As someone who had pondered becoming a part time landlord as an investment, this is a really interesting read.
You could probably figure that out on your own, though. If you still have interest in being landlord, here's something nobody will tell you: you will see people at their lowest, and you will see people at their worst.
I had a tenant argue with me over a door they kicked in from the inside, "Why should I have to pay for what I did when I was drunk!?" I had a tenant weep openly while she explained she had to break the lease because she had terminal cancer and was moving into hospice. I had a tenant cry while he explained that he lost his job and had to break the lease because he couldn't afford to house his family there anymore. A few months ago I had a very nice family move out of one of my rentals and the young wife teared up because she "hoped that one day they could buy the property from me." - The husband worked for a large corporation and had been unwillingly transferred out of state.
The nice family with perfect credit and references will turn out to be dirt-bags who wreck up the place. Sure, you've got that security deposit but you'll still spend hours doing the labor yourself or managing contractors.
My best tenants were a group of college kids who rented my biggest property out and left a year later with the place in better condition than when they moved in - they had no credit or references, but I had a good feeling about them.
The point is, is weighs you down, if you're a even a little bit kind-hearted. I started selling property off last year. I don't want to be a landlord anymore.
If you don't mind me asking, did you make decent money?
If you work in IT (like I do), that's not exactly life-changing money, and as a function of time-in vs profit out, you'd probably be better off just doing some contract on the side.. at least, in the short term. In the long term, after holding on to a bunch of properties for 13 years, having other people pay my mortgages plus market appreciation, I've generated a ton of equity. Now that I'm cashing out, if you consider my time and my initial investment, I'm doing a great deal better than market.
Had I have had the stomach to stay in and pay off those mortgages, I'd probably be doing even better. The price of my sanity, I guess.
The housing boom over the past 20 years makes everyone belive that real estate is the path to easy wealth. But being a landlord takes work and offers a market return. There is no magic. Those people who tell you "I just collect the rent" haven't been doing it long enough.
Turns out all I need them for is a rent-collector broker. I interface directly with my tenants to address all issues. While I still make a small profit even after the $80 fee, I think whenever these tenants decide to leave, I may strike out on my own, maybe make a little more money.
You are in the very extreme minority of people able and willing to perform maintenance and repair work yourself. We're a dying breed it seems. For most it's simply not a realistic option, due to the lack of "real world" experience/skills most in the position to buy an investment property are in.
This is why it's generally considered a poor investment choice for most people just looking to put money somewhere.
If you are willing to roll your sleeves up and have some handyman skills? You'll certainly enhance the return on your own capital that way. I see such businesses (and they are businesses - not remotely passive) as a means to ensure your money is working for you, which feels much more satisfying and honest to me than just stuffing it into some ETF somewhere.
Fortunately I lucked out with tenants. I am a working single parent and I live an hour away from my property. I'd really like this to work out in the long run, but so far what I've learned more than anything else is, you can't beat having excellent tenants.
It's OK to use a management company to find a tenant, show the place, run credit, Etc. Don't use them after that though.
SO, when the tenant moved out and the landlord decided to inspect the place himself, he was surprised to find a large amount of damage and a badly overgrown yard. It seems that the management firm had collected the rent (through automatic weekly debit), taken their percentage, and done nothing else.
I'm afraid it was so long ago that I don't remember anything specific.
Yes, being a landlord isn't "easy money" but if you're willing to work a little you can make a lot of money slowly.
I've never seen someone loose their ass on a rental property, I'm sure it happens but you'd have to ignore the fundamentals. You can download plenty of spreadsheets online that will calculate whether a property cash flows or not before you even call the real estate agent. You insure everything, and put the cheapest everything into fixes.
Source: I grew up fixing and painting my dads houses in between renters.
If you get a background check of everyone in the neighborhood
> no one else is trading your house while you had it
My share is my share- what other people do with their shares has an impact on mine- kinda like what your neighbors do with their property has an impact on the value of yours.