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FreeFall

FreeFall

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Does anyone here own property? I've formed an LLC with two guys and we have the capital. We are looking at small rental properties of say 6-10 tenants to start with. Do you guys have any experience with this? Any parts in the process or bumps in the road I should look for? I'm a first timer.
 
first off... partnerships hardly ever work out with this kind of business
even worse if your friends with them

rental properties are a nightmare for most to own.
dealing with tenants, maintance and up keep of property cause the tenants dont give a shit
and many other reasons. do some research and you'll see.

if you're talking about building some duplexes, quadplexes and have the capital then I would recommend looking into buying land...
depending the area you will being doing business in.
you own the land and sell to builders, developers,etc..

thats how most of the big wigs here make $$$. they buy up shitloads of land and sit on it until they decide to split it up into lots and sell.
1.5 acre lots selling for 40 -50K in nice neighboorhoods. if it happens to be on the water then 100K +
 
land doesnt depreciate in value
only increases... here anyway
you're on the other coast I believe so might be different there.

research the market, business plan, and research some more
if I had the capital the last thing I would be looking into would be rentals
but it takes $$$ to make $$$
 
Its profitable but can be a nightmare. Keep tight controls on the types of tenants you allow in (finanacial stability is the only criterion). Get two attorneys, one landlord tenant on retainer and one LLC/business specialist to set up the business factoring in EVERY conceivable contingency (partner wants out, when to renovate, size of capital cushion to keep, rights of first refusal, etc, etc, in infinitum).

Do your homework. If you buy prefab units ask why the owner is selling. Model best case and most importantly worst case occupancy scenarios.

Finally, swallow your pride and know when to take a loss. Good luck dude.
 
Make sure that you have in your partnership agreement that you can branch off and buy a building or 5 on your own without there being any issues with your partners. Mind you , they can do the same thing which will make you competitors. Partnering on rental units/buildings is a good idea to start with because you learn the ropes and make mistakes on other people's dime.

As for hiring a property management company to manage your rental units, remember that you are going to give up about 15% of the rent to pay the company. This wouldn't make sense if you have partners who are willing to share in the upkeep of the properties. One thin to write in your leases is that tenants are responsible for garbage disposal, snow clearing (if you have snow in your area) and lawn maintenance etc.

Also like Boner mentioned, watch who you rent to, but even good renters can be a nightmare. In Canada (NS), it's very hard to evict shitty tenants.
 
I don't know PuckOff - he said they have the capital to buy. I tried to do the manage my own thing at first and I was slaughtered. Not even by costs or because things were breaking down but because you're the sole point of contact when you deal with idiots. I had people calling me in Europe because their cable channels were cut off, thinking it was an 'antenna issue' (ummm, pay the bill and maybe you'd get to watch Teen Pigs or whatever). And that's just a tepid example.

I think if you have the money to buy an investment property, you should budget the cash to hire someone decent and professional to take care of it for you unless you're doing a 1 for 1 rental pymt vs mtg pymt ratio. Then you might have to suck it up but obviously the ideal is no mtg pymt to speak of or at least a bit of leeway as profit. Anyway, just my experience. I'd never rent stuff on my own again and two of my things are rented by people I know extremely well. I don't want to hear about supposed or actual problems as I can't fix them and I also don't want to be the one chasing down those who can. Or even worse: Chasing rent money. Or doing inspections. Or screening tenants. Or advertising. No.
 
Pavy
You pay property taxes for a rental unit every year whether you have tenants or not. Don't forget that. Also you pay utilities too.
Click to expand...

yap... gf just moved into a rental house last month...last week she got a notice on her door...the guy she is renting from hasnt paid property tax in 3 years on the place...already looking for her another place...
 
Oksana
I don't know PuckOff - he said they have the capital to buy. I tried to do the manage my own thing at first and I was slaughtered. Not even by costs or because things were breaking down but because you're the sole point of contact when you deal with idiots. I had people calling me in Europe because their cable channels were cut off, thinking it was an 'antenna issue' (ummm, pay the bill and maybe you'd get to watch Teen Pigs or whatever). And that's just a tepid example.

I think if you have the money to buy an investment property, you should budget the cash to hire someone decent and professional to take care of it for you unless you're doing a 1 for 1 rental pymt vs mtg pymt ratio. Then you might have to suck it up but obviously the ideal is no mtg pymt to speak of or at least a bit of leeway as profit. Anyway, just my experience. I'd never rent stuff on my own again and two of my things are rented by people I know extremely well. I don't want to hear about supposed or actual problems as I can't fix them and I also don't want to be the one chasing down those who can. Or even worse: Chasing rent money. Or doing inspections. Or screening tenants. Or advertising. No.
Click to expand...


I know exactly what you are saying. There are a TON of risks involved with real estate rental investments. Give them the bare necessities. They pay for power (hydro), have electric heat and not oil. minimize the headaches from the start. There's a ton of risks, but after 5 years in a decent market things should be good.

FreeFall is looking to be an absent landlord which could be tough to do unless of course he has someone managing the properties. One thing for sure is keep an eye on the property management company. They can be sleazebags as well.
 
Pavy
You pay property taxes for a rental unit every year whether you have tenants or not. Don't forget that. Also you pay utilities too.
Click to expand...

Get the tenants to pay for power, heat etc. Where I am we need to pay water unless there are separate lines coming into the property for each unit which is highly unlikely. Pass the heat/electricity on to the tenants. Actually pass as much on to the tenants as possible. For electricity, each unit would need a separate service so the tenant pays their own power.
 
Being handy is very important if someone wished to own rental properties. There nothing worse than dealing with unreliable and shady contractors and the good/reliable contractors cost $$$$$$$$. If you are able to do electrical, plumbing, drywall (mud) and other carpentry related stuff then you will cut costs drastically.
 
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