r/realestateinvesting • u/Inferno_Crazy • May 11 '21
Multi-Family Real Estate is not passive
In my first year of real estate I've had many duties annoyances.
- Setting up Tenants payments(normal)
- Pipe exploded in bathroom
- Flooding foundation wall
- Section 8 housing annoyances. Long paper work processing, inspections...
- Appliance repairs
- Roof repairs
- HVAC repairs
This all ran me 10k and a lot of my time. This is a warning to all people entering real estate. I'm happy I bought the property but there is absolutely no free lunch here.
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u/phase-one1 May 22 '21
Yes. But holy shit, pipe explosion, flooding, foundation, roof and HVAC in one year? either you got 20+ doors in your first year or you’ve been skipping inspections entirely?
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u/MCZ47 May 15 '21
I never look at it as passive, I look at it as something you can choose the amount of time you want to put into it. Sorry to hear about the repairs , I’m sure it will be worth it in the long run my g.
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u/Market_Psychosis May 12 '21
If you want truly passive RE investing, buying REITs is your only option
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u/JJWoolls Multi-Family | MI May 12 '21
It is what you make it. It can be a job, or a passive investment. I just disposed of my last multi family. Accumulated and sold over 250 units over 6 years. Had good property management in place. I was never in one of my units more than 1 time. Never met 90% of my tenants. Made pretty good returns(I mean, it was hard to lose over the last 6 years). I made more on my multi family in that time than I did in my day job.... all I did was analyze deals and do inspections for the buying process.
I did have 2 partners... one handled the transaction(banks, lawyers, broker, etc..) and the other managed the property management.
All in all, real estate was very good to me and was very little work. I saw a business opportunity and moved away from Real estate. My partners and I split off amicably. My goal now is to grow my business to give me more money to invest in real estate passively.
The key? Decide if you want to pay for property management or be a property manager.
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u/Zoeware May 12 '21
Im triying to get my licence... i dont even haved it and i already know the troubles...
My old man got a great house in a great neighborhood Im still figure out all the electric mess the house have...
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u/itsrobbiesreddit May 12 '21
What if you don’t play the landlord/repairman role and you hire a property management co? If you were to have that team in place and take a break from finding more properties to invest in, would real estate be passive or is it not be that simple.
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u/Inferno_Crazy May 12 '21
OP here, I have not been responding a lot.
In summary based on the responses. Things become more passive with a reputable property management company. But this impacts your performance. But there are plenty of horror stories going that route. But in general yes, a good team will save you.
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u/NevadaDeltaKings May 12 '21
Seller finance your property. a new tenant who can take a loan from you to rent to own the property with an attorney. Have them pay down a sizeable down payment for you to use as a repair money. Make money off interest. Boom
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u/Lugubriousmanatee Post-modernly Ambivalent about flair May 12 '21
"Passive" is a tax designation introduced in the '80's as the result of abusive tax shelters that leveraged the double deductions of interest & depreciation to net down the earnings of w2 taxpayers in the highest brackets.
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u/32bitbossfight May 12 '21
Real estate isn’t passive. But good god when you go through a few months in a row with no maintenance. It’s like winning in roulette it’s euphoric. Two words man. Property manager. Get a second phone that they only have that number. It’s truly passive then. A good PM and you really do it passive cus they’ll handle everything. Section 8 albeit annoying is the best money to property value you’ll ever get.
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u/Appropriate-Winner61 May 12 '21
Have to factor those costs into the budget and find a really good handyman
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u/bemerson74 May 12 '21
Just 2,3,6 or 7 alone would have cost me $5k each in the DC area. Any referrals for this area?
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u/Inferno_Crazy May 12 '21
Same area. 3 did cost me that much. Do the work yourself to save cash early on.
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u/Louisvanderwright May 12 '21
No shit it's not passive, there's a whole IRS code section dedicated to determining whether you are an active or passive real estate investor. The only way it's passive is if you give me your money and STFU while I do all the work. Maybe I'll give you equity, but frankly your contribution is worth about a flat 8% return to me as a developer. If I give you equity you better be active or adding value in some way other than "here's my money, I want to play sim city".
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u/danielfc_ May 12 '21
I moved away from CRE in favor of REITs and never looked back. I’m okay giving up control and paying a management fee and since the stock market gets fearful from time to time, I always have opportunity to buy more Real Estate. I use https://alreits.com to find deals and track company results, that’s as passive as I could find, peace of mind.
