As a landlord here in Brevard County Florida, over the past 14 years I have had my fair share of ups and downs. And, I've made mistakes and learned from those mistakes.
Often, we have people call us with an interest in investing in real estate. Real estate investing isn't for everyone. Some people don't have the disposition to be a landlord. If it were easy, everyone would be doing it.
The first property we bought was in 1996, a 1700 square foot home, 4 bedroom, 2 bath. We kept it rented for 10 years, with the same tenant for 8 years. But, as property values increased, so did the taxes and insurance.
We sold it, took the money and replaced it with 2 smaller properties. Houses about half that size.
That house was too big. We buy smaller houses now.
We have found that typically, smaller houses rent for more money per square foot than larger houses.
Since the rent tends to be more affordable, there is a more abundant supply of tenants available for smaller houses.
Tenants have a tendency to stay longer in smaller houses, because of the affordability, versus larger more expensive ones.
The mortgage payment, taxes, and insurance are typically less in smaller, well appointed homes. So, when there is a vacancy, the landlord's holding costs are less.
A small house accomodates less people, than a larger one, so typically there is less wear and tear.
The upkeep, repairs, and maintenance are typically less. And, when a tenant moves out of a smaller property, typically there aren't as many rooms to paint, or as much cleaning to do as on a larger house.
Be careful, in choosing a property don't go too small, or compromise on the area. Always buy in an area of well cared for homes. Otherwise, the landlord may wind up dealing with tenants that can make them wish they never got into the rental business.
Smaller houses typically sell for more money per square foot than larger houses. And, they sell more quickly than larger houses, as there is a larger pool of buyers, including other investors, in the lower price ranges.
In a market downturn, such as the one we've had in Brevard County a smaller house's value will not be as severely affected as a larger house's value.
For us, we have found that smaller houses, in clean neighborhoods with good schools are a better rental investment option than larger houses.
In writing this article, please remember, I live and work in the Melbourne/Palm Bay area of Brevard County Florida. I am speaking from my experiences in this area. This information may vary in different parts of the nation.
Sandy Shores REALTOR®, Melbourne/Palm Bay FL Real Estate Brevard County, Florida's Space Coast Real Estate & Investing I specialize in Residential, Investment & Relocations. We have a team of professionals that can help with your Short Sale. I buy, sell, rent, own and manage Investment Property
Points well noted Sandy, we're looking to add to the portfolio and take advantage of some great values out there.
great info, it is always easier to take counsel from someone who has been there done that!
Sandy
Well said, thanks for sharing your thoughts.
Good luck and success.
Lou Ludwig
Sandy, I'm dealing with an investor right now that bought in 2006 and has 3 short sales going on his investments. The bank is the real loser here...
I hope this was a super Friday!
Paul
Very good tips for the investor Sandy. I'll keep this in mind for sure.
So true being a land lord is not for everyone, often some buy and only later sell the investment property because they didn't understand the constant work involved.
Sandy, I totally agree with you on all your points here! Investing in rentals is not for everyone! Location is everything and keep it clean and desirable! Winner, winner!
Sandy, These are all wonderful tips and I'll bet it's not at all easy being a landlord. Some people may try investing before they really look into it, I hope this is a reminder of all that is involved.
Oompa, very nice article and great tips from an experienced investor. Cheers! Say hi to the girls!
Sandy - That is a really well written piece on buying and owning rental properties. I have owned a few over the years, and have come to the conclusion that I really haven't the temperment to be a landlord. It seemed I always had the misfortune to be planning a weekend out of town, when the phone would ring with a large plumbing problem, or something of that magnitude.
I also agree with you about the smaller homes making the better rentals. . .Especially if they are in reasonably good neighborhoods.
Sandy,
Excellent post. Everyone thinks being a landlord is easy.
Ann Hayden in Wildwood, MO
Hi Sandy, Thank you for the great information here! Our first, only and last rental was a four bedroom, and I found out I do not have the temperment to be a landlord :-)
Excellent tips. The rental market is something else right now. Definitely not for the faint of heart. I agree with you. All my houses are bread & butter type where the typical tenant will probably just stay a tenant all or most of their life. The bigger houses tend to attract people that will eventually buy a home of their own. Of course that gives you the chance to be the one to sell a house to them.
Sandy you are so right on and there are several good points investors can take away from your post. I invest and love the deals and of course the money. ;0)
Great advice especially for people looking into rental property. Thanks!
Kevin, Thanks. Come on over and look me up. We can have lunch. We're only about 2 hours 15 minutes away from you.
MaryBeth, I learned about investment property from my broker, who has been in the business for 50 years. He's such a wealth of knowledge. I don't know what I'd do without him.
Lou, Always a thank you for stopping by.
Paul, Uh oh, 3 short sales on investment properties? We're hearing the same stories here. It's really not a pretty picture, at all.
Gabe, Everyday I learn something that I didn't know before. It's trial and error, that's for sure.
Mary, Being a landlord is constant work, especially with multiple properties. I don't think that everyone is cut out for it, and I think they should know going in that it's not going to be easy.
Caren, The right location is so important when considering an investment property. The wrong house in the wrong location will just wear you out.
Carole, I don't think that any job is really easy. I just think that you have to pick your poison, and figure out what you are good at. I think that you have to have the right disposition to be a landlord.
Hey TOTO, Thanks, I take that as a compliment. How are things going in your neck of the woods?
Myrl, Isn't it funny, that timing seems to be everything with those dreaded tenant calls. We recently got a call from a tenant saying that he got his water bill, and it was $1300. Sometimes it can really be no fun.
Ann, No it's not, is it? How are you doing with your rental? Do you still have a tenant?
Mary, It's not for everyone. It sometimes takes a certain kind of "meanie" LOL. My husband and I take turns playing good guy, bad guy with some of the tenants that are slow pay.
Rob, It sounds like we're on the same page. Several of my tenants have been with me for over 5 years now, and they will probably always been renters. They are really good people. Being a landlord can be really tough, sometimes.
Charles, Thanks for the kudos. For me, I invest in real estate as a retirement plan for my future.
Irene, I hope that the info helps someone. But, I know that we all have to learn by trial and error, which takes time.