Who Has Built an Empire of Small Rental Houses?

[RDCanecutter 26476]

This thread had some good posts on the old forum. Starting it up again in case folks want to share some more knowledge.

[Monster 219]

I had a question for landlord types.  This seemed like a good thread for it...

I have a rental house with 4 girls living in it.  One of the girls has a boyfriend who, apparently, has moved into her room with her.  This has caused two of the other girls to send me text messages asking if they can be let out of the lease, citing roommate issues with this girl/boyfriend combo.  (apparently the boyfriend is messy and generally an asshole)

I've searched online and found a 'rule of thumb' about 'guests' being able to stay overnight for 2 week in a 6 month span, at which point they are considered 'rogue tenants'.  If a rogue tenant won't sign a lease and pay rent, then I could consider the lease violated.

Except I'm not looking for extra money, or a lease termination.  I just want to stick to the lease I have with the good, quality tenants I have.  Should/can I confront the tenant with the boyfriend and ask about him/how long is he staying?     Would definitely create drama between the roommates....which could lead to what I'm trying to avoid--a broken lease.

Also, I don't actually have anything in the lease about 'Guests'.

Edited July 15, 2018 by Monster

[52-80 19263]

4 girls and 0 pics?

 

C'mon man

[Gil Bang 26048]

4 hours ago, Monster said:

I had a question for landlord types.  This seemed like a good thread for it...

I have a rental house with 4 girls living in it.  One of the girls has a boyfriend who, apparently, has moved into her room with her.  This has caused two of the other girls to send me text messages asking if they can be let out of the lease, citing roommate issues with this girl/boyfriend combo.  (apparently the boyfriend is messy and generally an asshole)

I've searched online and found a 'rule of thumb' about 'guests' being able to stay overnight for 2 week in a 6 month span, at which point they are considered 'rogue tenants'.  If a rogue tenant won't sign a lease and pay rent, then I could consider the lease violated.

Except I'm not looking for extra money, or a lease termination.  I just want to stick to the lease I have with the good, quality tenants I have.  Should/can I confront the tenant with the boyfriend and ask about him/how long is he staying?     Would definitely create drama between the roommates....which could lead to what I'm trying to avoid--a broken lease.

Also, I don't actually have anything in the lease about 'Guests'.

Forget the "rule of thumb".  What does the lease say?  That's all that matters. 

[NeverMarryAStripper 21943]

Forget the "rule of thumb".  What does the lease say?  That's all that matters. 

In Texas you need to look at the Texas Property Code too.

[Nice Guy Eddie 13528]

getting into the middle of 4 women fighting with each other.  what could go wrong.

[RDCanecutter 26476]

Next neighbor you get will be worse.

 

Well fuck. Wrong thread. Change to "Run out boyfriend, start sex cult with four girls, double rent."

Edited July 16, 2018 by RDCanecutter

[Monster 219]

22 hours ago, Gil Bang said:

Forget the "rule of thumb".  What does the lease say?  That's all that matters. 

Just because I put something in a lease, doesn't make it legal.  So, while I agree that this is mostly true, it isn't necessarily all that matters.  

And agreed, Nice Guy Eddie.  Getting directly involved is a guaranteed way to get my eyes scratched out.     Which is why I threw out a line in to see if anybody had an unconventional idea. 

[Monster 219]

23 hours ago, 52-80 said:

4 girls and 0 pics?

 

C'mon man

Here you go.

[UTPhil2006 3817]

Tell the 2 girls to talk to their roommate like grown ass people.  If they are able to text you, you have the type of relationship with them to tell them that they need to handle it in house.  

Edited July 18, 2018 by UTPhil2006

[Quagmire 2147]

Put cameras in their showers, post live link and we will monitor for violations

[mycox 582]

Looks like a case for Judge Judy is coming up

[T’Boo Ted Marshall 2740]

I’m still in heavy debate on our current house. My intention is to convert it to rental #2 but there are some interior structural issues that need to be addressed.
If I had to guess I need to spend about $20-25k to repair and update the other areas. It needs to be done if we decide to sell anyway so I guess it’s at least an expense as a rental.

[beer 3220]

On 7/20/2018 at 7:47 AM, T’Boo Ted Marshall said:

I’m still in heavy debate on our current house. My intention is to convert it to rental #2 but there are some interior structural issues that need to be addressed.
If I had to guess I need to spend about $20-25k to repair and update the other areas. It needs to be done if we decide to sell anyway so I guess it’s at least an expense as a rental.
 

well not really but you can depreciate it.  Do these repairs have to be done if it is just a rental?  You could use rental income to defray the cost of the repairs. 

[T’Boo Ted Marshall 2740]

Most of it does need to be done.
Some foundation and master bath overhaul.

I thought I had read somewhere in the tax code that renovation costs on rentals could be fully depreciated in this (2018) tax year.

It mainly boils down to me whining and not wanting to spend the dough.

[HookEm 2468]

My wife and I are looking to start building our rental empire. She is a real estate broker, so it will make the transactions cheaper.