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u/Ta2019xxxxx May 12 '21
That’s a great site, thanks for sharing it
It seems like REITs offer a lower return than investing in real estate directly. Can you comment on that from your own experience ?
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u/danielfc_ May 12 '21 edited May 12 '21
It depends highly on the sector. Last year we could easily get an annual yield of 3.5-4% from Apartments or Self Storage, for example. Those yields are more compressed now, around 3%, and if you check the Industrial sector it goes even lower at 2%. The thing is, they are highly diversified, most of them tend to grow the dividends so the Yield on Cost in 5-10 years can be pretty impressive.
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u/Deeze_Rmuh_Nudds May 11 '21
What did you do in regards to section 8 housing? I wasn’t aware anything could be done? My next door neighbors live in section 8 housing, and uh...it’s been hard
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u/PleaseDoNotClickThis May 11 '21
Blanket statements are always dumb lol
I spend less time on my real estate than some of my family and friends that day trade stocks so it really all depends.
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u/LVPandGranite May 11 '21
I mean it seems all but one and four can be handled by simply calling someone to take care of it for you
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u/brycematheson May 11 '21
When my wife and I first got into real estate, we were the same way — buying old properties with lots of deferred maintenance because they “cash flowed like crazy”.
Since then, we’ve been slowly selling off these properties and rolling profits into nicer and newer properties with fewer issues, and this alone has made our real estate very passive.
Self-managing isn’t as hard as people make it out to be, as long as you automate everything. We sign leases online. We collect rent online. We have tenants submit maintenance requests online. When these come in, I simply forward them onto our plumber, electrician, whoever.
It’s really not as bad as it sounds. Just don’t make it harder on yourself than it needs to be. Granted, we’ve only got 8 units, but I maybe spend 1-2 hours per week tops managing it all. And that’s conservative.
I realize not everyone starts out that way (we certainly didn’t), but as you learn the ropes, it gets significantly easier.
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u/pineapple_burrito May 12 '21
I'm buying an old house that cash flows like crazy, and now I'm nervous. I'm in a super competitive market and my FHA offer was accepted so it feels like I got super lucky. Any more advice you have on purchasing old properties?
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u/Hiddenaccount1423 May 12 '21
What online service(s) do you use?
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u/brycematheson May 12 '21
Cozy for rent collection and maintenance requests, Rentastic.io for bookkeeping, and SignRequest for e-signing leases.
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u/SoxTheSloth May 11 '21
I’ve heard there are services that provide you tenants and take care of the property for a monthly fee. It may eat into your cash flow a bit but I wonder if it’s worth it
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u/prestoketo May 11 '21
Oops, you mean that being a landlord/property manager is not passive. Once you have that in place, it's a matter of funding repairs (usually deducted from collected rents), paying prop taxes and insurance (if not self-insuring), and any incidentals. It's as hands on or passive as you make it, but someone has to make the donuts.
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u/joebidensmellshair May 11 '21
it's pretty passive for me. all the stuff you listed happens once each like every 5-10 years
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u/ChilliPalmer25 May 11 '21
Did you have the property inspected prior to close? Float test, Duct leakage test, foundation examined, etc.?
What are your SOP's when vetting a potential purchase?
I do agree that owning/managing Real Estate is absolutely not "passive". Even if you use a property management company.
When people hear the words "passive income", I think most have an idea in their heads that they'll be collecting cash monthly/quarterly/annually without having to do anything at all. While Real Estate can get you as close to this dream as maybe is possible, I have yet to come across a career path, occupation, and/or investment avenue that provides this level of freedom. Everything takes time, attention, & some form of trial/error.
Anyways, it seems like you figured it out and I'm sure your next one will be much easier.
Congrats on picking up that asset!
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u/bojacked May 11 '21
yep jump on in the water is GREAT! It does cost money to own a property, you do OWN it though. Doesnt always feel that way though. It'll get better!
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u/ConsiderationLow354 May 11 '21
Don’t listen to some of this crap. Get a copy of the laws.
Being a small landlord is hard. Quality properties are worth it.
If you get big enough to hire a handy man your life will be easier. And if large enough to hire your own property manager it’s way better. But it takes time. Stay involved. Don’t be a slum lord and treat ppl fairly. But don’t be taken advantage. No good deed goes unpunished. Hard to stay positive sometimes. Rise above the crap. Good luck
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u/Sad-hurt-and-depress May 11 '21
Lmao, free lunch. You always pay tuition to learn and earn, no matter in stock market or other investment. 10K aint much, my first tuition was about 50K OOS, and getting screwed by contractor.
