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Itscrowdedinhere

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Posts: 3
Reply with quote  #1 
Hi there,

This is my first post. We're exploring the idea of investing in rental properties a few years down the road, and want to do our homework.  We'll read all the books, and try to be as responsible as possible about running the numbers, etc., but I thought it might be interesting to see how you all got into it.  There are probably some of you who took a really deliberate route with a business plan or a partner and stuff, and other who just kind of tried it out. I'd love to hear your story!

Thanks!

Marie

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Posts: 7
Reply with quote  #2 
Well, I bought the house next door to me from an older gentleman who had been taken too many times by his nieces and nephews that he rented the house to.  He wanted to be rid of it and it needed a few repairs and a cosmetic change, so he sold it to me for a great price.  Also, even though he would have liked to get all the money up front, he sold it to me on a land contract  because I couldn't get approved for another mortgage.  I fixed it up and rented it for 1 year (to very good tenants!), then sold it and doubled my money.

Let me point out here:  that was probably my deal of a lifetime.  I haven't had luck that good since.  Things haven't been a total failure, but never that good again.

I only did it because my son was soon to go to college and I needed the money.  Otherwise, I probably would have chickened out.  It turned out to be a great deal for all involved, so I got hooked.



Itscrowdedinhere

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Posts: 3
Reply with quote  #3 
Thanks for your story! How many properties have you purchased since then? What do you like most about this kind of work? Would you consider yourself to be pretty comfortable with risk, or do you think of yourself as cautious?
kurt

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Posts: 137
Reply with quote  #4 
You either live in a semi demcent area or you just got lucky on that first buy with the renters turning out good..Buy in a lower income area with out a fair amount of saved cash(or equity) or income comming in and it can turn into bad juju quick!

MY first buy was a place that by all rights if in a lower middle class income area would have done much better. But I bought it with little cash in bank and maybe $25,000 a year income.. MEaning I got my butt whooped on the place to many slime rats, loosers, job quiters, drug users, dead beats, and out right scum bags.. Not that that would bother me if they paid the rent, kept quiet, and didn't trash the place, but people with no ambitions, no future, and little to no self esteem tend to treat the place really lousy because they have little to nothing to loose. Get in even lower middle class area and now your possibly renting ot people who might have some hting and might want a future(other than malt liquor). Granted it's not a guaranteed, but so far as I have seen buying in low income areas is a ousy gamble unless you can get a really, really good deal on the property(meaning owner want to dump it and run with their butts in hand)!

Oh yeah don't count on having much for rights as a landlord because you don't.. Lousy but true that the tenants have more rights than the owner(s) of the property.(least i
Marie

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Posts: 7
Reply with quote  #5 
Kurt, I somewhat know what you mean.  My rentals have all been in a low income area of Detroit.  I bought 2 more since that first one.  A lot of the people in the neighborhood are on state aid and have no ambition what-so-ever.  In January, I finally evicted a PITA tenant who wouldn't clean anything, had lots of other people moved in, trash around the yard, never mowed the grass, I was summoned to court on 9 city ordinance violations, she broke 3 brand new vinyl replacement windows & garbage disposal.  One of the windows looked like it had been set on fire, it was melted and black and the glass was broke. The place was filthy when she went...left all kinds of furniture, clothes, food (some rotten), I threw everything out, including the stove & carpet.  There was so much grease and food on the walls, I had to scrub them with Greased Lightening (great stuff by the way) nothing else would get it clean enough to get the primer to stick to the wall!  Then after she was gone the neighbors complained to me that it was a drug house.  I had no idea and no one bothered to "anonymously" call me even though they have my number.  I guess they were afraid of retaliation from her and her cronies.

