Landlords, any tenant horror stories?

1

We have been debating buying some property to rent. Any horror stories? Tips to avoid disaster tenants?

2

Have rentals for 10 years almost. Issues may be there, but not horror/disaster tenants. One time, I have to write off $1500 damage when tenants ran away due to their divorce. Other time, tenants water damage costed $25000, managed to get from insurance when they do not have insurance. Tenants were very good agreed to provide me my deductible. Accident can happen, like any car accidents, but need to absorb them.

Important:

Rental involves privacy, tenants rights (even though you own home) and some legal binding. You must obey local California laws/rules.

Tenants screening is important to avoid issues.

Home location is important to get good tenants.

Cash flow positive is better, but you may need to put down at least 35% or 40% range to get +ve cash flow.

Again, Location, Location and Location is very important in Bay Area real estate to gain full benefit.

Make sure you calculate everything using excel and have many permutations regarding cash flow, rent, mortgage, roi etc.

Good Luck.

3

$25k in water damage…Ouch! Glad the insurance paid.

Any websites or books that you have found helpful?

4

There are books available in amazon, but I do not think it is useful for bay area. Google is best, cash flow, cap rate get to know.

Just put all facts in excel and try to see whether you what you are getting into (something similar like this one).

Loan Years
Purchase
Down Pay
Loan
Rate/INT
Period/PMT
Garbage+Garden+Clean
SubTotal Monthly & LTV
Rate After Tax & CLTV
Tax Savings(own)
Rent Equivalent
Property Tax
Insurance
Grand Total
Tax Rate
Rent
Property Mgmt
Garden
Maintenance
Grand/Month
Principal
Net Gain/Loss
Net Spend
Cap Rate
Yearly Gain
Depreciation
(Depreciation100/Rent12)
Tax Gain/Loss

1 Like
5

Jil,

You are a data guy😄

Criteria for tenant:

  1. Drop if you don’t feel good about them;
  2. Annual base pay, exclude RSUs, more than 3 times annual rent;
  3. Avoid dual income, ideally wife doesn’t work and doesn’t come from pampered family;
  4. Husband, hopefully, someone willing to dirty his hands, talk about some minor repairs and maintenance stuffs, to see whether he knows; and
  5. Drop if bargain too much and point out minor issues about the house.

Market rental $50-$150 below market for a larger pool to choose from.

6

I see this dual income differently.

If dual income means stability for rent payment. All my tenants are dual income. Appx less than $150-250 market rent makes them happy to stay long.They maintain the home nicely.

7

I purchased two books

https://www.amazon.com/Complete-California-Landlords-Kit/dp/1572485434

https://www.amazon.com/Complete-Book-Real-Estate-Leases/dp/1572486287

But, I just scanned them, but did not use as I have property manager.

8

So near your house also use property manager? I use PM only for Austin rentals. Experienced* PM knows how to choose tenants, manage the tenants and property pretty well. I know very little about the profile of Austin tenants. My previous comment is when you want to manage the rental personally cum handyman.

*nowadays, many young inexperienced PMs around, don’t engage them till they are experienced.

9

Yes, Self managing is a business and I need to devote time for that. Even though my rentals are within 30 miles range, I use PM as my main profession is IT side and do not have time to respond to the tenants call, screening, open house, some fixes.

Current PM started his first rental with me 6-7 years before. His father was main realtor guiding him. Now, he manages appx 50+ rentals in San Jose area,he has his own handyman going everywhere and promptly informs me & responds the calls.

The current one is my fourth PM after many struggles. I know how PMs are working. PM selection itself challenging.

1 Like
10

Is this PM ok? If ok, message me his contact and coverage. Might want to buy rental far away from my house but still in bay area such as Fremont, and Milipitas.

11

He may not service Fremont, but you can check with him Milpitas. He is located at Los Gatos/Saratoga and accepts homes within 20-25 miles distance from his office. He is also a active realtor sell/buy homes. I will PM his info.

12
13

So far the worst is they called the property manager because of a wasp nest. They sent over a handyman with a can of raid to take care of it, and left them the can of raid for any future issues. If that’s my biggest issue, then I’m pretty happy.

14

Me and a crew were called to paint ??? a rental in Chico.
So, we got there, the place was trashed big time. We cleaned up, and then we noticed the entire front window, including pieces of sheetrock were missing. The students threw a party, and in their funniest moment they threw the coach through the window.

That’s nothing the owner said, that’s nothing…:sweat_smile: