Does anyone own rental properties? If so, how did you get started? Are tenants usually nightmares? Do you manage them or a realtor? Has it been worth it?

My husband and I used to own 3 rental houses in addition to our own house - in South Africa. We were in Cape Town for almost a decade and property was going up approximately 20% a year. We have now sold all of our property there and are currently in the process of building a home to sell after living in it for two years(using our original down payments plus the profits). We will keep building and selling over and over to finance our retirement. We will have a low mortgage on our own home now because of investing in the property. We did it because the value of the property was rising so fast. The rents did not cover all expenses and we lived on the edge for a long time to get these capital gains to be at the place we have reached financially.

Living in a foreign country, we had a property management firm manage the property for us. We had middle-class homes, so the tenants were of a certain socio-economic class. In 6 years, we only had to get rid of one tenant for behavior and had rent late 3 times and rent not paid one month by one tenant one time. Rentals that are at the lower end of the rent scale have the most problems with payments and property destruction.

Know what it is you want out of the rental property, an income stream or capital gains from property values rising (or both.) Rental property is often not a good return on investment on a monthly or yearly basis, but when paid off can provide a relatively stable income in the right market. In a market in which property values are rising quickly, it can be a relatively safe way to grow your initial investment through capital gains if you plan on riding the wave up and then selling it to invest elsewhere.

In our case, the wave is continuing to rise in South Africa, but we wanted our own home here and have decided to build and sell since we are in a market in which we can make at least 100K profit per house we build and sell after 2 years. (Probably more, but that is worst case senario).

My advice is not to invest in rental property that caters to the lowest level/s of the rental market. That is where you end up having the most problems with tenants. Also, know what it is you want to get out of the rentals: income, capital gains, or a combination of both. Get advice from a property management firm, an accountant, etc., whatever would be best for your situation.

We own one. DH bought it before we met for 36,000. It had 4 apts each had 1 bedroom, the income was $1000 a month. DH lived in one and rented 3 until we decided to move in together. He was able to pay the mortgage off in 5 yrs. It was a fixer upper, he did all the work himself. Last year we had only 3 tenants - 1 was evicted for not paying the rent. The other 3 decided they were going to stop as well. DH would have evicted them but was planning on gutting the place and remodeling it this spring so he let them stay to keep the house heated - otherwise we would have had to pay the utilities for 4 months to keep the pipes from freezing. Jan the evicted tenant broke in and plugged a space heater into an extension cord - it caught the house on fire. The entire top floor roof and attic were destroyed. The fire took care of evicting the freeloaders and we no longer had to pay the utilities through the winter.

DH and I owned a duplex together, I invested the equity from the sale of my home (I owned before meeting DH) we were able to rent one side and live in the other - it got paid off in 2 yrs. We sold it and bought the single family home we are living in now - we had enough to pay cash for it so we no longer have a mortgage.

The apt house after sitting for 4 months is finally getting rebuilt. We have been doing it out of pocket. All the money I make is supporting us (barely) all the money he makes goes towards building supplies and laborers. Once the house is finished there will be 2 apts with 3 bedrooms each, the income will be $1200-$1300 a month - again with no mortgage.

Real estate for us has been profitable - largely due to the fact that he can do almost all the work himself to maintain, repair and improve. We have been fortunate to find discount building supplies and have friends who we can hire cheaply when DH needs help.

DH mainly does flips - buys fixes up and resells for a profit, if we find another apt building or duplex cheap and in need of repairs we will buy it.

Most tenants have been great but it only takes one to damage the place or not pay rent to make you feel like it's too much of a hassle.

Thanks for posting this. DH and I are thinking about making our current home a rental property when we move to our next home.

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Mom to Kaylee (10/2006)
Waiting on our second bundle of joy to arrive January 2009!

We don't yet, but will within the next year or so. We plan on having a property management company handle the details, a normal fee for their services is 10%.

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A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt

We have once. We also went through a real estate company (friend) to handle it all. He made 10% off the rent price. The problem was that everytime anything needed a repair, it was a MAJOR pain. Things that we would have either lived with or fixed had to be replaced several times (dishwasher, stove, and backdoor!). We also had damage to soem walls that the security deposit was not enough to cover. We ended up selling the house to the real estate agent that we used...and were glad to get rid of it. I don't think it is something we would do again. Just not our "thing"!

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When we bought the house we live in now five years ago, we rented our other house. It has been good so far. We've only had 2 seperate people live there. The first lady took advantage of us. We're not particularly good about saving money, so we have to have the rent to make the house payment. There was a time when she couldn't pay so DH applied her deposit to her rent. When she moved out, the house was a mess. I had to repaint the whole house and we had to do a lot of work on it. She'd had teenagers and they'd done stuff like stabbed (?WTF?) the doorjams repeatedly on almost all the doors. But our current renter has been there for a couple of years. She is single and keeps it looking like a model home.

I'd have to say overall it's been positive.

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Ordinary riches can be stolen; real riches cannot. In your soul are infinitely precious things that cannot be taken from you. ~Oscar Wilde