Rental Property Owners get in here.

[impaul4]

So it's been quite a year, long story short I'm thinking about buying the wife's parents old house in Lenexa near 79th and Quivira. They just did a slight remodel with new floors, bathrooms and paint to make it livable again.

My wife and I have never owned a property before and in my head it doesn't seem too hard to manage but I'm sure I'm missing quite a few components.

My questions are:

1. Is a property management company worth it to deal with the admin of the property?

2. Where and how do you decide on rental contracts and deposits and payments?

3. At what point is it not worth doing it? I estimate after taxes, P&I, to bring about 300-350 home.

4. What can I expect to have to constantly fix, or deal with for tenants? The house is older (built in 70's) but the HVAC, windows and remodels are newer. The only issue is they need a new main sewer line. It has backed up and they get it rooted once a year.

I want to do this as I think it's a great 4 bed house near the elementary schools and would rent to a good family. But I don't want to deal with people from hell.

[BuddyLee]

Originally Posted by impaul4

So it's been quite a year, long story short I'm thinking about buying the wife's parents old house in Lenexa near 79th and Quivira. They just did a slight remodel with new floors, bathrooms and paint to make it livable again.

My wife and I have never owned a property before and in my head it doesn't seem too hard to manage but I'm sure I'm missing quite a few components.

My questions are:

1. Is a property management company worth it to deal with the admin of the property?

2. Where and how do you decide on rental contracts and deposits and payments?

3. At what point is it not worth doing it? I estimate after taxes, P&I, to bring about 300-350 home.

4. What can I expect to have to constantly fix, or deal with for tenants? The house is older (built in 70's) but the HVAC, windows and remodels are newer. The only issue is they need a new main sewer line. It has backed up and they get it rooted once a year.

I want to do this as I think it's a great 4 bed house near the elementary schools and would rent to a good family. But I don't want to deal with people from hell.

So I've only ever dealt with owning one rental property and it wasn't a good experience as many know.

Question 1: I think this boils down to convenience. What is your time worth? Are you close to the property where you could get over there at any hour to deal with whatever issues? If you find that dealing with the property in person would be inconvenient, then I would say it's worth it. Since you only have a single property, this might not be the case.

Question 2: Basic rental contracts can be downloaded from the internet. If you want something more specific then it would be wise to consult an attorney that deals in those sort of things. Deposits I would recommend at least 1 months rent as a security deposit. Payments again should be set in the contract. How the payment is to be made, when it is to be made, and what happens if it's late.

Question 3: So you will only be making about $300 extra a month? Seems like that number should be a bit higher with how property values are. Do you have the rent amount set appropriately for the area? Even so an extra $300 a mo isn't bad. Though I would tuck it into a high yield savings so that you have a money bag to dig into when maintenance issues arise. I wouldn't touch it.

Question 4: I would expect the same things to break that would break if you are living there. I typically got calls for the HVAC or basement flooding, both of which I repaired (at a huge cost in the case of the basement). I would demand your renters carry renter's insurance as well.

Make sure you do a background and credit check on any prospective renters. It will be worth it in the long run. This in of itself, will save you a shit ton of potential headache. Good luck!

[impaul4]

The renter insurance is good idea. The property is about 10 minutes from where we live. So not too bad. The income is just a figure. Depends on how much we buy for and what the insurance to carry is. The house is probably more expensive than the typical first time buyer- so we might look into others.

Even if it is $300 a month, still building equity into the house I suppose.

[DIYAutoRepair]

I would go through a PM company. You won't make as much but they will take care of the screening and contracting any maintenance. Make sure in the contract, they will be responsible if the tenant doesn't pay or trashes the place.

Stick with a larger PM company and check with some of their clients.

[jasman18]

Been doing this for a a few years now.
I enjoy it and find it to be easier than most people realize.

I don't use property management as there just hasn't been the need. Give someone a property in great shape and there will be less to break. I will consider property mgmt once I get to 10 units soon.

You can get a good lease from other property owners in your area. I got mine from the HOA president who paid a lawyer to draft their. I Can send if you like.

You need to calculate your cash on cash return *true* net income divided by what you put down. Don't move forward unless you are over 20%. Expenses and vacancies will reduce it anyway.

95% of all calls I've ever gotten on my properties have been water related. So take care of your plumbing issues.

I post my rentals on Craigslist and Zillow and have all my units rented as of today.
I now make ALL renters pay me via Venmo. No more money orders.
I perform background/credit checks on all of them. ($25)
I them ask them about what I find. Debts student loans etc.
You should use your gut when vetting people.

I always tell them up front that there are others in front of them that are interested in the property and I try to honor first come first serve so I can't promise that they will get it.
This leaves me an out if I don't get a good feeling after meeting them.

For your house a typical renter I tend to see is recently divorced men with pretty good jobs and bad credit from the divorce. They want a place close to their kids but don't want an apartment and have the funds to rent a house


All I can think of right now.

[Fenix]

I would go for a property management company at least like this you will have less headaches. Plus in your case it is really a good business when you buy to let. Here about buying and registering property in the USA might be of help to you.

[scoobsmcdoobs]

good info on here