There are a few people around there that work and want to live in a decent way, but just can't afford to live in a better neighborhood.  Those are the ones that I screen for.  I just filled 2 units with working single moms.  I pray they turn out to be ok tenants.  That really bad tenant was there when I bought the place.  I don't think the previous owner bothered to screen her at all.  I say screen, screen, screen....try to judge their character.  I know they can still turn out bad, but it has to help some.

kurt

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Posts: 137
Reply with quote  #6 
Pretty much same old thing here in the bottoms of columbus...Waiting out for good tenants is a tough thing when my gf and I are working ft and making less than 50k a year gross.. Comes a time when eating the empty unit/duplex gets to e a pain in the pocket book.. But then it turns out just as bad cause I know the people are suspect at the very least.. Yeah I've heard fix it up nice, so they wont want to tear it up.. Even if I could have afforded to to begin with I have been weary to try such being that ok I put some money and a fair amount of time into a duplex and the tenants turn out to be crap and tear it up anyhow..

Not to mention "catch a 22" in low income areas your not going to get leiacoca or donald trump moving in, so most times t he best your going to attract to view the place is drug dealers, loosers, dead beats, and the usual scum.. Granted get lucky once in a great while, but taking that beating inbetween really takes it's toll.. And yes if I had more income or saved more I coulda avoided having to bend and take some of the loosers I rented to before.

ANd I have tried to talk to senator ray miller and state rep dan stewart on changing Ohio's court collection laws, you think they listened? Nope did didly along with the Ohio apartment Assoc..  I tried telling them the big loop holes in trying to wage garnish in ohio and that modeling arizona's system would make it a lot easier and more efficient.. I even wrote news channels and news paper trying to get attention to my idea and ya think I got a reply.. Nope might as well have talked to a wall..

Thing I have learnt so far is this, if your going to get into low income areas either have money set aside, so you can hold out past lousy applicants in hopes of finding and geting a decent tenant.. Or have plenty of income from some where to give the same leway time.
kurt

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Posts: 137
Reply with quote  #7 
But why I got into being a LL?

My father had done it years ago in WI. My brother and best friend got into it roughly 1997-1998 and made really good off from it in arizona. I had wanted to for years before, and finally did in Ohio.. Missed doing some of my home work on Ohio and the court system/laws versus arizona's fairly big difference. Ohio is almost 3 times more expensive to file an eviction case than in AZ. Not to mention the wage garnishment system in AZ is much better. MY fault for not doing the research and choosing to be a landlord in ohio versus AZ..
Itscrowdedinhere

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Posts: 3
Reply with quote  #8 
So Kurt, do you still have properties in those tougher areas you've had troubles in, or have you moved on to other areas? And are you still committed to making a go of your properties, or are you kind of burned by the tough situations you've had to deal with?

Thanks for your comments! This is all great information for me. My grandfather owned 4 houses back in the day, and he's been gone about 15 years now, but I always remember him believing deeply in real estate and being his own boss (he also built a solid small business).  Now I wish I'd picked his brain years ago!
kurt

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Posts: 137
Reply with quote  #9 
I have fortuneatly dumped off dana ave property and kept the other duplex that is rented by fairly decent tenants.

Not giving up, just learning some times despite all the book reading, ideas, and so forth it can come down to eaither having money to start out with(least a few thousand) or a income with low debts that would allow "leway" from having to deal with so/so place in lousy area..

Going to try and build up my credit score better to get lower rate loans, and try and buy in some what better area/lower middle class. Also I did finally rent the book "landlords legal guide" from the library, and it does have some good info/ideas I will try instituting and ading to my lease to make it more detailed with less "gray area".

Yeah it's nice to be able to pick a relatives brain cause they usually want to help and enjoy shairng their info with out charging you.

And your wlecome for the stories, best thing I can say is read up, try and learn as much as you can on how to do as much maintinance as you can to cut down on your costs..
kurt

Registered:
Posts: 137
Reply with quote  #10 
Oh yeah check up on your states wage garnishment system, soem states don't even have wage garnishment (I think TX, NC/SC and florida), so that might be some thign to keep in mind.

Also your local library would be a good place to find your state's Landlord Tenant Law book.
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