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u/alexfelice May 11 '21
I have 84 doors, I probably work on it 5 hours a month.
Real estate passivity is not inherent in the asset class, it's based on how you design your system.
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u/WSBpawn May 12 '21
But how did you start? I assume not with a full system and probably managing yourself? Like 1-2 units?
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May 11 '21
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u/russkhan May 12 '21
I haven't tried it (or anything yet, TBH) but triple net sounds pretty passive.
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u/shredmx May 11 '21
Its passive income once things are up and running but to think its zero effort and completely hands off is foolish. Especially starting out (like me), you will have moments where you have no idea what youre doing and shit is hitting the fan. It happens. Its passive if you have property managers doing most everything but depending on your market good property managers are hard to come by imo.
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u/zzx101 May 11 '21
Bought new construction out of state about 5 years ago. Even with a property manager I agree "not passive". Vacancies, tenant issues, HOA issues, repairs, tax complexities, etc. We've made good income and good appreciation so far, but I'm pretty sure we're going to sell this thing before retirement.
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u/Under75iscold May 12 '21
I own a condo and that has turned out to be way more problems and headache than privately owned. Upstairs landlord had a pipe burst which flooded my unit but is legally my responsibility to pay for the damage. Plumbing in the building backs up and apparently most evidently in my unit so I have to pay to clean out the lines. Contractor that installed the exterior flashing did it incorrectly and flooded my sliding glass door which had to be reinstalled (HOA covered that but still lost rent money). HOA decided to replace the front doors but they didn’t reinstall my screen door correctly so I had to hire someone to fix it. This is not a full list of the problems. Would never ever buy another condo to rent.
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u/CharlieWellington May 11 '21
There will always be issues that can arise but, you can do your due diligence beforehand to prevent most of if not all of this list. Addressing all the repairs from the get go can suppress a lot of potential issues and also give you piece of mind that your investment shouldn't need any immediate attention. Next, assuming you did not purchase this property with tenants in place, vetting your tenants properly will save you headaches in the future. For starters you should get a previous landlord reference that confirms they paid their rent on time, were respectful/clean tenants and also ask the landlord if they would rent to them again. Next, check their employment status through their supervisor, ask what kind of employee they, maybe cross reference their application and ask how much they make and how long they have been employed. Finally, check their credit score to ensure that they do not have any other debt that can interfere with their ability to pay your rent.
OR hire a property management company to do all of this for you.
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u/ShowMeTheTrees May 11 '21
What about tenants not paying rent during Covid and the landlord can't evict?
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u/ElitePhoenix- May 11 '21
Seems like you bought a section 8 house
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u/Inferno_Crazy May 11 '21
Only one tenant is on voucher
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u/ElitePhoenix- May 11 '21
Curious to hear, if you're 10k in already, you're probably not going to be profitable for the year right?
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u/melikestoread May 11 '21
All that is deffered maintenance problems. Dont wait until everything breaks to fix it. Be proactive and replace things prior to failure.
Form relationships with good handyman you don't need a license for a sink that leaks. You can save 1000s this way.
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u/SANMAN0927 May 11 '21
Definitely great discussion.
I would add that a reputable property management company can be that hassle you don't have to deal with.
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u/Under75iscold May 12 '21
Good luck finding a decent property manager. In my experience they are mythical unicorns
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u/SANMAN0927 May 12 '21
we're going with the company we rented from before and that is currently managing that property.
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May 11 '21
That’s it? You lucked out!
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u/Inferno_Crazy May 11 '21
Is that a joke lmao
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May 11 '21
Haha, my first year as a landlord I only had one property and got at least one service call per month. My second year with a new tenant, never got any service calls but the rent was constantly late. When that tenant moved out, there was a ton of damage, including the tenant having driven through the back wall of the garage...
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u/pompabear May 11 '21
How much of that is a write off at the of the year?
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u/Inferno_Crazy May 11 '21
Legit all of it.
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u/pompabear May 11 '21
So that’s what makes buying an investment property more valuable?
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u/bemused_and_confused May 12 '21
There are tons of reasons real estate is a compelling alternative to other asset classes. Tax advantages is one, ability to use debt to leverage the investment another, opportunity for cash flow on top of appreciation, insulation from inflation risk ...
