Well I am not new to the rental property thing but I will tell you how it all started. It all started a few years ago about rental properties when we were looking to move out of our furnished apartment for rental because our landlord was driving us crazy. We were aggressively scouring Craigslist to find an apartment. Well we found an apartment, ground level which means no stairs!
We decided to grab it as soon as we saw it; we definitely thought the rent was well below market value. Come to find out the gentleman was getting ready to put the house on the market and was just trying to get it rented to cover his carrying costs until he could sell the house. The house is a 2 family house upstairs and down.
About a week after we moved in the house was on the market. We casually discussed purchasing the house and I didn’t really think I would be purchasing a house this quickly. A month and a half later after all the paperwork and legalities, I was handed the keys to my first house. Still in the whirlwind of the purchase, I quickly listed the rental property on Craigslist to try and rent out the upper unit.
After a few showings of the rental property and being in the middle of the winter months we didn’t know what to do. So we found a few college guys, don’t pass judgment on college guys these 2 were very respectful and great tenants!
We had previously rented units but didn’t really have a contract, I wanted to come off as official and make sure I followed all the rules and regulations. All of our previous contracts for rentals were either handshake deals or poorly written contracts.
I did a little research and found a few companies out there that write contracts specific to the state of New York. There is a little more about me! I decided to purchase a template to which I could edit. It was very well written, I just filled out some of the information that pertained to the rental and I was ready to go.
Since the house is an older house we had to notify the tenants that there was the potential for lead paint in the unit. I warned them not to gnaw on any of the window sills for fear of lead poisoning. I had to give them a lead pamphlet and have them initial a form acknowledging that they know of the potential of lead based paint.
The guys stayed a little less than a year, but to get the apartment rented in the winter during a tough time of the year we were not too specific on the length of the contract. After their tenure in our apartment a single female moved in and she is now in the process of moving out. So as we speak, I am getting emails daily for potential tenants to rent. Sure I am a pretty good judge of character, but I love the internet because you can find just about anything on anyone!
Life can turn upside-down very quickly and you find out you’re a homeowner and landlord in a matter of moments. As a single family household the rental allowed for Mrs. MBA to stay at home with our little one!
We will discuss another time on how we derived a fair market value to rent the unit for.
Anyone else own rental property, if so how have you coped with tenant turnover? We are trying to find a tenant that will stay for a decent duration, but as long as it is rented we are happy. Now that the Mrs. is working this will be a nice supplemental income. Did I mention that the rental unit covers our mortgage plus some of the escrow!
What are your thoughts on owning rental property? More hassle than they are worth? I would like to purchase more as a means of additional income for our family.
If you have property in a college town or neighborhood, grad students usually make great tenants. Usually they have more money than undergraduates and are quiet and studious instead of noisy, drunk, and dangerous to your property.
@Terry – That is what these 2 gentlemen were, we knew they would be great tenants when they came to meet us and they were so excited talking about their internships. They were like little kids in a candy shop, that was the kind of enthusiasm they were displaying. Thanks for the post. Do you own any rental property?
We are in the process of buying our first home, but have dreams of building up a real estate portfolio of rental properties so that we can live on the rental income when we retire. For now it feels a million years away, but we’re just getting started, so we’ve got some time to get everything in place.
@ Kari – our first home ended up being our first rental property. It will happen before you know it and you will look back and say wow we are homeowners now. Then all the fun starts! Good luck and thanks for checking me out!
I would love to get some insight on how profitability this journey has been for you! I am constantly debating rental property, but I just get too good of a return via stocks and options to justify.
Great article, I love reading about landlord’ing!
@Drew- Well the journey has been profitable only in the sense that it allowed my wife to stay home with our daughters until they were a few years old. We used my income to pay for the other essentials, she would have had to work if it weren’t for the rental income. It can be a pain like right now looking for someone to rent the property, and the woman that was renting it failed to use common sense with her air conditioner and it ran inside and stained the hardwood floors. But that is the reason we charge a security deposit. I think it is easier to find good tenants when you actually live in the building. If you want to build a portfolio obviously that will not be the case. Overall it has been a great experience and I would definately invest in more once cash flow permits.
That’s great. I’m also thinking about building something (townhouses/ apartments) that can give me some positive financial returns too.
@ Dannielle – it is very nice income. It allowed us the opportunity to have my wife stay home with our kids. You can’t put a price on having one parent stay home with their child. Good luck, just do your research to make sure it is feasible before you jump in.
Christopher, only one word of advice: You are better off with a vacancy than rushing in a bad tenant. Get a long-form lease with lots of conditions just in case your judgement was bad.
@ Astro – very true. Thankfully the new tenant we found is great!!!
We are still renting. We are saving up money for our down payment of our first house.
I’m hoping we end up acquiring a couple of rental properties.
You could always rent your apartment through airbnb while you find a new tenant.