Anyone who owns a house for long (the older the house, the more true it is), knows that it requires constant small bits of care here and there to make it ‘work’. A bit of maintenance on the exterior here, some yelling at a new yard guy who is mangling something here, getting a plumber in to fix a blocked drain there, add some untangling who gets to figure out the fence contractor on top, and you’re looking at work. Not full time work, but it goes on the pile.
If it doesn’t happen, it goes into a maintenance backlog that will make your head spin later, and possibly your wallet implode.
If you live there, it’s usually straightforward enough to fit it in with everything else, but can be exhausting on it’s own.
Through something major in (roof leak? AC breakage?), add it being in an area you don’t live in anymore, and gets harder.
Then, you can have tenants that aren’t absolutely perfect, and it gets even harder and more tiring. Late payments? Property damage? Neighbor complaints?
If you pick good tenants each time and nothing goes wrong, it can be great. It only takes one case of it not for things to get really unpleasant and overwhelming however.
Also, add in the Covid eviction moratoriums, which opened a whole additional can of worms for landlords - if something happens like that again, which precedent has now been set - you could spend years paying a mortgage and upkeep on a place with zero income from it.
Personally, I never rent out a place unless I know how to do an eviction in the local jurisdiction. I hope I never would have to, but not knowing how is a good recipe to lose your shirt and possibly any future gains you could ever hope to have.
I’ve known folks that had renters who seemed perfectly fine (solid full time professional jobs, etc), but left a complete trash house (literally, multiple dumpsters worth - trash to chest high), and disappeared suddenly without paying last months rent.
The underlying truth is that it takes work and management expertise + energy to maintain a house in livable condition, let alone want-to-live-in-it-condition, and that has value. Also, not everyone can, or wants to do that.
> Personally, I never rent out a place unless I know how to do an eviction in the local jurisdiction. I hope I never would have to, but not knowing how is a good recipe to lose your shirt and possibly any future gains you could ever hope to have.
I know how to do an eviction in my local market and did one in my former life as a landlord. That is precisely why I will never be a landlord again.
It’s the grind especially when you are juggling a real job.
The eviction process in my state
- first you have to give them your own personal notice.
- if they don’t pay in 7 days. Then you go to court and file paperwork with the court
- then once the tenant gets served they have a certain amount of time to reply to the notice
- then they can make up any reason to dispute it
- then you have to wait on a court date after you win. They still have a certain amount of time to pay. If they don’t…
- then the Marshall again serves a notice
- then you have to schedule a time for the marshal to oversee the eviction.
- then you have two hours to remove everything from the house on the street while the marshal is supervising. You must have a crew of 5.
- while all this is going on, you can’t enter the house or harass the tenants in any way.
- then you have to clean the place up and fix any damage.
- then you have to find and screen new tenants.
There is a reason standard underwriting only gives you credit for 75% occupancy. The effort is not worth the money. I spent years grinding out rental property between 2002-2010 and even if the housing market hadn’t crashed, I would have been better off focusing on my career.
From 2010-2020, by concentrating on my career I tripled my compensation without having to relocate. Not bragging, it’s about that of a mid level software engineer at any BigTech company in the US (I work remotely at BigTech in the cloud consulting department). Even now if I cared to, I could put in 6 months to a year worth of practicing coding interviews and probably increase it by another $100K.
Residential real estate is not “passive income” by any stretch. I am better off just investing my income from my 9-5 in REITS if I wanted exposure to real estate.
If it doesn’t happen, it goes into a maintenance backlog that will make your head spin later, and possibly your wallet implode.
If you live there, it’s usually straightforward enough to fit it in with everything else, but can be exhausting on it’s own.
Through something major in (roof leak? AC breakage?), add it being in an area you don’t live in anymore, and gets harder.
Then, you can have tenants that aren’t absolutely perfect, and it gets even harder and more tiring. Late payments? Property damage? Neighbor complaints?
If you pick good tenants each time and nothing goes wrong, it can be great. It only takes one case of it not for things to get really unpleasant and overwhelming however.
Also, add in the Covid eviction moratoriums, which opened a whole additional can of worms for landlords - if something happens like that again, which precedent has now been set - you could spend years paying a mortgage and upkeep on a place with zero income from it.
Personally, I never rent out a place unless I know how to do an eviction in the local jurisdiction. I hope I never would have to, but not knowing how is a good recipe to lose your shirt and possibly any future gains you could ever hope to have.
I’ve known folks that had renters who seemed perfectly fine (solid full time professional jobs, etc), but left a complete trash house (literally, multiple dumpsters worth - trash to chest high), and disappeared suddenly without paying last months rent.
The underlying truth is that it takes work and management expertise + energy to maintain a house in livable condition, let alone want-to-live-in-it-condition, and that has value. Also, not everyone can, or wants to do that.