I’ve known lots of people who used to own rental properties, but for one reason or another, they got out of the business.
I actually put myself in this category, but I haven’t sworn off them. I sold mine because they tripled in value and I wanted to cash out, but I’d buy more if the right opportunity presented itself.
I'm curious, for those out there who chose to exit the rental property business completely, what were your reasons (what was the last straw, lol)?
What would have to be true for you to get back into the business and buy rentals again?
I haven't gotten rid of mine. Sometimes I'm tempted to, but I doubt I ever will.
My relationship with rentals is a mix of love and hate, as I'm sure many landlords can understand.
The tax benefits and streams of income (when they aren't eaten up by repairs and maintenance) are great, but they do complicate my tax return and accounting, and they weren't really reliable as a source of income until I owned several of them.
It's one of those REI strategies you have to either go all-in on, or don't bother with them at all. A lot of people like to dip their toes in the water to try them out, and get frustrated when they don't deliver all the freedom and income they thought they would get. They can be great a great source of income, but most people won't see the full benefits unless they chase after the dream with everything they've got.
I know many rental property owners, and they rarely offload properties.
The few times I've seen it happen or even almost happen, it's been either due to a sudden huge life change that required them to leave the country, or due to unscrupulous property managers squeezing out any profitability or will to keep the properties. I live in a town with numerous comically villainous property management companies. The rental property investors I know who have wanted out have given stories about how the property managers lie about paid rent, stop collecting rent randomly, lie about repairs that are needed or performed (this is a big one), and many other little issues.
College towns where the university is going all-online this semester I'm guessing will have more real estate investors trying to offload properties than usual.
@oranjoose - that's a great point about the college towns offloading their rentals. I hadn't even thought of that, but I can see that being a HUGE wave a motivated sellers.
Of course, most markets are still pretty hot right now, so maybe there will just be a big redistribution of real estate ownership without prices actually being affected much, but it'll be interesting to see what happens there.
@retipsterseth I have been thinking about offloading a couple of rental houses, mostly because the market is hot, and I would like to use the cash to do more land flips.
I do have a couple of properties that I did “rent to own” lease options on, and truth be told this is the easiest and imo most profitable way to do houses. At some point I will be getting rid of all my rentals, and if I ever buy more I would ONLY consider doing that.
I have a property manager, but it seems like they nickel and dime me on po-dink maintenance stuff all the time.
@jawollbrink I’ve heard a lot of people say this over the years (about how rent to own is a great alternative to long term rentals). Have you found that most of these agreements don’t actually materialize in an eventual sale? That’s one common thing I’ve been told, but not sure if that’s true.
How long do you set the term for on these agreements?
@retipsterseth
I set them for 2 years. They pay 5-6k option fee (some people charge more) and they can extend the agreement for another year for a $1k fee. I have a 100/month rent credit towards purchase price IF they make their payments on time each month.
Some guys put the purchase price as “to be determined by appraisal” when they choose to close but I felt it was only fair to the customer to set it from day one.
I look at it as 3 ways to profit;
Non refundable option fee
Monthly cash flow
Cash out sales profit.
These are on houses that I bought undervalued so it works.
@jawollbrink, I’ve thought about doing rent to own with my one current rental. Do you have your tenant/purchasers responsible for maintenance in your deals, or unless and until they exercise the purchase option are you still as responsible as a typical landlord for repairs?
@dl7573 The beauty of it is that they are 100% responsible for repairs. I had already fixed the places up to rent ready conditions so it was a good deal for them.
Also for me the only thing I hear is the money dropping in the bank.
It looks like a good business at first glance, but it’s not as easy. There are details you have to take into consideration.
I was renting out a place in Ontario for few years, and I always liked making everything official. That’s why I had to use forms like https://pdfliner.com/ontario_rental_application_form_410 that made it much easier for me.
Still, some tenants were awful people. It was like they never had a house of their own, and they thought they could trash my place. I had to pay a lot of money for repairs, and it was crazy. I stopped doing it because it was too much, and I ended up selling the place.