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.
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.
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.