OT - Help, Do I want to be a landlord?

[Twoboos]

My initial response is NO. But, here's the deal.

We are finally getting my mom's house cleaned out. My brother has been doing an amazing job on it (while I am here w/DDs and no camp! Yikes.).

We had discussed renting it, but were leaning more toward selling. Now he has talked to a friend who rents out a property in the same town and apparently we can make a lot of money on the rent - which we would just put back into paying off the remaining mortgage, then sell in 5-7yrs, or pocket the $ from there on out.

Pros - more $ in the longterm once mortgage is paid off and hopefully market turns around; keep the house we both grew up in.

Cons - we are landlords; if we're not landlords we pay a prop mgmt co which would take longer to paydown mortgage; have to pay to upkeep at least some of the house; who knows what will happen w/housing market; keep the house we both grew up in.

My gut reaction is sell it and get it done. This is a starter home, good town w/good schools, good location. LIke the rest of the market, it has lost value but it's not like it was $100k or anything, probably more like $25-50ish-k.

Any landlords out there - thoughts? Honestly, I know I have answered my own question but have agreed to let him explore this option more. Run #'s, talk to RE agents, etc.

[ellies mom]

What happens when the plumbing goes? Can you afford to fix it immediately no matter the cost? What happens if the heat or air conditioning goes out? Same thing? What happens if the place gets trashed by tenants? The security deposit may not cover the full amount of repair/clean-up. Granted I'm a cynic but those thoughts run through my mind everytime we've thought about renting.

[zoestargrove]

Are you a worryer -will this keep you up at night?

DH and I have been landlords for 10 years. We have 3 separate units we rent out. I run the ads, take care of the finanicials, screen tenants, deal with email requests - but he takes care of the big issues -showing the place, maintenance stuff - tenant problems.

Many months can go by and we do nothing but collect the rent. Then, sometimes problems arise that need are immediate attention. I think you can get a really good vibe from a person/family when you show the place. We've been lucky to find people willing to mow the lawn for us in exchange for some money off the rent. We look at it as the kid's college savings.

PM if you want to ask specific questions.

Kelly

[HannaAddict]

We considered keeping our first house that we outgrew (we loved it!) and renting it out, but ultimately decided if we could get what we wanted for it to sell it. The thought of being a landlord didn't appeal to me. Even with good tenants, things break or need to be replaced and we would have to go back through the process of getting the house all perfect again before selling it. We were lucky that it was in a good neighborhood and darling and were able to sell it (after a few lowball offers that we didn't even counter) for what we wanted. It is great to be done with it, even though we had been very attached to it (and it is only eight blocks from our new house).

Talk to an accountant or attorney too about tax implications of keeping it versus selling it now. I don't know the rules for an inherited property, but we had to consider that if we wanted to use our capital gains exclusion, we needed to sell in the next few years and not hold onto it for five or ten years. We were just at the max. now (we bought it over ten years ago and prices went up a ton in our neighborhood and city). Also, with another person involved, it might be easier to just sell it and divide the spoils and not have to worry about who pays for what, what if someone needs to sell it at some point due to unforeseen circumstances and all the other things that can happen. Real estate can be a good investment but we are not handy and my husband's time is far more valuable at his office than trying to learn how to do it himself so we would have had to hire out for everything that needed to be done. Sorry if this is rambling, but I would probably sell.

[wellyes]

I'm not a landlord so take this w/ a grain of salt but... I'd definitely consider doing it. Strongly consider. Multiple streams of income is always good. And passive income (rent) is better than income you get through a paycheck. Get some books from the library & research more before you sell.

Good luck!

[gatorsmom]

We've been landlords for the past 12 years and have many properties. I couldn't respond to your post when I first saw it but thought immediately the answer to your question is "it depends on a lot of things." But, in your scenario, it could work.

There are 2 very important things to having a successful, stress-free (and that can be possible), tenant-landlord relationship. The first is to BACKGROUND CHECK AND REFERENCE CHECK ALL PROSPECTIVE TENANTS. All of them. Look at credit history, rental history, criminal background and then ask for the names of previous landlords. When you call the landlords all you want to know is if they owe them money, if they were ever evicted, and if this landlord would ever rent to them again. Trust me, crappy tenants have a history of being crappy. If they were terrible tenants to previous landlords, they'll be terrible tenants for YOU. And terrible tenants are what will make your life hell and cost you money. DO NOT JUST GO BY YOUR GUT. I could tell you horror stories about "feeling" someone would be a good tenant....Btw, there are agencies that will do these background, rental and credit history checks for you. But I advise strongly in doing your own reference checking.

The second thing is to have a very strong LEASE AGREEMENT. Find a lawyer who has rental properties of their own and does rental law. Then ask for help with your lease agreement and any necessary addendums (like pet deposit, garage use, etc.). It will cost some money upfront, but consider it rental insurance. A lawyer with rental units of their own knows what pitfalls to look out for and has provided for that in the lease.

It sounds scary but it doesn't have to be. If you do those 2 things up front before anyone moves in, you could have a good tenant in there for years and not have to worry about them or even remember they are there- until the rent check arrives at the beginning of the month. :yay:

Feel free to pm me.