Should we buy to rent?

April 29, 2009 8:43 PM

My SO and I are considering taking advantage of the current housing market and purchasing a second house to lease. What specifics should we contemplate at this early stage?

There are several houses for sale in our neighborhood and surrounding areas; what are the pros and cons of being so close to one's tenants? Obviously we will thoroughly research the rules; I'm looking for experiential information that might help us be better landlords (or convince us that we don't want to be landlords). We live in NC.
Oh, I have read this threadand I've found this one interesting and useful; but am looking for more details about whether it's worth doing.

posted by purpletangerine to Human Relations (5 answers total)

Property management is sort of a funny economic category in that no one wants to do it, even if they're compensated very well for it. All it takes is one difficult call. . . pipe burst, bad toilet back up, mold . . . and all of that 6% you've gotten paid per month, for months seems very not worth it.

I do some property management. My family owns some units and I can tell you that being a landlord. . being beholden to someone else's toilets is truly a thankless existence. The only time it makes sense, I've decided is if property values are on the way up and you're riding them on up and then you sell at the top, it could make sense.

We certainly have not hit bottom yet. . . if you're looking to park you money in real estate, for Pete's sake, just get some raw land.
posted by No New Diamonds Please at 10:16 PM on April 29, 2009

Are you handy? Do you have free time? Do you have a significant amount of money to put down on an investment property? Can you afford to make two mortgage payments for a few months at a stretch if you can't find tenants? If you answered no to any of these questions, definitely do not do it.
posted by rabbitrabbit at 10:21 PM on April 29, 2009

I would not buy any type of house to rent out.... EVER! I have seen firsthand what some people will do to a home that isn't theirs. Next door to my parents is a rental home. There have been several families in it since I lived and moved out. Everyone of them never cleaned up after themselves or called the poor landlord when a problem would occur. Last people there I think moved out in the middle of the night. It seems the toilet pipes blew up inside the wall and they didn't tell anyone for the last 2 months. He said that the whole bathroom has to be replaced.

So if you really want to buy up homes... flip them. Buy them dirt cheap, do some repairs to them and then sell them when the market recovers. You can make improvements cheap. DIY the kitchen and bathrooms. Those two rooms will always increase value to a home. Make sure that you remodel in a neutral color that everyone will like. I often thought about buying up some homes for cheap and remodeling them then flipping them when the market improves... easy way to make some cash. However you must be able to afford all those house payments first. Sigh I hate the way you need money to make money :>(

Whatever you do good luck!
posted by Mastercheddaar at 7:01 AM on April 30, 2009

Like the previous posters, I'm very wary of real estate. Doubly so because where I live the bubble is still pretty puffy, and the laws are very unfriendly to landlords.

That said, I think highly of John T Reed's real estate books (not so much his politics, but that's another story). In particular, "How to Manage Residential Property for Maximum Cash Flow and Resale Value".
posted by CruiseSavvy at 9:55 AM on April 30, 2009

Response by poster: Thanks for the feedback so far. These are all good things to think about. Rabbitrabbit, we have actually considered all the things you mentioned, and feel confident in those areas. We certainly want to go into this thing with our eyes open, so please keep it coming.
posted by purpletangerine at 11:19 AM on April 30, 2009