Anybody have advice for a first timer? We are looking in Cedar Park / Leander. Looks like $200K is about as cheap as you can buy a house and it would rent for $1,400 - $1,600.

What kind of loan do you get? Better to buy as LLC or as individual? How leveraged do you go? Any sweet spots for size of house?

[UTPhil2006 3817]

1 hour ago, HookEm said:

My wife and I are looking to start building our rental empire. She is a real estate broker, so it will make the transactions cheaper.

Anybody have advice for a first timer? We are looking in Cedar Park / Leander. Looks like $200K is about as cheap as you can buy a house and it would rent for $1,400 - $1,600.

What kind of loan do you get? Better to buy as LLC or as individual? How leveraged do you go? Any sweet spots for size of house?

Message/email me - pdubord@prodigymbo.com  - I can give you the run down of the Mortgage side of things

[NeverMarryAStripper 21943]

On 7/23/2018 at 7:30 PM, T’Boo Ted Marshall said:

Most of it does need to be done.
Some foundation and master bath overhaul.

I thought I had read somewhere in the tax code that renovation costs on rentals could be fully depreciated in this (2018) tax year.

It mainly boils down to me whining and not wanting to spend the dough.

I think you can under Section 179.  You may have to place the property "in service" prior to expending the money though and you would have to classify your rental operations as a "business" for tax purposes.

Edited July 26, 2018 by NeverMarryAStripper

[Dbeasy 15095]

My wife and I are looking to start building our rental empire. She is a real estate broker, so it will make the transactions cheaper.

Anybody have advice for a first timer? We are looking in Cedar Park / Leander. Looks like $200K is about as cheap as you can buy a house and it would rent for $1,400 - $1,600.

What kind of loan do you get? Better to buy as LLC or as individual? How leveraged do you go? Any sweet spots for size of house?

Might be very tough finding something at $200k, but if you do, do you feel confident that you can make money at $1500 per month for a house that costs $200k? The math gets tight really quick.

[milkman 428]

Looking at buying some rental properties. Is there some sort of cost to rent ratio that can be used to find the viability of return?

[HookEm 2468]

7 hours ago, Dbeasy said:

Might be very tough finding something at $200k, but if you do, do you feel confident that you can make money at $1500 per month for a house that costs $200k? The math gets tight really quick.

 

Agree, but next year, that house could easily be worth $210K and the rent go for $1520.  And the year after that rent goes up again along with the house price.  All the while your mortgage stays the same.  

Of course it could turn the other way as well, but over the long term I would think both the mortgage and rent would go up with inflation at the least.

[T’Boo Ted Marshall 2740]

That’s not always the case. Sometimes you stay flat based on the market near you. I did for the first time in 9 years and my condo in Addison raised in value significantly. You weigh potential time between tenants and make ready costs vs a small increase/flat to keep them in there and happy.

[Buzzrock 14948]

Is paying a rental MGMT company worth it?

[Archer 474]

3 hours ago, milkman said:

Looking at buying some rental properties. Is there some sort of cost to rent ratio that can be used to find the viability of return?

Depending on the market 1-2% ($200,000 house $2,000-4,000 rent). The bigger pockets guys preach 2% but I am not sure if you can find it in lower cost states (OK/TX). 

[PvilleStang 2921]

10 hours ago, Buzzrock said:

Is paying a rental MGMT company worth it?

We haven't hired one yet.  Wife does most of the marketing work of getting a tenant, then I get the maintenance calls (house is hers from before we got married).  Only have one right now, but she wants to get another investment property.  I'm not sure at what point it's worth it, given I've had three calls with the current tenant since February, and the former tenant maybe called twice.  Management companies want $99 / month (Renters' Warehouse), which cuts into the profits tremendously (consider your $rent - $mortgage - $mgmt fee).  If they could increase your rent enough, I'm sure it'd be worth it, but do your homework.  Plus, not sure how the maintenance contract works for them, but I can't imagine they'd take it out of their management fees.

[T’Boo Ted Marshall 2740]

They don’t. Expenses for repairs or maintenance are on you.

For me it’s worth it. I don’t have the time to screen tenants and vendors, collect rent or supervise repair issues. I did negotiate certain vendors to use for certain things. HVAC is an example. They use my guy if anything comes up.

[TexTexTex 104]

On ‎7‎/‎26‎/‎2018 at 7:21 PM, HookEm said:

Agree, but next year, that house could easily be worth $210K and the rent go for $1520.  And the year after that rent goes up again along with the house price.  All the while your mortgage stays the same.  

Of course it could turn the other way as well, but over the long term I would think both the mortgage and rent would go up with inflation at the least.

As the house appreciates your property taxes will go up too.  Leander area is usually close to 3% so that can eat up some of your increase in rental income.  I have heard the 1% of purchase price for the monthly rental rate as well, but that doesn't seem competitive for Leander area.

[Johnny Chimpo 479]

This feels like the wrong time in the market cycle to be buying rental houses but hey if you can find the right price/rent combination I guess no reason not to.