Grassroots housingsports?

Dear god, what have I done? For some time now I've been looking to start making some investments to plan for an escape from cubicle land. A good friend of mine started a few years ago buying up cheap houses around Pensacola, FL and making rentals. He's doing ok with it and I kept threatening to join him.

Well he called me last night, his realtor had a deal that was hard to pass up but it had to be cash and it had to be now. He couldn't jump on it but wanted to see if I wanted in. He already owns 2 other houses on the same street.

So, pending acceptance by the bank (short sale) I just bought the first of hopefully many rental properties in FL. Once it closes I have to head down there for some rehab but the list is pretty light compared to the houses he usually gets for these prices. New floors, paint, and put the kitchen back (cabinets were removed but saved during additional renovation). I know the renovation stuff, I'm completely lost on the rest of this and feeling a bit like the morning after a drunken ebay spree. Luckily I have a good mentor in the friend who is doing this already and he's going to handle the property management for me.

So...3 bed, 1 bath, near the gulf, a golf course and a public park. Near the military base so plenty of renters.

Cost less than my car.

How're you going to get it back to NJ?

Cool. I've got a rental that looks a lot like that.

Not a bad looking little house. It shouldn't be too hard to get rented. The last time mine came up, it rented in under 24 hours. I must need to raise the price.

What does a house down there rent for? I get $1200 a month for mine in Charleston, SC.

carzan wrote: How're you going to get it back to NJ?

I was going to drag it home with the Colony Park on the way back from BABE ;)

Toyman01 wrote: Cool. I've got a rental that looks a lot like that. Not a bad looking little house. It shouldn't be too hard to get rented. The last time mine came up, it rented in under 24 hours. I must need to raise the price. What does a house down there rent for? I get $1200 a month for mine in Charleston, SC.

$750 seems to be the going rate in that area for houses like this.

In reply to JThw8:

That's not a bad return if you paid less than a car for it. Good luck. Having a local guy to manage it will make it a lot easier.

JThw8 wrote: $750 seems to be the going rate in that area for houses like this.

That's what I pay for my small 1br apartment.

Toyman01 wrote: In reply to JThw8: That's not a bad return if you paid less than a car for it. Good luck. Having a local guy to manage it will make it a lot easier.

Yeah, I definitely couldn't have done it without having a "man on the ground". Its a small start, obviously $750 a month won't let me quit my job and it was that mentality that's kept me from jumping in sooner. But as I get older and semi-smarter I realize it has to start somewhere. I can't buy 10 houses, but if I buy one when its this cheap and let it start working for me then soon I can afford another...and so on. I hope.... If not I have a cheap summer home.

That's kind of the direction I'm leaning. 8-10 paid for houses at 750-1500 a month would be nice.

My BIL has 22 of them. They will pay off about the time he hits 60, netting him about $18K a month. I'm pretty sure I could retire on that.

Toyman01 wrote: That's kind of the direction I'm leaning. 8-10 paid for houses at 750-1500 a month would be nice. My BIL has 22 of them. They will pay off about the time he hits 60, netting him about $18K a month. I'm pretty sure I could retire on that.

yep, I have 15-20 years to retirement, I'd like to know that if/when SS fails I'll still have something. This one should be "paid off" (paying cash but need to get it back) in under 4 years so we'll be hunting for another within 2

I have some advice... If you are renting out an entire house, always schedule a monthly visit to "inspect the Smoke Detectors/Carbon Monoxide detectors." Place one of each in every single room. Make it clear to potential renters that this is a monthly thing, and a requirement for them to be a tenant. Then imply it is for their protection. Also tell them " To prove to my insurance company the equipment is working ", each visit will be video recorded " Video recording also helps prove tenant neglect"...

The reason I recommend this. It will help ensure the place isn't used as a grow-op or crack house.

If potential tenants know you will be there every month and in every room they will likely think twice about doing anything mentioned above..

In reply to drsmooth:

I'm an extremely responsible renter, I pride myself on leaving a home in the same or better condition than what I found it in, and I can't imagine renting from someone that thinks they can walk in monthly as a matter of habit.

Nice get. Be sure the sill plates are good. Rentals don't make much money in the early years but can deliver a nice income stream later. Way to go.

pres589 wrote: In reply to drsmooth: I'm an extremely responsible renter, I pride myself on leaving a home in the same or better condition than what I found it in, and I can't imagine renting from someone that thinks they can walk in monthly as a matter of habit.

yeah, that's not happening... coming in and videotaping my stuff... don't think so..

I've had pretty good luck with my renters. I usually do a drive by once a month, but I don't go in unless they have a problem. That's happened once in two years, a failed breaker on the heat pump. As far as I'm concerned as long as the rent is on time, it's their house. Even though I have keys to it, I stay out. Rent around here starts in the $400 range for an appartment. Not being in the bottom of the market helps with the quality of the renters.

Toyman01 wrote: That's kind of the direction I'm leaning. 8-10 paid for houses at 750-1500 a month would be nice. My BIL has 22 of them. They will pay off about the time he hits 60, netting him about $18K a month. I'm pretty sure I could retire on that.

is that before all the expenses ? taxes, maint., savings fund for unexpected expenses, .... etc ...

The monthly inspection is becoming the norm. To many people trashing the place and then bailing out. That being said, if I had the cash that's exactly what I would be doing.

