Some random advice to you or anyone else: it's not as easy as you think.
The housing boom over the past 20 years makes everyone belive that real estate is the path to easy wealth. But being a landlord takes work and offers a market return. There is no magic. Those people who tell you "I just collect the rent" haven't been doing it long enough.
Opportunity is missed by most people because it is dressed in overalls and looks like work.
Yes, being a landlord isn't "easy money" but if you're willing to work a little you can make a lot of money slowly.
I've never seen someone loose their ass on a rental property, I'm sure it happens but you'd have to ignore the fundamentals. You can download plenty of spreadsheets online that will calculate whether a property cash flows or not before you even call the real estate agent. You insure everything, and put the cheapest everything into fixes.
Source: I grew up fixing and painting my dads houses in between renters.
Or they turn over a good portion of that rent to a third party to do the actual maintenance and management of the properties (a big business in and of itself).
If you are thinking of using a management company, know that they have it pretty well figured out. Their fees will take almost all of your rental income after mortgage and taxes and insurance. So you'll end up with property that the tenants paid for (no small thing) but no real cash flow.
Besides that there is a high level of fraud in small-time property management. Crooked managers have kickback arrangements with their preferred vendors for landscaping, appliance repair, painting, etc. The property owner pays full retail price for the work and then the manager gets cash back under the table. Many managers are 100% honest but it's difficult to know whom to trust and there's no way to really be sure.
Hah, know what's even better than that, when the PM company outright owns (or their owner owns) a whole arm of companies like that, AND has "exclusivity arrangements" with those.
I use one now, 80 bucks a month. I only used one because I was a brand new landlord and wanted training wheels.
Turns out all I need them for is a rent-collector broker. I interface directly with my tenants to address all issues. While I still make a small profit even after the $80 fee, I think whenever these tenants decide to leave, I may strike out on my own, maybe make a little more money.
That's not what most folks use them for. If you use them for maintenance and generally fielding complaints they get expensive quick.
You are in the very extreme minority of people able and willing to perform maintenance and repair work yourself. We're a dying breed it seems. For most it's simply not a realistic option, due to the lack of "real world" experience/skills most in the position to buy an investment property are in.
This is why it's generally considered a poor investment choice for most people just looking to put money somewhere.
If you are willing to roll your sleeves up and have some handyman skills? You'll certainly enhance the return on your own capital that way. I see such businesses (and they are businesses - not remotely passive) as a means to ensure your money is working for you, which feels much more satisfying and honest to me than just stuffing it into some ETF somewhere.
It's not just skills, though, it's also the time it takes. Like all side businesses, it'll consume quite a bit of your "free" time until you can live off it and quit your job. Many people aren't interested in getting a second job, they just don't realize that's what they're doing.
I agree, I wouldn't be very pleased with the current state of affairs if I didn't enjoy being a handyman. Heh for instance, the day before my first tenants moved in, a pipe burst. I always assumed pipe welding and drywall patching was hard, but not so much. A tree fell in my yard and thru my fence, twice. Bought a chainsaw, grabbed a hammer and nails, trees are cleaned up, fence looks fantastic. Tenants have let the oil run out twice, learned how to prime an oil line. Closet doors are jacked up, learning how to do some carpentry.
Fortunately I lucked out with tenants. I am a working single parent and I live an hour away from my property. I'd really like this to work out in the long run, but so far what I've learned more than anything else is, you can't beat having excellent tenants.
Never do this remotely. Far off management companies for far away properties will take you to the cleaners. Only buy and rent local properties. Ignore your friends and coworkers talking about the screaming deals they are getting in the desert properties. Stay local and you'll do OK.
It's OK to use a management company to find a tenant, show the place, run credit, Etc. Don't use them after that though.
About ten years ago, I read a news article about a management firm in Auckland, New Zealand, who collected rent, conducted monthly inspections, and had found the greatest tenant.
SO, when the tenant moved out and the landlord decided to inspect the place himself, he was surprised to find a large amount of damage and a badly overgrown yard. It seems that the management firm had collected the rent (through automatic weekly debit), taken their percentage, and done nothing else.
I'm afraid it was so long ago that I don't remember anything specific.
It's usually much more subtle than that. Repair bills for this and that on a regular basis. Then a big ticket item like new fridge or plumbing repair. Later you'll find that the fridge wasn't actually replaced, the plumber is the manager's brother, and that the property management company goes out of business and resurfaces with a new name every 5-6 years.
For property management? That's what I'm paying; they handle everything, including hiring subcontractors for maintenance and repairs. Works out well, if they're good about picking renters.
The housing boom over the past 20 years makes everyone belive that real estate is the path to easy wealth. But being a landlord takes work and offers a market return. There is no magic. Those people who tell you "I just collect the rent" haven't been doing it long enough.