Any property managers out there? Newbie question...

Discussion in 'Archived Threads 2001-2004' started by Jason Handy, Feb 27, 2002.

  1. Jason Handy

    Jason Handy Second Unit

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    Hello,

    My wife and I just invested in second home which we plan to rent out for a couple years. This is our first foray into the wide world of real estate and I am a bit nervous. Basically, I am looking for recommendations on software packages designed to help people manage small numbers of rental properties. I ultimately plan to have no more than 3-5 rental properties at one time, but I want to have a good way of keeping track of the mortgage interest, rent, and expenses so that when tax time comes I am not backtracking to figure out these numbers.

    Currently, I have MS Money 99 Standard; perhaps I need to get the new version, and a more comprehensive package like the Deluxe? Any tips would be greatly appreciated!

    Thanks in advance,

    Jason
     
  2. Mark R O

    Mark R O Stunt Coordinator

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    Jason,
    My wife and I have owned rental properties for several years. Of all the tips, lessons and wisdom we could share with you, by far the most valuable is DON'T DO IT!
    The nightmares awaiting you are beyond anything you can possibly imagine.
    I know the two of you have sat down with pencil and paper and figured out the extra monthly income 5 rentals will bring. Looks good, doesn't it? Crunch the numbers again with these situations tossed in (all have happened within the same year.)
    3 of your 5 rentals do not pay the rent.
    The water main going into one of the houses or plex's burst, 2-3 day repair.
    The guy you had fix a screen door and paint some trim has just sued you for the dibilatating injury he suffered while doing the work for you. His lawyer has filed state disability claims, filed for a lien on all your properties, and sued you personally for negligence.
    The gas is shut off at one rental because the tenant won't pay their bill. They call State Code Compliance because now the unit is not "inhabitable" and "unhealthy" without hot water and heat. Guess who has to pay to restore the gas, pass due bills and deposit being cleared first, of course.
    O.k., thats only four things going wrong. Just four. What's the $$$ cost to you this month? Let's see.
    1. You make 3 mortgage pymts. out of your pocket. Say $500 each? By the way, eviction takes a 3 day notice, then a unlawful detainer filing, court date setting, they file an answer to the complaint, you finally win, then a time is set for the sheriff to come and serve them. Total time for this, AVG: 9 to 12 weeks. Meanwhile, no rent!
    2. Guess $500 for the work, but you have to provide accomodations for the tenant for 2 days because they have no water. Plus 2 meals a day per family member. $200.
    3. Our good friend had this happen 3 years ago. She won in court against the low life, 4 months ago! It cost her $11,000 and 3 1/2 years to prove she wasn't responsible. He walked away with all the state money he was given over that time. We are in the process of the same thing right now.
    You can avoid this with Workmans Comp. Insurance for every person that steps on your property, approx. 2 to 3 thousand $$ a year. Don't forget $1 million in liability protection, your properties are at risk! $1300 a year.
    4. amt. due $140. Deposit $300.
    Total out of pocket expenses for you this month are $2640.00. If you fight the lawsuit, $5000 retainer. If you file the eviction papers on 3 tenants, $100 each. Plus this all carries over to next month, and you owe it again. Still no rent coming in. Taxes due in april, too! Add $1000 per property(?) to Aprils total. But hey, 2 tenants are paying. But one is moving. 30 days to rent it to someone else. No money for a month.
    I hope this all gives you some insight about what you will deal with. This s**t will happen, guaranteed. It's not worth it...Keep in mind that depriciation tax deductions you get each year are paid back to the feds when you sell the property. Did the value increase more each year than what you wrote off? Doubt it. So in 15 years, you sell and owe more in taxes than the selling price.
    Still want to be a landlord?
    Best Wishes,
    Mark
     
  3. Don Black

    Don Black Screenwriter

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    Yikes.
     
  4. Todd Hochard

    Todd Hochard Cinematographer

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    I'll stick to losing my ass in the stock market, thank you very much.[​IMG]
    Todd
     
  5. Don Black

    Don Black Screenwriter

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    You mean Carlton Sheets lied to me? [​IMG]
     
  6. Jason Handy

    Jason Handy Second Unit

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    Wow, thanks for the harrowing tale. It sounds like you had a really bad experience. I think ours will be different for a couple of reasons.

    1) The house is brand new (1 year old)

    2) We live right next door

    3) It is a pretty high rent district (~$1500/mo.)

    4) Chances are, the tenants will be medical residents

    5) I plan to do most of the non-electrical, non-plumbing work myself

    I am so sorry you had such a bad experience. I will definitely keep your post in mind when it all starts happening. But for the current situation, we are approved for the house even if we don't have tenants (i.e. we can afford both mortgages). I hope that we don't have the same troubles you do. Thanks again!

    Jason
     
  7. Mark R O

    Mark R O Stunt Coordinator

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    Jason,

    Thanks for the reply. I just wanted you know what it can be like to own rental property. It wasn't just one bad experience, we've done this for years on the side and it was getting worse all the time. Finally, after two and a half years we have sold them all and feel like we just got pardoned from the governor!

    You will be fine with the house as an investment. We have two homes as well, and go between them as schedules and weather permits. It's fun and makes sense financially.

    But all those considering becoming landlords need to be cautioned, it's not gravy!

    Our very best to you and yours,

    Mark and Ann
     
  8. Jason Handy

    Jason Handy Second Unit

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    Mark,

    I know that my wife and I are both pretty optimistic about the whole thing. Sometimes, it is good to have a different side of the story to put things into perspective. The way I figure it, this will never really be a huge portion of our income. But, if we turn out to have good luck (as I am sure that there are those out there who have), this may be something we consider more seriously. But it is stories like yours that make me happy that we are starting out with something small that is right next door - minimum possible risk. Just to get our feet wet!

    Once again, thanks so much for your input, I value your opinion as a very possible result - I just hope we have better luck!

    Cheers,

    Jason
     

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