Anybody own rental property? I'm thinking of buying one!

[anonymouse1]

Ok, so the divorce is moving ahead (mostly amiably, yay), and we'll be putting the house on the market in September. Have a good Realtor, market is ok, etc.

If things go reasonably well, I will get $425K or a bit more net from the sale, and then I'lll need a place to live.

My first thought was "I can buy a condo that I want for that much, and never have to make a mortgage payment again! Pick the right condo community, and the COA payments will be reasonably low and I'm set."

But then I thought, "I eventually want to move to Seattle. What if I buy a rental property there, rented out and then it's ready for me when I'm ready to move there?"

Financially, it's obviously a losing move to just rent, unless the markets go crazy. So that's off the table, but if I put down say 20% on a 400 K condo here and 20% and say a $1 million condo in Seattle, and then rent the Seattle condo out, I'll have some cash left over, and the rental payment will cover the mortgage payment plus expenses in Seattle.

I've never in my entire life thought about buying a piece of property to rent it out, but it seems to make sense. I think there are some others here on the forum who own one or more rental properties, so I'm hoping some of you may have some  advice.

Thanks!

[vicrockpt]

We have had rental properties over the years, and if you have good tenants, it can be ok - if you have bad tenants you can lose your shirt. In Washington, especially Seattle, landlords have NO rights - the law is behind the tenants - good luck evicting them if they don't pay rent - and just recently a cap was put on rent increases - so if your insurance, taxes etc go up, you may not be able to cover the increases with a rent increase.

[mattkime]

You need to find a landlord forum. Its not as easy as it looks and you can lose a lot of money having no fun at all.

I guess I don't understand why you'd buy this distant property at this very moment aside from going through a lot of life changes and you might as well add another in.

[Black]

I did, had as many as 6 tenants at one point.....have successfully got out of it. Long distance landlording or property ownership particularly a solid no.

[RAMd®d]

My first thought was "I can buy a condo that I want for that much, and never have to make a mortgage payment again! Pick the right condo community, and the COA payments will be reasonably low and I'm set."  .


That's a landmine right there.

IF you find a place like that with COA (HOA?) payment reasonably low, I doubt they'll stay that way.

I don't know from real estate, but as attractive as a condo or townhouse might be, the potential for continually increases payments, even though lower than a mortgage (maybe) would really chap my hide.

It sounds like a plan, even if a bit ambitious or optimistic, but I hope it works out for you.

[Fritz]

we haven't, but with all the success my neighbors had, I'd rather Groundhog Day empty the litter box .... with my bare hand.

[Le nouveau clavier de Todd]

Back in the mid-eighties, someone shared his advice on how to become wealthy. Admission: I've never tried it.

Buy property that can be rented out to tenants whose rent is paid for by the government. For example, folks who need assisted living for medical reasons or prisoners transitioning into society through halfway houses. The goal is to have steady rental income guaranteed by a government or some other agency, not the tenant(s).

Charge enough rent for the various tenants to pay the salary and housing of a live-in caretaker (plus your mortgage, insurance, utilities, and taxes).

Todd's keyboard and room

[davester]

Financially, it's obviously a losing move to just rent, unless the markets go crazy.

Wait, what? That is not obvious at all. When you buy a place you are highly leveraged and your down payment money is unavailable to invest in a diverse portfolio, meaning that a small hiccup in the market can put you underwater. Not to mention that the transaction costs for buying and then selling again can easily dwarf any appreciation gains. You need to at the very least run some rent vs buy calculators trying out various assumptions. In general I would say that buying when you are thinking of selling within ten years or less is very often a losing proposition.

[atilla]

Unless you have experience first in the local market, going into as unfriendly mine field described by Todd, is pretty much definition of insanity.
Dont do it.

PS we do lease out industrial space, it is not the same, ours is a much simpler business experience , but there are some common elements.
Dont do it.

[rz]

Been there, done that, don't ever want to do it again.

Had a condo that we used as part time (high season) rental.  Did ok the first few years.  Then the housing market crumbled, which caused the rental market to die since all the investors couldn't sell so they were renting out.  Also, condo fees basically almost tripled over 10 years.  Remote managing was a pain, and local management was expensive.  Found out I was basically paying them to do stuff the tenant should have been doing like changing light bulbs and programming the cable remotes.  Sold for less than we paid, but was able to get most of it back writing off the loss.

Wife and her mom had a rental house with apartment locally.  Over 10 years, they had two tenants in the apartment who were great. Almost every tenant in the house though were horrible. Late rent payments, refusal to maintain the yard, flea infestation, non-approved pets, etc.  Thank GOD they sold it literally a month before Covid hit.  Otherwise I'm positive the last tenants would have just stayed in the house and not paid rent for years.

Wife's mom has a bunch of commercial and residential rentals that were handed down from her father many decades ago.  Same kinds of issues... one of her commercial rentals refused to pay rent for over a year before they could evict him.  He owed close to $50K in back rent.  They're still trying to get it from him.

You may be able to get rich from real estate, but I have no desire to ever get sucked into that again.