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Re: Rental Income
Old 05-31-2004, 08:32 AM   #21
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Re: Rental Income

In the years my husband was a landlord he had only one really bad experience. He bought his first buidling, a tri-plex.
One of the apartments was occupied by a "collector" who had newpapers and other trash piled all over. As part of the purchase, he required the owner to have her moved out and the owner clean her apartment. That went just fine. However, the owner, right before closing on the sale, rented the apartment to a woman and her children, with no deposit and he didn't even collect the first month's rent. The landlord at closing paid the first month's rent out of his pocket. My husband didn't know that and thought the landlord had done his job and simply had rented to someone new.

This tenant was a nightmare. She never paid any rent, though she kept promising to do so. Although the trash was cleaned out by the prior owner, the apartment was in bad shape and needed repairs. The new tenant wouldn't let my husband in to work on it. The neighbors complained about noise and kept calling my husband and the police. As my husband's lawyer, I started an eviction action for failure to pay rent, and all the other problems. In Wisconsin, if a tenant says she contests the eviction, it is set for trial. The tenant contested the eviction and the court wouldn't set it for trial for two months. The tenant filed complaints about the condition of the property and had the county test for lead paint. The tenant claimed no rent was due until the apartment was fixed up. The county found lead paint and demanded my husband repair peeling paint. He still had not even been in the apartment since before closing on the sale and the tenant still wouldn't let him in.

Finally, we get to the trial date. The tenant called the court right before the trial was to start and said she was in labor at the hospital and having a baby. She wanted a continuance. None of us believed her because she lied all the time. The judge said he would do the trial by phone. We did the trial. We won an immediate eviction order.

It turned out she really was in the hospital having a baby.

Nevertheless, we enforced the eviction order.

Years later, my husband is still mad at her and the seller. I never really was mad at her. She was doing what she needed to do to survice, just as we did what we needed to do.

When all of this was going on, we went and saw a movie, Pacific Heights, about a tenant from hell destroying an apartment with the landlord unable to do anything. We still hate that movie to this day.




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Re: Rental Income
Old 05-31-2004, 12:53 PM   #22
 
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Re: Rental Income

Hello Martha. Good story. I never really had a "tenant from Hell", but had a few give me trouble. I always worked it out. The tenants who never paid a dime
(I just posted about them yesterday) were a young
couple with a small baby. They said there was something wrong with the furnace but wouldn't
cooperate to let us fix it. Anyway, when we finally went to small claims court they had moved out. I showed up to represent my partners dressed as usual in my standard wall street/captain of industry attire. They
showed up with the baby and dressed in what appeared to be Goodwill rejects. We did not get our
money.

John Galt
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Re: Rental Income
Old 05-31-2004, 01:21 PM   #23
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Re: Rental Income

Evicting a tenant is something like firing an employee. Except you get to hear their baby screaming. And you have to go to court to do it. And they usually leave a big mess when you're done.

In short, don't become a landlord unless you have a heart of stone, the patience of a saint, and an extremely high tolerance for pain.
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Re: Rental Income
Old 05-31-2004, 02:00 PM   #24
 
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Re: Rental Income

I was lucky in that I never had to actually evict a
tenant. Besides the young couple that stiffed us
for a couple of months, my only other rent lost was
a manufacturing company that leased a pretty large
building from me. They got into financial trouble, but because
I was close to the owners I collected my rent almost to the end. In fact, when they had no cash I just took
assets in lieu of rent. Some of their furniture is still sitting
in our home as I write.

John Galt
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Re: Rental Income
Old 06-01-2004, 08:03 AM   #25
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Re: Rental Income

Hey everyone!
Thanks for all the responses! As usual, I have learned that I have a lot to learn! It's been really helpful to read about people's experiences with owning rental property. Not sure what the outcome with the condo will be yet, but you definately gave us food for thought....

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Re: Rental Income
Old 06-03-2004, 06:15 AM   #26
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Re: Rental Income

Wzd was looking for rental rates vs prices.

We bring in $1600 a month in rent on a 3 unit we paid $82k for 6-7 years ago. We pay heat, water, sewer. Tenants pay everything else.

We bring in $280 a month on a single family we paid $1700 for this past year. (Yes - you read that correctly. Admittedly, the place is sort of a dump.). We pay water & sewer.

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Re: Rental Income
Old 06-03-2004, 07:32 AM   #27
 
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Re: Rental Income

Those are both quite good rental streams vs. investment. Did you notice the $1700.00 folks?
I know it can be done because I used to do it.
Takes work to find these though. Another good trick
is to get the seller to take something (could be anything)
you own as a down payment, and/or get seller financing
which makes it a no-brainer (use your imagination).
One reason I like real estate is that with some creativity
the possibilities are endless.