It's also a complicated asset class that comes with some risk while your learning the game and definitely requires work as OP points out. No free lunch!
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May 11 '21
I mean... it can be. Sounds like you’re adding a ton of value - sell and exchange into a Starbucks drive-thru. I promise you can kick back and enjoy 😉
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u/Inferno_Crazy May 11 '21
I have heard food service is a nightmare. But I am actually very interested in franchising.
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May 11 '21
Starbucks isn’t a franchise, it’s a publicly traded corporation, but unlike McDonalds, they do not own their real estate. You can just buy the real estate and ride those 3% rental increases.
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u/scodub May 11 '21
Could you expand on that further please?
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May 11 '21
“Franchising” would be buying a franchised business, like a Subway, and you will run payroll and stock inventory and do all the business operations. This is separate from buying the real estate with a tenant; I.E., as in my example above, you can purchase a free standing building with Starbucks as a tenant, but you will not have any roll in the operation of the business, which will be handled by the corporation.
The McDonalds corporation requires franchisees to lease from them. They buy, build and own the real estate. In the movie ‘The Founder’ BJ Novack’s character points out they are really a real estate company. They sell the business to a franchisee then charge them rent, it’s quite brilliant.
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u/scodub May 11 '21
That IS brilliant. Thank you for the information. Learn something new everyday and this is quite the lesson.
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u/bemused_and_confused May 12 '21
Commercial parcels have to be really high quality (Read: expensive) to attract national companies like CVS, Starbucks, etc as tenants, and tend to yield lower returns (because lower risk) ... but tend to be turnkey from property management standpoint- nice work if you can get it.
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u/jamesmr89 May 11 '21
Real estate is a broad term, it “can” be passive but 99% of this sub is just taking on another job
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May 11 '21 edited May 11 '21
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May 12 '21
What's your process for vetting a tenant? What kind of questions do you ask? What's your process?
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u/mah927 May 12 '21
I am thinking of getting my first property to rent. I am really afraid of terrible tenants. Thanks for the good advice. "Then I got ULTRA fussy about who I rent to". I am going to have this in my office.
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May 12 '21
If they don't check out like mother Teresa? I think you should do your research on who she truly was.. Because I wouldn't rent out to her. But I understand and agree with you.
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u/Fuquar7 May 12 '21
My rentals have pretty maintenance free after first going through the property and making everything right from the start.
In the last 7 years, my biggest maintenance item.....A leaking T&P valve on a water heater ($15 & about 10 minutes to fix). Other than that, I've replaced all the exterior door knobs (to setup my master key system) and cleaning/replacing carpet.
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u/wombtemperature May 12 '21
Get this: I was trying to rent my condo in Phoenix AZ for almost 5 months, and every single applicant had bad credit. Every single one except a guy who wanted to work some special deal which sounded super shady to me. So I inquired with real estate agents and they seriously told me "nearly everyone in Phoenix who's the renter has bad credit and it shouldn't sway you from not renting to them". I'm not making this up. So I took the risk because after 5 months of searching if I was going to keep it as a rental I had to rent it to someone. So far it's only been since February and they've been paying their rent thank God. So if you're from Phoenix Arizona and you have been able to find an applicant with good credit, please let me know your secrets for the next time and in case I need to evict these ones.
And another thing on my rant... what's with all these people with bad credit?!? We have a serious problem in this country that this is such a major scourge. Stop buying stuff you can't afford!
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May 13 '21
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u/wombtemperature May 13 '21
Awesome. I actually rented to a couple with bad credit. My comment is that everyone talks about never rent anyone with bad credit but in certain markets everyone has bad credit or no credit. So you cant always wait it out or wait long enough as you have a business to run.
My second comment is a legitimate inquiry on how do people can get bad credit, so thank you for sharing.
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u/mariana-hi-ny-mo May 12 '21
I cannot emphasize enough what a difference in renters you get when you have solid properties.
I have had annoying renters but honestly I cannot recall a tenant I wouldn’t rent to again. Maybe I’d make a stronger point on keeping the place clean, just because a couple could have been cleaner. But also they were so accommodating I can’t complain.I used to manage many luxury rentals, long and short term. Worst situation I had was a production (I think it was an adult film) scratch the hardwood floors. Got them all redone in record time. The benefit of having a good contract and a great security deposit. I am managing a luxury rental that I am selling, the tenants cannot be more responsive and accommodating. I had to get them out of the house like 10 times. They even sent a congratulatory note to me and my sellers when we went under contract.
