/biz/ - Business & Finance

[Anonymous No.663228]

Can we have a thread about managing an repairing rental properties? I just inherited one from my mother, a section 8. It's beat to shit and I just kicked out the guy living there as he's 2 months late on rent.

[Anonymous No.663242]

>>663228
Bump. I have no idea where to start on this,
Should I hand it over to a property management company?

[Anonymous No.663246]

>>663242
Property Managment firms are the easiest way to manage a property. My father used to own rentals, but he got out of the game because of the way the tenants treated the property and it was hard to make a profit from it. Even with background checks there's no guarantee that a tenant isn't just going to fuck shit up and leave. Your profit margins (depending on the area) will be small, but with the right firm you can make some money.

[Anonymous No.663248]

Depends, do you intend on making money here? If so then learn how to manage property, kind of a shame your parents didn't show you how. My mom owns two section 8 homes and working with her made me hate black people.

[Anonymous No.663252]

Renter's Warehouse.

[Anonymous No.663256]

Rentals can walk a line between great income and a money pit nightmare. Unfortunately since it is Section 8, you are almost guaranteed for it to be the latter.

Rentals survive on long term middle/high class tenants that do the majority of work for you. Cut the grass, wash walls, have the carpet cleaned every year or so. Pride in ownership types who for whatever reason never had a down payment for a house. They sign lease after lease. They never really intend on moving.

Where you get nightmares is when kids or habitual movers get in. They will destroy the place. Do no maintenance at all, stop paying rent, and then dare you to evict them. Section 8 only pays off long term in volume (when you own 20 buildings with 30 units each.)

If I could make a suggestion, turn it over to a management company and let them take their 70-90%. In a different situation I would say that is a horrible idea, but in yours, for your sanity and wallet, let the management company deal with the tenants you know will come (if you know what I mean)

[Anonymous No.663279]

>>663256
That's the thing though, the location of the property is become exceedingly nice, and it almost looks as if I have a chance to get out of the section 8 area. The house is beat, and was being managed by a company for a while, and making meager profits. What if I were to improve on the place and look for better tennants?

[Anonymous No.663282]

>>663248
The tenant was a Nigerian who somehow put three bullets into the floor

[Anonymous No.663294]

>>663279

Thats a tough question. If the area is getting nicer you have options.

Rehabs/flips is how my friend made his money, and also how I know about rentals. He did the whole sell one buy 2, sell 2 buy 4... Problem was in 2009 he was holding 13 houses in a gentrifying yet still borderline area. All fully rehabbed but couldnt really be sold. Of those 13 5 were destroyed and needed to be rehabbed again inside 3 years. 2 of them never rented (the nicest of the bunch, rent was just too high for your average "renter" in the area) The others played out with varying success.

After everything was said and done he sold 8 of them for a little over 200,000 in profit (after paying to rehab 3 homes completely a second time) The reason it worked out for him was the 5 he kept rented out to the "new neighborhood"

It took a bit over 4 years to get out of it and in his moments of clarity said after he included his time and the money tied up that he wished he didnt buy all those houses at once.

Take that for what you will. I just know that rentals a lot of times are hit or miss, and at other times, your hit rate is below 50%. With those odds you are better off taking cash and betting red/black at the casino

[Anonymous No.663298]

>>663282

That isn't anywhere near a section 8 horror story. I've read about houses being turned into trap houses that took YEARS to evict the tenants in court. At the end of it holes were cut in floors and walls for drug storage, spray paint on walls, and everything from appliances to light fixtures stolen

[Cal !7p6ZFzW.pU No.663326]

I currently own a couple investment properties and the way i see it is that it's trivial income... Not making enough off it to not have a day job, but not losing money on it either. Like the other posters, it depends a lot on the tennant. If you have a full time job, it's probably not even worth the time/effort.

A property management company isn't really a good call if its just one property...they take anywhere from 10-20% of the gross monthly rent for trivial stuff like just collecting a check from the tennant and writing checks to for utility bills and repairs, they'll still bill you for those expenses. If you have 3 or 4 rentals, then a management company makes more sense.

Do you own the house outright?
If so you can take out a home equity line of credit, use that to fix the house up well enough to rent out again or to sell it and do something else with the cash. You'll probably be able to deduct the credit interest and repairs from your rental income from taxes which is nice.

