Tuesday
23Dec
So you want to be a landlord?
Tuesday, December 23, 2008 at 07:35PM We renters know the joys of being a renter, and how much money we save by not having to pay for repairs and upgrades on our homes. (Yes, the correct word is "we" renters, not "us" renters....when in doubt, eliminate the word renters)
My roof is leaking, and now the landlord has to pay $11,500 for a new roof. He also has repairs of $60K on two homes hit in the hurricane Katrina. Last year, he had to replace the roof on a house in Riverside County. Besides that, he's made several repairs to my home already.
He is also cash flow negative on my rental property. He can't sell, because he is upside down.
Being a landlord is not all it is cracked up to be.
Why would anybody want to do it?
Reader Comments (3)
Being a landlord is tough. It's easier when you maintain your properties, foster a great landlord/tenant relationship and stay actively involved with the community where you own the property. Too many landlords think they are just supposed to bank the rent check and magically become rich. That's a formula that just starts a downward spiral for the property and tenant quality. Just my two cents.
I purchased a three unit property in 1989, just before the last peak. There were some lean years until 1996.Even with this terrible downturn that property is worth 2.5 times what I paid, provides $800 cash flow each month and the debt is 20%, which will allow me to buy a property in '09-10. Yes, it is a part time job to manage but it has rewards. It is also a long term game with nothing sure in the short term.
One of my friends owns 4 investment properties, which are all cash flow negative, but he is upside down and can't sell. He says the interest payments are tax deductible, which helps to lower his taxes. He says he has seen these CA real estate cycles, and will eventually recover his paper losses.