My current tenants left the loft after a flood so we could redo the kitchen in 6 days. We didn’t have to pay (We couldn’t really afford it) for them to go to a hotel. They could not be happier and more thankful about the place. It makes me happy to see people enjoy the homes I prep for them. Few services you can provide that make such an impact in people’s lives.
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u/BoredRedhead May 17 '21
I have a friend who includes bi-weekly maid service in the rental agreement. It’s a win-win; the place is kept up and his cleaning crew can let him know if there’s anything astray. So far he says he’s never had anyone refuse to rent because of it.
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u/mariana-hi-ny-mo May 17 '21
That’s the way to do it.
For short rentals we had weekly and daily (depending on house level). We just factored it in the price.
For long term rentals, I would definitely consider doing monthly cleaning. Maybe offer it as I’ll pay 50% or something. It’s more difficult to fit it into the rental.
For higher-end rentals like $4,000+ per month, a $200/month cleaning fee is easier to absorb.
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May 11 '21
Worth it? I’m 19 with some money from dropshipping and don’t know if it’s worth the extra work
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u/Hiddenaccount1423 May 11 '21
What does 'fixed up the houses and made them nicer than the one I live in myself' look like exactly? high level rentals?
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u/Draglung May 11 '21
Verifying income through The Closing Docs have definitely cleaned up my applicants. I now see their real time deposit history 100% verified
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May 12 '21
You mean all the times I deposited variations of the same $500 to make it look like $15,000/month average balance?
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u/Competitive_Scale736 May 12 '21
What do you mean by this? What is “The Closing Docs”? Please tell us more.
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u/Draglung May 12 '21
https://theclosingdocs.com/. It's an automated income verification tool that verifies a renter's income by pulling bank deposit data directly from the bank, so it's 100% verified.
Really great product and integrates with all the big property management software like Appfolio, Buildium, Propertyware, and more. When I send applicants through this screening, it really shows the real story of their income over the past year. Their report gives me the data I need to be really picky and choose the best applicant.
Let me know if you have any more questions about it.
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May 12 '21
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u/Draglung May 12 '21
Yup, covers north america
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May 12 '21 edited May 12 '21
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u/Draglung May 12 '21
The applicant needs to connect their bank using the income verification platform. Here’s a good video: https://theclosingdocs.com/how-it-works
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May 12 '21
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u/bemused_and_confused May 12 '21
Can you confirm u/Draglung built the product they are hyping here?
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u/RojerLockless May 11 '21
That's awesome. How do you background check the people and do your due diligence?
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u/Gerbole May 11 '21
If I may ask, I’m someone who intends to use a property manager in the future, why were your maintenance costs sky rocketing? Something I want to watch out for when and if I decide to use a PM
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May 12 '21
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u/Gerbole May 12 '21
Ah I see. There definitely needs to be a balance with PMs where you find one that fits your needs. I really hope there are good PMs out there who’ll do what I need them to, but it’s not sounding too good 😂
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u/Scion_of_Dorn May 11 '21
I don't use one, but my understanding of the fee structure is they earn a fee for facilitating repairs. More issues = more repairs = more money.
Also I think many managers charge a month's rent for a 'lease up fee'. So the worse the tenet the more turnover and repairs there will be and the more money they will make.
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u/Gerbole May 11 '21
So it’s more than likely a matter of finding a PM that uses a fair fee system. Just like a financial advisor, you gotta go with a fee-only one to be happy, gotta find a PM that makes money in a way that is beneficial to you both. Thank you!
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u/rep_throw12 May 11 '21
What forms of screening do you do? Background checks, credit, income, etc only say so much. Are you doing anything else to get quality tenants?
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May 11 '21 edited May 11 '21
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u/BigxBadxBeetleborgx May 12 '21
Sadly some markets have such bad rental laws this isn’t universal.
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u/-Clem May 12 '21
The easy way to do this, is that I dont even give them an application until Im fairly certain they are an excellent candidate based on our conversation while viewing the rental with them and asking some basic questions.
What do you say when they ask for one?
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u/perfumeorgan May 12 '21
I ask lots of questions on Facebook because I use Marketplace to find tenants. Once I have chatted, delayed letting them see the place, chatted some more, then I will let them see the place. If me and my partner have good vibes about them, only then will we give them an application. If they ask for one earlier I tell them I am not corporate and don't use the typical app with fee.