Or sell it and pocket the cash.

[Anonymous No.663346]

>>663326
It's paid off and managed by a
I was looking to manage and contract all the repairs myself, I'm not employed atm so getting this running is what I'm looking at doing

[Anonymous No.663350]

>>663294
That's horrifying. I'd prefer to keep it as its the house I grew up in and I'd like to have a place if I decide to move "Home"

I think staying with the company may be best

[Anonymous No.663361]

>>663228
>section 8

Money pit

Going section 8 with your rental properties is the worst thing you can do.

You will literally never make money off any of these properties, even with any government contracts or subsidies.

It is impossible to manage a section 8 rental properly. The tenants will always do more damage than you will ever get out of rent.

Your best bet is to get it off section 8. If the neighborhood is so ghetto that section 8 is the only way that anyone would rent it, then you're better off just selling.

[Anonymous No.663365]

>>663361
The neighborhood is getting quite nice now actually

[Anonymous No.663421]

>>663365

Still doesn't matter if you're renting to section 8.

[Anonymous No.663440]

>>663365
What city is your property located in?

[Anonymous No.663528]

>>663440
Mondeor, south africa

When I say section 8, I mean the equivalent

[Cal !7p6ZFzW.pU No.663622]

>>663361

Find an Asian person to write an rental listing ad for you in a Chinese newspaper. Most of them have a hard work ethic, and are decently wealthy and don't cause a lot of problems.

This along with many other ways to legally discriminate potential tenants.

[Anonymous No.663698]

>>663622
O shit this is a good idea. I totally forgot about this being an option.

[Anonymous No.663709]

>>663228
>section 8

sell it

buy index funds

[Anonymous No.664147]

>>663256
>Rentals survive on long term middle/high class tenants that do the majority of work for you. Cut the grass, wash walls, have the carpet cleaned every year or so. Pride in ownership types who for whatever reason never had a down payment for a house. They sign lease after lease. They never really intend on moving.

God damn it you just described me exactly. I just can't stomach the idea of throwing away my independence by buying.

[Anonymous No.664150]

>>663326
>>663346

If it is section 8 it is probably in a shit neighborhood and will not recover the cost of renovations.

[Anonymous No.664152]

>>663528

>south africa

You're fucked

[Anonymous No.664153]

>>664147

Nothing wrong with renting as long as you are investing the money you would have used as a downpayment on something with a decent return.

[Anonymous No.664154]

>>663622
faurk i can comfirm, my best friend and my current roommate is chinese, most of his family lived in this china part of town, it was slightly run down but not like a negro would do, good people

[Anonymous No.664155]

>>663622

Asians will only rent in a good school district. If you can get them they are great tenants. They will stick an entire family in a one bedroom but they don't cause problems.

[Anonymous No.664158]

I manage 200 units.
Don't do this!

[Anonymous No.664188]

Alright. Related tangent here

How is a guy to get the money to acquire a house for the sole purpose of renting it out? I live in California and make $13 an hour full time. Do I not make enough money to make more money?

[Anonymous No.664294]

>>664188
Maybe if you bought in arizona

[Anonymous No.664297]

>>664188
You can leverage up with loans. Of course you increase your risk doing that.

[Anonymous No.664700]

>>664297
Explain. Does that mean I would have higher interest with a lower down payment?

[Anonymous No.664705]

>>663228
that pic is retarded

[Anonymous No.664724]

>>663622
this might be the best advice i have ever seen on /biz/

[Anonymous No.664732]

>>664724
>sir you're late on your rent
>NO RENT DUE FIFTEEN OF MONTH
>actually sir it's the first
>NO YOU SAY FIFTEEN OF MONTH

Asians are notorious assholes and will complain about everything and make you pay for ever minute little thing

[Anonymous No.665190]

>>664732
How are Indians tho

[Anonymous No.665374]

>>663228
Google "biggerpockets"

If any mods exist on /biz/ please give us a sticky

[Anonymous No.665435]

>>663228
That's the advice I needed, thank you Op's mother.

[Anonymous No.666136]

>>663361
Currently it was netting 250 us per month, after all paid expenses and fees.
That's some decent cheddar, and the property has appreciated quite well