There's a house in my mom and dad's neighborhood that is for sale. My dad thinks I should buy it and rent it out, but I don't think he's thought about all that's involved with that.
I contacted a friend of mine named Ray who is a realtor for Century 21 in Las Vegas. I don't really have a lot of time to re-type everything because I have to help with the Claims Training Class from 1PM-5PM and it's 12:45.
Here is the pasted e-mail I sent to my dad about what Ray said. (For the record, he would never steer me wrong.):
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Hey,
I thought about what you said about buying the house and consulted with a friend of mine who is a Realtor in Las Vegas. He said buying a house is always a good idea, but it’s best to go about it by hiring a property management company. (That way the renters are dealing w/ them and not you directly in case something goes wrong- and they can enforce the laws if the rent is overdue, and they will be responsible for getting and keeping renters.) He said don’t go in it for a profit. Let the renters pay the mortgage.
For example:
Rent = $850/mo
Mortgage= $450/mo
Property Management = $200.00/mo
After property management and mortgage there would be $200.00 remaining. He suggests putting any extra money into a savings account in case of an emergency such as the plumbing explodes, or for whatever reason you are left to have to pay a couple of months worth of rent because no one is interested in renting the property.
He said that I shouldn’t look to turn a profit until I’ve used this method and saved at least 6 months worth of rent for “in case of emergency”. He said that’s the smart thing to do.
He said now after the renters pay the mortgage, I can choose to keep the system of them renting, or I can kick them out and sell the house.
(Oh, and he said always call around and talk to different property managers. You want to ask why Jim is wanting 120/mo to manage your property and Joe wants 200.00. He said it could be insightful- such as “Well, Jim never has any renters and his clients are all in debt.” ) He also said after I talk to all these people to go with someone in the middle-range. The person charging the lowest price isn’t worth it and the person charging the highest price is just in it for the profit.
Let me know what you think, but I really trust Ray and he’s a Century 21 Realtor…. I think he’s right.
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So with that wealth of knowledge- that may be a greenlight. I still need to review the inside of the house.
Will keep you updated as always! :)