Hey DG Family:
For those of you who are buying real estae to have a rental income, I thought I would tell you about my experiences, just so you know what to expect.
For years I have been buying foreclosures, fixing them up myself, renting it out myself, managing it myself. There is one small problem with that -- all the properties are 100 miles (2 hours drive away). When you are 21, single and have not a worry in the world -- that's ok. But then you grow up, get married, have a family and driving up and down every weekend becomes harder if not impossible. So, I hired a management company to look after the properties, to collect rent and find new tenants when old ones get out.
They were supposed to be screaning the tenants, run the background check and so on. Well, when old tenants moved out, the house was vacant for about 6 months. I was told that there are just no takers. I said to myself, let me run an ad on craigslist. I did and within 2 days I had over 20 emails asking to see the place. When I confronted the management company, I was told "well you are not our only client and we are shorthanded, sorry". So I fired them that day.
I am not saying all the management companies are that way, just want to warn you what to look for.
Now getting to the tenants themselves. Boy oh boy!!! The reason I started investing in PA rather then NY because you need 6 months to get a non-paying tenant out. In PA you need 1. They don't pay one month -- OUT!!! Easy enough?!
I literally had to put out about 20 of my tenants at various times for non-payment of rent. There is term used for some tenants, they are called "Professional" ones. These people know the system better then any lawyer and use it to their own advantage. They work up and down, left and right, until they can't use it anymore and then they move out and on to the next victim.
One thing I have learned, do not I repeat, DO NOT!!! Form any sort of bond with your tenants. Don't listen to their sap stories, don't let them cry on your shoulder. This is a business investment!!! PERIOD!!! If they don't pay the rent, they are taking food away from your kids, because you have to pay the money for the mortgage. You may or may not hear all the excuses in the world, do not budge.
It took me years to come up with the lease I use now. It is 7 pages long and protects me from everything. It is also as elaborate as possible so people know what they are signing up for and don't say "Oh we weren't told!". I am not sure if I am allowed to post the copy here, if I am, let me know and I will.
I read alot of posts about people wanting to buy properties for rental income, so I figured I will let you guys know what you should expect.
-- TIME IS A TERRIBLE THING TO WASTE, SO STOP WASTING IT --