Give me some advice before I buy my first rental property

[jdgator]

Got my eye on some low end residential property that I can afford to pay cash for. About 38k for a 2/1.5 900 square foot home on quarter acre lot. Blue collar neighborhood 15 minutes from a large industrial park. The area rents for 700 - 800 a month. Already performed my own inspection. It’s a little rough but has a recent roof and HVAC. Any advice before I take the plunge?

 

[LTZ25]

Go for it !!!!! You can always sell it if you don't like to deal with renters . Almost forgot make sure you get some very good insurance , just in case someone gets injured on the property or it burns down .

 

[Lukikus2]

No

Or is it in Costa Rica?

 

[jdgator]

Nope. Mobile, Al.

I wonder if this could be an opportunity to write off a bunch of purchases as business expenses.

 

[4HAND]

Are you prepared (have the time) for having to make repairs, chase down the rent, etc?
My mother in law owns four rental homes. Two of them are handled by an rental company. The other two are in her hometown & she handles them. It seems there's always something. Water problems, utility problems, appliance problems, renters being short on rent, etc.

Not at all trying to discourage you. Rentals can be a good source of income. Just trying to be realistic.

Part of her problem was my FIL handled all of the rentals. When he passed away she was kind of lost with the rentals.
I will say my MIL's situation is getting better. We've helped her get more organized by dedicating the rental income into that account so it's never an issue for repairs, insurance, taxes & she knows where the money is used.

 

[Lukikus2]

You would have to talk to an accountant on that one.

 

[LTZ25]

He's paying cash so no big risk , it'll be looking good in 15 years when you have you money back and rent will have almost doubled , you can't buy a decent pickup for 38 grand .

 

[sinclair1]

Not enough info for a true opinion. There are areas where I would buy it and bulldoze the house to reduce the tax burden because I know the property is where the value sits and is rising fast.

Some areas have the downtown square future and worth renting until cashing in about twenty years out.

Some are going to become crime infested areas where your just giving tax money to the city as you gave up renting to scum bags the first year.

I wish you luck finding the answer....and each situation can change with the stroke of a commissioners pen and become the other.

 

[Big Foot]

I’m a fan, rental been good to us - be prepared to deal with things, but like anything effort shows results...put in the work on the property be a good landlord and returns will show....if you buy the right property

 

[swamp hunter]

If the Renters say they Love the place and might be interested in buying it from you...It really means their gonna stiff you for 3 months rent and move out one night...

 

[Mexican Squealer]

Absolutely put it with a rental company....best 10% you will EVER spend.

 

[jdgator]

Thanks everyone for the input. Before I pull the trigger I am going to find out what a couple of the management companies think of the property. If they don't want to manage it I definitely wont buy it!

 

[Jimmypop]

Google Alabama rental law . Make sure you have a good lease contract. Learn to be mean in a nice way. Select renters who have a good work record.Become handy if you aren't already. I have about lived off 4 for the past 25 years and they're worth about 4 times what I have in them. Wouldn't think about selling them.

 

[LTZ25]

He's not buying Trump Towers , its a 38 grand house and there may be a few problems but it will be a great learning experience .

 

[bassboy1]

To me, the Mobile part sounds like the only hangup. A lot of the headaches I've heard about regarding rental properties involve a property that's not local to where you are. Usually, the issues stem from a lack of property manager oversight.

On the flip side, 40k isn't going to get you Jack Diddley up here, so the potential headaches very possibly are more desirable than the additional costs of local RE.

I know people on both sides of that fence. Some have sold all of their non local property, and said, "never again," where others love cheap properties many states away.

 

[j_seph]

Remember that folks today do not tend to take care of stuff that is not theirs like they once did.

 

[Pig Predator]

I would crawl all up under and in the attic spaces to make sure there isn't any black mold or copper plumbing. A mold abatement could cost thousands, but if a tenant finds it, it could cost you tens of thousands. Good price otherwise. I just can't get that.."If it's too good to be true...." out of my head on such a good price. Whats the catch?

 

[AceOfTheBase]

Had one once, for about a year. Too many hassles.
No more, unless managed by a rental company and smack on the gulf !

 

[Cmp1]

One word,,,,DON'T,,,,

 

[treemanjohn]

38k for a home is a no brainer unless it's a total mess. I would not use a management company unless you absolutely have to. Also, only rent to active military.