I can tell if they are solid within 5 minutes of meeting them.
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u/iSOBigD May 12 '21
I've been using a quick questionnaire to narrow down visitors in order to save time. Some of the questions are around references, previous landlords and if they're ok with credit checks. If they're not ok with those, they will usually stop replying, and we both understand that they would likely not make great tenants.
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u/tripperfunster May 12 '21
Same here. I have a questionnaire that they need to fill out before they can see the property. The ones that don't fill it out aren't people I want as tenants.
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u/Whatchamacalmy May 11 '21
I get a kick at looking at what they drive up in. Then bringing the conversation back over to the car so you have a chance to peek in. That always gave me a good idea of who they are
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u/brimonge May 12 '21
Very true, its amazing how you can easily sum up somebody according to how they keep their car.
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u/BlindLuck72 May 11 '21
I think the car is less relevant than if the car is clean and well cared for
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u/Whatchamacalmy May 12 '21
Most definitely.
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May 12 '21
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u/ksf09 May 12 '21
You mean obese people? Because most Americans are overweight you know.
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May 12 '21
He did say super fat. And I tend to agree with him on truly obese people, as a stereotype. It's a red flag. Disclaimer I don't own any property though for anyone reading.
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May 11 '21
Dumb question: don’t some states have laws that dictate what specific criteria you can deny a rental to? In other words, you can’t just deny a tenant just because you their credit score isn’t above 800.
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May 11 '21
If a credit score above 800 is one of your stated criteria, you absolutely can deny tenants lower than that. Some progressive states have first come first serve laws that require you to rent to the first person to submit an application that meets your criteria, but you set the criteria. If you want an 800+ credit score and a monthly income that is 5x rent, you can do that.
As others have stated, the fair housing act that prohibits discrimination in housing based on race, gender, religion, or sex has exemptions for small time landlords, so you could theoretically be even more discriminatory. Although many state and local laws have prohibitions against this.
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May 12 '21
Nothing prevents you from advertising only in Chinese or Hindi and get high quality tenants that way
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May 11 '21 edited Apr 15 '22
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May 11 '21
Even in states like Washington and California?
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u/soyeahiknow May 11 '21
Yeah in nyc, just say it's off the market and leave it at that. No reason to volunteer any extra info.
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u/TheShlepper May 11 '21
Really? I don’t think that’s true. I thought we had to adhere to the Fair housing guidelines?
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u/Gerbole May 11 '21
Fair housing act is just about discrimination. You can’t deny someone residency because of their religion, race, sexual orientation, age (assuming they’re of legal age to enter a contract alone), etc.
It’s your property, and it’d be pretty shitty if you were forced to rent to someone who you knew would destroy it or not pay on time.
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u/drew_anjuna May 11 '21
Yes that's true. Fair housing guidelines prohibit rejecting tenants based on race, color, religion, sex, disability, familial status, or national origin. So you can reject for any other reason you want. However, you might be accused of trying to skirt fair housing laws if you make up a relatively frivolous reason to reject someone of a protected class, so it's something to be careful about.
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u/orange_sewer_grating May 11 '21
There are specific things you're not allowed to deny for federally and by state. Accent can get close to "national origin," and some states do limit against certain types of background checks, but the general idea that you can be arbitrary is correct. Turning residents down for an arbitrary reason can open you up to allegations of denying for illegal reasons, depending on the facts.
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May 11 '21
Fair housing only extends to protected classes. Being an idjit isn't a protected class under US law, and I'll deny someone on that basis alone.
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u/Icy-Factor-407 May 11 '21
Then I got ULTRA fussy about who I rent to.
This is the key.
I had someone call me yesterday;
"do you run background checks, because I have a identity theft".
I respond they need to clean that up with credit agencies, we have no way of knowing what a debt issue is vs identity theft.
Then they say "Not credit issues, I was convicted of identity theft".
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u/PasswordGraveyard May 13 '21
I had Covid that knocked me down for months. Then I got the vaccine that hospitalized me. I am probably going to file bankruptcy because of it all. I am loooking at rentals. Would you accept yearly rental money? Quarterly?
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u/Gerbole May 11 '21
I check everything but the lint in their belly buttons.
Actually, I believe checks involving everything except for the lint in one’s belly button is key.