John Galt
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Re: Rental Income
Old 06-03-2004, 10:35 AM   #28
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Re: Rental Income

Quote:
. . . In short, don't become a landlord unless you have a heart of stone, the patience of a saint, and an extremely high tolerance for pain.
I've never been a landlord, but this is kinda what I always thought. And I know that the person you just described isn't me. I envy those of you who are skilled at this and can create such a nice income stream. I would rather go for a root canal.
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Re: Rental Income
Old 06-03-2004, 11:27 AM   #29
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Re: Rental Income

". . . In short, don't become a landlord unless you have a heart of stone, the patience of a saint, and an extremely high tolerance for pain. "

We use bait and switch. I'm all nicey nice. We both show the place, but I answer the questions. Reel them in. Then the hubby plays bad ass when they mess up.

The hubby and I are all about sheriff and tax sales. That's how we got the $1700 property. We paid $6000 for our last house, lived in it for 18 months, fixed it up and sold it for $89k. We also bought 77 acres for $1200. You just have to know how to do your homework.
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Re: Rental Income
Old 06-03-2004, 12:48 PM   #30
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Re: Rental Income

My goodness Yelnad! How do you go about finding things like that? That is a realm I've never ventured into, I wouldn't know where to start....but I'm intrigued...

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Re: Rental Income
Old 06-03-2004, 05:07 PM   #31
 
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Re: Rental Income

I just want to say again that yelnad's experience is
not all that unique. Big money is possible, but it is work
which is why I no longer do it.

John Galt
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Re: Rental Income
Old 06-04-2004, 05:29 AM   #32
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Re: Rental Income

Adventure - I don't know a ton about it. My husband has a degree in real estate and works in the mortgage industry. I think a lot of it is knowing the state laws and the right people. It takes constant research to cover our butts.

And John is right. The PITA factor is VERY high, which in turn often increases the stress factor on the marriage. (We had a hum-dinger of an argument last night about our newest property). This is nothing I would choose to do myself. I married into it and am careful about how I get involved.

It's really hard to buy a house at tax sale and then have to evict the prior owner, especially when she's a little old lady...then again, she had a really nice car and a 60" television, so I can't feel that bad.
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Re: Rental Income
Old 06-04-2004, 05:51 AM   #33
 
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Re: Rental Income

I have a thousand real estate stories, a lot of them about "near misses". Here is just one. There was
an old hospital in Michigan that had been converted to apartments. I think
it had 14 units and good cash flow. I made the owner a low ball offer. While he was contemplating this he happened to mention it to a co-worker at the power
company where he worked. The co-worker said,
"Hell, I'll buy it at that price!" and that's exactly what happened.

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Re: Rental Income
Old 06-04-2004, 10:06 AM   #34
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Re: Rental Income

Yelnad - I hear ya about the PITA factor, I'm probably not cut out for that type of challenge although my SO has no problem with confrontation....
I'm always intrigued, with all the different ways people are working their way towards ER....you and John Galt sound like you'd have some interesting stories to tell about "Adventures in Real Estate".... 8)

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Re: Rental Income
Old 06-04-2004, 04:15 PM   #35
 
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Re: Rental Income

I don't know about yelnad (is that danley backwards?),
but I could write a book or maybe 2. In fact, just today
I was thinking about maybe my oddest experience
ever in real estate. Too long for this forum I fear.
I'll put it in the book

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Re: Rental Income
Old 06-08-2004, 05:59 AM   #36
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Re: Rental Income

Yup, you guessed it. It's my maiden name.

My husband could probably write a book, but he wouldn't because he'd think he was sharing all his secrets.
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Re: Rental Income
Old 06-08-2004, 10:46 PM   #37
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Re: Rental Income

yelnaD and John are describing a different, but important aspect of real estate investing. Buying and operating rental real estate at market prices is profitible, in general. Finding deals is another realm, is a lot more work on the digging side, and is much more profitible. Unfortunatly I haven't found those yet.

So, yelnad's rents and prices are not market rates. I was wondering about single family market rates - and I believe from memory and cases I have seen that rent is between .6 and .7% of the purchase price per month (but I have no current data to back that up). Multi family (>5 units) tends to be around 1% of the purchase price per month (and I have lots of examples in Denver for that). This simply was to illustrate the difference between single and multi family for rentals for cash flow.

I'm sure it is possible to find deals. In fact my sister recently found a good one. Someday I may stumble on to one, but not because of extensive looking. My sister follows all the auction notices in her small town. She saw one for a house she had her eye on (for a home for our mom), and tried to go to the auction. It got postponed 3 times before it finally was held. One other person showed up, and stormed out when she bid it up to about 60% or 70% of value! She walked into a setup sweetheart deal, and got it for herself. So it can be done, but note that it took some legwork to track down the rescheduled auctions.
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