keep up the mortgage payments if you are stuck for several months without a tenant?
Can your budget sustain the upgrades needed, especially to make sure it meets code in your area?
Also, do you really want to live next door to your tenant - some of them can be pretty demanding over stupid stuff, and when you live next door you're a captive target.

Those are just my immediate thoughts, you've probably got these covered already. Good luck with your decision.

[gizmonic]

2. Shameless kick

:kick:

[Lil Missy]

3. I used to, but wouldn't do it again.

They called me for stupid shit, like changing a light bulb. Also called me about a stray animal, and a parked car they were suspicious about. Then, they demanded a cut in rent to keep the lawn mowed. Stupid shit like that.

They finally moved because they didn't like my "service". Then they had the audacity to use me as a reference. Bad decision.

I sold the house after they moved. At least they didn't trash the place. But they did quit mowing the lawn, and let it go to shit. That was an awful mess to clean up.

[Chemical Bill]

4. I owned a house with three apartments.

I had to evict somebody almost as soon as I bought it. I had good experiences after that, but I did have to sink cash into things regularly. When I sold it I covered my debt, and my ex got a house in Florida.

I now live in a house that I rent. The previous tenants paid no rent until being evicted, and stole a fridge and washer/dryer. They left fleas.

The thing is, you need good tenants. If you have friends who can move in, great.

Bill

[xchrom]

5. there's a book you might want to get --

how to invest in rental property without mortgaging your soul by mabel armstrong.

she's an ethical landlord -- now she uses a property manager.

and they take care of any ugly business.

sshe believes in owning property and has some very good advise for making it work out.

you can look her and the book up on line.

i strongly suggest you start there -- and i think it sounds like a great idea.

[CabalPowered]

6. My friend who owns a couple rentals, will not buy anything

that doesn't pay the mortgage, a 7% monthly fee for management and some profit, which he usually uses to pay down the mortgage. His particular situation, he has access to a management company that will guarantee occupancy. The best rental properties are multi-tenant buildings. Older condos and duplexes are perfect investment opportunities. He's made a killing on an older complex just outside of town. So cheap, he can usually pay cash.

I would caution you on purchasing something right next door. He lived in a duplex where he rented the other half and had a couple tenants that turned wacko later. That's when he started using a management company and bought his own house.

[cobalt1999]

7. very similar situation...

I have a rental house across the street from my house. Older home, very large lot, needed lots of work (but came cheap). We fixed it up, and now have a couple renting from us.

My thoughts:

We were very picky about who we rented to because we could afford to keep the house without renters if need be. Since we were picky we ended up with a great couple who can stay there as long as they want. Don't get it unless you can afford it without the renters!

We don't get enough in rent to completely cover all the costs, so don't do it if you are looking for a positive revenue stream. However, the equity gain for minimal cost is well worth it. Even with today's slumping housing market, I could sell it for twice what we bought it for 5 years ago.

The proximity hasn't been an issue, it's actually been nice the one time there was a big water leak!

The plan is to sell it when I retire and use the cash for my retirement sailboat, so with that in mind, I don't mind the extra effort.

[Karenca]

8. The smartest financial decision I ever made was to buy.

Mine are co-op apartments in New York City, so I don't know if you'll find my advice helpful, but if you want to, you can PM me.