Renters

It seems as though when I talk to people about rentals, the first words out of 80-90% their mouths are something along the lines of: "oh, I will never have rentals because I don't want to be fixing toilets at 2 in the morning."

It really saddens me that people first reaction is potential negatives instead of the potential positives (like "mailbox income" and great cash flow). I used to be this way, so I understand how devastating this mindset can be.

As with any potential downside, you can always do things to avoid it. The cleanest way (if you have enough cash flow) is to hire a property management company. They typically charge about 10% of gross rents, but some markets are lower (around 7%). They deal with all of the typical headaches - collecting rent, coordinating maintenance, paying utilities (if some utilities are paid by owner), running ads for new renters, taking applications, and getting new renters in. They typically pass through the additional charges (for maintenance work and sometimes advertising), and they typically charge a fee for each new lease they get signed.

This is all background to a story:

Late last week, we got our monthly check from our property management company for our investment property (5-unit house). Along with it was a long description of the various incidents that had recently happened with the tenants in one of the units.

Apparently, there were several incidents where the father in this unit pulled a gun on other people. This apparently was not the first time as he had pleaded no contest to a similar charge within the past year (before we bought the property). The offended parties refused to press charges, though one police report was filed.

I suppose such incidents would discourage some people from owning rentals. Not me - that just makes me more determined to be successful.

I am VERY thankful that I have a property management company in place for that property so that I don't have to deal with such issues myself. I am also really looking forward to the property manager screening the tenants - the background checks they do should avoid most such issues in the future.

The moral of the story is that anything you don't want to deal with in business (rental real estate or otherwise) can be outsourced to others. Even as a very "frugal" person (my friends have less nice words they would use), I see a lot of value in paying other people to do the things I don't want to do and am not very good at.

Where there is a will, there is a way.