Datsun1500 wrote:

wbjones wrote:

Toyman01 wrote: That's kind of the direction I'm leaning. 8-10 paid for houses at 750-1500 a month would be nice. My BIL has 22 of them. They will pay off about the time he hits 60, netting him about $18K a month. I'm pretty sure I could retire on that.

is that before all the expenses ? taxes, maint., savings fund for unexpected expenses, .... etc ...

What a pessimistic outlook. Even if it is before expenses, it is still a nice position to be in. Worse case he has 22 house that someone else paid for that he can now sell

not pessimistic ...just realistic .... I've never seen a house that didn't require taxes paid, normal day-n-day-out maint. and eventually something quits/breaks/leaks ... and has to be fixed ... and I wasn't trying to throw a damper over the idea of living off of real estate

$18k/month is great ... especially if all mortgages have been satisfied ... but if living on all of that ..then .............

Toyman01 wrote: In reply to JThw8: That's not a bad return if you paid less than a car for it. Good luck. Having a local guy to manage it will make it a lot easier.

On a related note, how do you go about finding a local guy to manage this kind of stuff? Obviously the OP already has a connection, but say you didn't.

I recently moved, and houses here can be very cheap. I'm planning on purchasing one soon, but have also considered only staying in it for a year or two then moving on to something bigger and turning it into a rental. Or maybe just buying a second one to rent while the rates are still so stupid low.

pres589 wrote: In reply to drsmooth: I'm an extremely responsible renter, I pride myself on leaving a home in the same or better condition than what I found it in, and I can't imagine renting from someone that thinks they can walk in monthly as a matter of habit.

You're kidding, right?

He OWNS IT. He ALWAYS has the right to enter. Ever read the fine print of your lease agreement?

Informing the tenant is just a nice courtesy.

Last rental I was in, I got a letter with a notice of intent to inspect about every other month. Generally a phone call to the landlord to set up a time would make sure everyone was home, and they would do a walk through. Guy never complained of the project cars behind the house, and once he spotted an issue with the house before I did and had to notify him. Other than a emergency phone call at 2 AM to ask where the water valve was due to a burst pipe outside everything went good. He never wanted to video tape anything though.

The video recording thing is optional. To be honest just the suggestion of it usually scares off most shady tenants.

I do monthly inspections (usually when I come by to collect the rent). Generally I have a tenant sign a sheet saying the smoke detector, fire extinguisher and carbon monoxide detector have been tested and are working.

Rarely have I had to resort to recording. Although, one time video saved my ass. I usually resort to recording If I feel uncomfortable inspecting a property.

Before I learned how to properly screen tenants. I rented to a couple who had a "Bachelors Degree" in both Crack Smoking, and Alcohol Consumption.

They had a water cooler, toaster oven, microwave and fridge. Plugged into the same outlet with a power bar. Somehow it was my fault the breaker was constantly tripping. I told them to use the other outlets in the kitchen. They did not like that solution. After a brief verbal dispute (they used very colourful language). I left.

After leaving they pulled down the smoke detector and hid the carbon monoxide detector. They immediately called the Fire Department. As a landlord in my jurisdiction it is my responsibility to ensure both are working.

The Fire Department shows up. To inspect the place. They (FD) installed a carbon monoxide detector and a smoke alarm. The tenants gladly told the Fire department where I lived. One of their inspectors was at my door shortly after. I showed him the footage of me testing the equipment in the apartment, recorded only a few hours before (with the crack heads in the background) including the verbal dispute. I showed him the time and date it was recorded. I also showed him videos of prior inspections at that place and others.

The inspector was back at their place shortly after to lay charges against the crack heads.

SVreX wrote: You're kidding, right? He OWNS IT. He ALWAYS has the right to enter. Ever read the fine print of your lease agreement?

The fine print on every lease I've ever signed explicitly laid out the circumstances under which the owner could enter. It was spelled out on most of them ahead of time, and I had it added before signing others. Ditto on the lease agreements for the properties my family rents out.

Further:

http://www.landlord.com/landlord_right_of_entry_by_state.htm

In reply to keethrax:

I appreciate the list and now know what jurisdictions I would never, ever provide a rental property.

That being said.. If I decide to give someone (A stranger) access to what is likely, the most expensive thing I will ever purchase in my life....

Damn straight there better be some provision in the lease that lets me inspect MY property with some sort of short notice!!! If state law prohibits or restricts it... F-that state. I won't be a landlord there. If I can be held liable for it being a Grow-Op, crack house meth lab, puppy mill, or fire code violations. I should be legally allowed to inspect things on a frequent enough basis to make sure these things don't happen. If tenants do these things on MY PROPERTY... It should be as easy as possible for me to prove that it was the tenant. Not me doing said things, or advocating said things happening on my property .

In reply to Datsun1500: You would be surprised what the E36 M3 bags know.. My local library in the lobby has a number of brochures outlining how it avoid an eviction due to non payment. These brochures, are produced by a local Tenant advocacy group..

keethrax wrote: The fine print on every lease I've ever signed explicitly laid out the circumstances under which the owner could enter. It was spelled out on most of them ahead of time, and I had it added before signing others. Ditto on the lease agreements for the properties my family rents out. Further: http://www.landlord.com/landlord_right_of_entry_by_state.htm

You are correct.

As I said, and as your post and link proves, a landlord has the right to enter his property. The specific details vary by state.

In most states he has to give advance notice.

A clause like this in a lease IS advance notice.

If you are adding a clause to a lease that says he cannot enter, a landlord would be foolish to lease to you under those terms. It's HIS property.

Don't be "that guy".