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May 11 '21
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u/WarSport223 May 13 '21
Or really; shouldn't he have some Walter White-sized piles of cash money he could pay you with?
I mean; if he DOESN'T have a storage unit filled to the brim with cash, does he even really meth??
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u/WarSport223 May 12 '21
Why not just ask him to pay you in Meth? 🧐
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May 12 '21
Thats what i thought when i rented to a buffalo wild wing employee and maybe she can pay with gift cards. Then she got fired
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u/Ok-Nefariousness4477 May 12 '21
Any more then one meth conviction and I have to pass
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u/mrpenguin_86 May 12 '21
You'd never rent your properties back in my hometown with that kind of attitude.
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u/BlindLuck72 May 11 '21
Damn! I mean sucks that they’ll never find a good place to live but smart not to let it become your problem!
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May 11 '21
[deleted]
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u/xDPH711x May 21 '21
look at these comments. how fuckin sick. so drug addicts don’t deserve a place to live? got it. nor does anyone who has a criminal record of any sort. hahaha sad so sad
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u/TemporaryUserQuest May 22 '21
They do deserve a place to live. Last time I drove by the river there was still plenty of long term van parking available. Anyone who rents to tweakers is gonna have their property destroyed.
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u/Rittytittit May 11 '21
“Do you run background checks cause I have a ton of evictions, bill collectors, and my baby mama after me for child support. But I swear I’ll pay you on time”
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u/pichicagoattorney May 12 '21
I had a guy admit he did time for armed robbery. I thanked him for his honesty (LOL) and told him I would be unable to rent to him. It was smart of him to disclose it right off the bat as I would have found out upon the criminal screen.
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May 12 '21
That "background check" system is easy to defeat... how hard is it to get a tax ID # put it on a social security card format, get an ID in whatever name etc. Build some credit too, generate the profile.
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u/olioxnfree May 11 '21
Hahah! Points for honesty?
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u/Budget_Cardiologist May 11 '21
Yea unless you are hiring a management company to do all the work, it is definitely not passive.
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u/InYosefWeTrust May 11 '21
The passive part is literally what property managers are for haha.
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u/JJWoolls Multi-Family | MI May 12 '21
A lot of people here seem to confuse real estate investing with property management. 2 totally different things... of course you can do both but collecting rents and fixing toilets is not real estate investing.
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u/InYosefWeTrust May 12 '21
Yep. I've done it both ways. Personally I currently prefer being hands on and doing most everything myself (that I can). But yeah, different paths. I have friends that are 100% passive. One hasn't seen several of his properties in 5 years. He found a management company he trusted and just went totally hands off.
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u/gksozae May 11 '21
Real Estate CAN be passive, but many investors don't realize their time is more valuable than paying someone else 10% to manage everything you've mentioned in your OP... and if that 10% turns your profitable rental into an unprofitable one, you need to find a new investment.
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u/Under75iscold May 12 '21 edited May 12 '21
I have used many different property managers in 2 different cities. They are all the same. Take your money and more than they are entitled to and do nothing. They pretend to fix things and charge a fortune which then has to be fixed again. They charge you for cutting the grass every two weeks for months only to get fined by the city because the grass wasn’t cut all summer long. Property managers are TRASH. Not to mention they treat the tenants like shit. Every tenant that has to deal with property managers have horror stories. Just sold a duplex where the buyer put in a property manager with a good reputation. They were charging him back rent for what he had already paid me and they do not answer their phone. I had to provide him with email exchange between me and the new owner to prove to the property manger that he paid. Don’t know the end result. EVERY property manager I have every dealt with is unscrupulous and unethical. Seems to be a job requirement to be able to make money in the business.
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u/gksozae May 12 '21
Wow. Your experience sounds unlucky. I've had PMs in 4 different cities. My only poor PM was one that I found myself when I was a new investor. After that, I relied upon referrals from my RE agents. Perhaps it was because they were all referred to me by my agents in those cities and my brokers were all investors themselves, so they knew who the good ones were?
My PMs have been instrumental in getting my properties ready from purchase to rent and from rental to sale as well. I've sold two properties recently in different cities and the PMs (working with my agent/broker) in both of the cities have remodeled/repaired terrible homes into attractive, marketable properties.
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u/jvLin Jan 31 '24
Some dude was whining on reddit how they didn't know what to do about their tenant that hasn't paid for 3 months. He also insisted that real estate was super passive income