Owning a rental property

If your handy and have the time to manage own properties, you are ahead of the game.  I don't know the real estate market in you area, but the overall market has been absorbing renters at a very high rate last 3-4 years.   Main obstacle to overcome is financing the property if not all cash purchase.   You would find difficult market for financing investment properties right now otherwise.    That said, not impossible, just need larger amount of skin in the game then ever before. 

 Also need to see if multi-family, commercial, residential makes sense for you.   Some have a higher margin, but consequent higher upkeep which might not be an issue in your case.   Anyway, I have done it and there are pros/cons.   Would it be a hobby?  Long term investment in the appreciation of the property?  Short/mid term cash flow from monthly net profit?   

about 12 years ago I bought an 8 unit apartment building and two duplexes for rentals.  I had no experience but it was my path to riches so I just did it.  In my case it did not work out very well, so I've got some good advice on what not to do.  

• All of the units I bought were single bedrooms which have the highest rate of turnover and evictions.  Think young irresponsible single people.  I would say 4 out of every 5 tenants I had paid rent for 2 or 3 months and then I had to evict them which took a couple months.
• With the single unit apartments and high turnover I was spending almost every night after my normal job cleaning out apartments and trying to get them ready to rent.  It was not a fun job and I kept falling further and further behind.
• I was young and didn't have much spare $ laying around so I bought all my units on 100% loans and had little cash to fall back on.  Combine this with my high vacancy rates and things got out of hand real quick.  As they say, cash flow is king.

So, the best advice I can give is to start with a single family house and make sure you have enough spare cash laying around to cover at least 6 months of vacancy, if not a year.  You hopefully won't need it, but if/when it goes vacant you don't want it to suck you under.  
You also have to be relatively strict with tenants.  It's easy to fall into the "My mom is sick and I have to pay for her new electric chair, I'll have your rent check in a couple weeks is that ok?" trap.  The two weeks turns into 6 weeks and then the eviction process doesn't get started until 2 or 3 months late on rent.

I do think the climate is good for rentals now because its hard for people with lower credit scores and/or lack down payments to get approved for loans.  Combine this with a depressed housing market and there's potential for some good deals out there.

Rented out a house for about 2 years.  Hated it.  Was not suited to being an a$$ about late rent, eviction, etc.  I think it would be OK if you have the right personality; i didn't.

I ended up as an almost-unwilling landlord in that I lived in a house for a few years, then got a promotion that involved a transfer. I thought the place would sell, but it didn't, so now it's on the rental market. First tenants stuck around for 2 years, but now it's on the market again.

I took the "easy" way out by turning the place over to a property management company. It's up For Sale or Rent. Either way, I'll deal with it. Would rather sell it, but if I can get the mortgage to be at least equal to rent, I'll deal with it.

The property management company has been great, but I've heard of bad ones. If you're going to do it yourself, I highly recommend learning as much as you can about your legal rights and responsibilities, and what you can hold the tenant responsible for. Be very careful about who you rent to and always hold them to their contract and the law (and, of course, you need to be held to the same standard, but I take that as a given).

As my property spends more and more time on the market, I'm thinking of keeping it as a rental investment. I don't like having the extra responsibility, but it may work out well in the future.

Find out how the rental market is where you want to have a property; some places are great, some have rentals sitting unoccupied for long periods. I think you should find out all that's involved and make a decision from a position of being well-informed. It might be great, it might be horrible. Just be sure it's right for YOU.

I have  2 that I rent out. One an urban apartment. One a suburban house. Here's a few things to consider and by no means not all that you need to consider.

Location- Supply demand.

Price- Do your homework. Zillow Trulia Broker sights. Know the area. Know last sale information. Know taxes, maintenance costs, homeowners association costs etc etc. Asking price means nothing. There is no bid too low if you're the buyer. Check rental and selling price trends. All this is on public record.

Personality- Its a business. Leave emotion out of it 100%.

Single family- Make sure its in a good school district. Houses obviously tend to require a lot more structural costs and maintenance. Being a handy guy doesn't help when you have to put in a new air conditioning until that costs 1000's of dollars.

Apartment- Make sure its close to where people work.

Personally I would favor multi unit (apartment) ownership in the right demographic as opposed to single family, a lot less can go wrong structurally.

I think it was a good investment 3 years ago. Since then some areas are up more than 20% off their lows. You're not buying at the bottom any more. If the economy does turn down again so will the value of your investment.

Feel free to contact me though the message thing if you have specific questions....

Good luck.

We are just now getting into the rental thing.  Our house was on the market for the summer,had a buyer (who backed out 7 days before closing and NOT paying earnest money to realtor--long story) and now a family of tenants.

So far things have gone semi-smooth, but I can foresee a couple of problems creeping up.

I own a house from one of my previous assignments that I rent out.  I also went the property manager route though.  It's really hard to manage from a distance.  Plus you get to let them use their experience to screen tenants and do all the "being mean" stuff that could have to be done.  And they do a lot of the legwork.  For that you usually pay them about 10% of the rent...so that can make it hard to make a profit.  But in my case I am OK with taking a small loss every month...someone else is still paying 90% of my expenses on a property that will eventually appreciate and provide me a nice chunk of cash when I finally do sell it.  If your objective is no kidding positive cash flow every month then you need to make sure the rent is more than covering expenses...whether you use a property manager or not.  You will definitely save a LOT of money if it's local and you are as handy as you say.  I can't count the number of ridiculous maintenance calls I've been charged for that even I could have done myself (really glad that particular tenant has left, honestly...haven't gotten a single maintenance charge for the new tenants since March).  So if you can fix the little stuff just with parts and your own time that is a HUGE advantage.  Big repairs will always happen...and there isn't much you can do about that except use quality systems that don't fail often.

Ever watch the HG TV network's "Income Property"?  The host (Scott McGillivray) is a general contractor who specializes in turning properties into investment properties.  I love that show.  I watch it all the time.  He does give a lot of good advice about becoming a landlord and turning various properties into income properties.  He typically just works with what a homeowner already has, but there was one episode not that long ago where he took a person to go see houses for sale and went through the process of how to pick out a good investment property (based on schools, potential, size, work needed, etc.) and then get it generating income.

I've had really good luck with my rental property.  Of course, it's in South Dakota, and my tenants have all been established adult families.  I've had firefighters (who oddly enough accidentally started a fire in the house), a preacher, a general contractor who built homes, and most recently the assistant football coach for the South Dakota school of mines.  I allow dogs but not cats (I can't stand cat smell) because I have a fenced in yard and it really widens your rental market...providing a rental that can have pets is a rarer commodity so you can charge more rent.  People with pets know this and are often willing to spend more.  Speaking of charging more rent...in every market when you reach a certain price point you are definitely going to attract a higher quality of tenant (this is a theme in the Income Property show as well).  Not to make too many stereotypical generalizations here...but....the more rent someone can afford generally speaking the less trouble you'll have with them.  That doesn't mean they won't break stuff or treat the property like it isn't theirs, but you just don't see as many "really bad issues" as you might with lower income housing.  There, I said it.

My property has only been vacant for about 3 weeks in the last 3.5 years...and that was pretty deliberate because we needed to fix some hail damage between tenants.  The rental market is fairly hot just about EVERYWHERE because lots of people are either scared to buy or unable to buy.

I guess that's all I have to add. :D