Buying a rental house

[Oildog]

Do you do repairs and lawn work yourselves or do you hire that out? I'm not really a handiman.

[marksmu]

Originally Posted by Oildog

Do you do repairs and lawn work yourselves or do you hire that out? I'm not really a handiman.

I do the easy stuff - IE changing locks between tenants, declogging a drain with a snake, etc....but I have a group of contractors I use for everything over my head...an electrician, plumber, roofer, and carpenter....I also have my cleaning lady go over and do a thorough cleaning annually. The tenants have really liked that and it keeps me up to date with the condition of the house....I also have the tenants pay the first $75 of any service calls....if it turns out to have been broken by no fault of theirs I give their check back without ever cashing it...You will be surprised how many tenants wont have something minor repaired when they pay the first $75.

I have the tenants be responsible for the yard though....I give them two options at lease signing 1) you do the yard and rent is X....Option 2) I have the yard done and the rent is X+$85/mo....In the summer months you lose but it all breaks even in the winter when you reduce the service to every 3rd week.

[City Love]

A lot of landlords don't like Section 8. There are extra hoops to jump through with the Section 8 inspection and then the delays in getting paid at first. Plus there are some landlords that don't like the fact that the Section 8 tenant can't pay the rent by themselves, so they feel they can't possibly take care of the property correctly. That's not always the case, but I can see why they feel that way. Some landlords love it. Go figure.

[StartToday]

Originally Posted by City Love

A lot of landlords don't like Section 8. There are extra hoops to jump through with the Section 8 inspection and then the delays in getting paid at first. Plus there are some landlords that don't like the fact that the Section 8 tenant can't pay the rent by themselves, so they feel they can't possibly take care of the property correctly. That's not always the case, but I can see why they feel that way. Some landlords love it. Go figure.

I have had section 8 for 13 years. I work full time and have my Masters degree. I work in nonprofit and have 2 kids. Unfortunately I've never made more than $35,000 so I still qualify for the program. Both of my children are honor students. My son is currently a freshman in the ROTC program and have all honors and AP classes. I'm recently divorced so now I'm a single parent.

I've lived in my current unit for 4 years with no problems. I may have contacted the landlord 3 times in the last 4 years for minor repairs. He's not required to be at my townhouse when the section 8 inspector come for the annual inspection. After the inspection both myself and the landlord will receive a letter from section 8 detailing any changes or any needed repairs. If the inspection fails then section 8 will determine if it's something that the landlord is responsible for fixing or the tenant. Either way both get 30 days to make the needed repairs. The inspector will schedule another inspection 30 days out and again the landlord is NOT required to be present.

In 13 years my place has never failed an inspection on my part. This particular unit that I'm in has never failed the inspection in all 4 years that I've been here. If you have a nice place and take care of it you will not have any problems and you really don't have to worry about payment because the government will pay you on time every month.

Yes there are some tenants on section 8 that are not the ideal tenants but there are also non-section 8 tenants that you would not want to rent your place either. Well just my two cents. If you are a landlord you are potentially missing out on a great tenant if you eliminate/discriminate against someone simply because they are a part of this program. Do your due diligence in screening section 8 tenants just like you would any other tenant and everything will be alright.

[LoraMao]

Our section 8 tenant has been with us four years now. She takes care of the house, and I actually sit out on the porch and talk with her. She's a nice gal that is trying to better herself, but having a hard time making ends meet. If you screen really well, which we did with 40 applicants, then you can find someone good. Make sure you run background checks yourself if your not using a realtor.

[Dopo]

BS idea that too many people have .... That poor people are bad people

[marksmu]

Originally Posted by Dopo

BS idea that too many people have .... That poor people are bad people

Nobody thinks poor people are bad....its just that poor people tend to not pay their rent. Rental properties are for profit investments....When you have less money there is a higher likelihood that you can not pay rent, or afford to do the maintenance like changing air filters, fertilizing the yard, weeding the flower beds, mowing at proper intervals, etc or other mundane tasks that are the responsibility of the tenant, not the landlord. Section 8 only pays a portion of the rent - the tenant must still pay the remainder. If they are poor, have a low skill, easily replaceable job, then the likelihood of not paying rent increases drastically....and low income folks are quite difficult to evict b/c they do not care about their credit and have access to a huge number of free legal services who know exactly how to game the landlord/tenant laws.

If you have lots of applicants, the wisest choice is the person with no criminal record, low debt to income ratio, a stable job, and good income. Families are better than single people or young people with no family because they are less likely to move - but unfortunately you are not permitted to pick/choose tenants based solely on whether they are a family, single, or just two folks living together.

I know that is not what you want to hear but it is a fact.

[tommy64]

Originally Posted by Oildog

Anyone have experience with this?

Was looking into buying a 1350 sqft house in the 4th ward as an investment, it was built about 10 years ago. Hoping to rent it out for 1300-1400$/month.

I may buy this with another person.

YES. Do it soon before the housing market runs away from you.

Here are a few things to consider beforehand:
Is the house ready to rent or will it need upgrades? No one worth renting to is gonna wanna live in a yucky house.

Is the house in question at least on a clean street? Curbed with a sidewalk? Lots of parking for your tenants? Is the house laid out on the lot in way that makes it functional and practical? Will it have enough appeal to attract a GOOD tenant who has many other options? The property has got to compete for quality tenants and not deadbeats who'll take anything because they have to.

If you do get a good tenant in the house, are they gonna want to STAY? If the neighbors has 3 dogs that bark all night, or the house across the street is occupied by rough hooligans, it may be a challenge to keep your good tenants.

Do you really need a partner? Do you have roles and responsibilities clearly defined to prevent disagreements and conflict? It's usually easier to operate and get things done without the drag of another POV, unless they're a deeply knowledgeable specialist and will stick to that role.

Screening tenants and managing the property will largely depend on what level of quality of tenant the house will attract, but setting realistic criteria and adhering to that is the key. In my opinion, screening is the single most important factor in operating a rental.

I would not hire a property manager (I have done this in the past). The level of service is very hit and miss, and a bad manager who is only working to collect fees and doesn't care one bit about your property can put a property out of business. The money you save on management fees can go a long way at an eviction attorney's office (if it even comes to that). You're better off learning to do it yourself.

Good luck.

[Htown2013]

Originally Posted by jd433

This is my formula. If you expect 1400 a month then the price + EXPENSES needs to be more like 80K. Also the home needs to be worth more like 115k but still cost only 80k. Remember it is all about cap rate + appreciation + equity capture. If you are buying in the 4th ward then you are probably focusing more on appreciation than cap rate. you will probably pay more for the property and sacrifice the cap rate in exchange for future appreciation.

That is a stellar return. Where can a return like that be had in Houston?