I'm interested in rental property but I have no experience. There are tons of books and web sites on real estate investing and rental properties but I don't know which ones are good and which ones are written by a retarded 5th grader. I know some people here have rental properties. What books/websites are worth reading? Any other sources of info I should look at? Thanks is advance.

Paging Johnny Reno.

Johntreed.com

He has a few short books and rates other authors. Helps you sift through the shysters. There are a lot of them.

I have a thread going in the Team Forum about this same thing. I will be watching this thread as well.



I joined Bigger Pockets

Here is what I learned from my rental in Reno NV

Go for small expensive rentals. Small condo in a very nice area vs a large house in a normal neighborhood. That way you deal with richer people with more money. Better clients.

Condos are nice since upkeep is less. I live 4 hours from mine.

Start a bank account just for the rental. Build up a little cushion to cover expenses. Feels better to have it come out of a rental account than  personal account. Also it is very easy to see if it is making or losing money.

Buy is a good school district.

Go thru a rental placement place. Full back ground checks.

Watch for cites with rent control laws

You can get a place in a town you like to visit. It is nice to a have a short vacation you can write off your taxes.

I'm closing on units #24 & #25 next week.

Rentals so far has been an absolute blast and I looove being a landlord.

I started out as a real estate agent with the goal of getting into development, took a while but now I'm finally here, biggest problem has been getting the $$$ structured so I could buy more than a couple.

Biggerpockets has hundreds of experts and thousands of people who have at least some experience. I've used it a ton and made some great partnerships on there, be sure to read through the articles/blogs on there, tons of good info.

Don't go to seminars, don't pay gurus, don't pay for anything other than a few books. So far I've only had one larger investor tell me he learned alot from a course and the name escapes me, everyone else that I know has learned from bigger pockets (Outside of painful trial and error).

My thoughts on rentals are :

Plan to buy a few of them - stuff gets cheaper with economies of scale. When I started buying I wanted 500, I still want 500 and I hopefully won't stop till I'm there. There's alot you can do with a dozen rentals that you can't do with one, such as having part time help do the maintenance.

TRY to manage yourself. Most management companies don't care whether your property is vacant or occupied, you on the other hand care a ton. This may limit you since I wouldn't recommend having properties too far from you, but to me it's well worth it.

Don't go cheap, but learn to be effective. If you're doing higher end rentals it's not so bad, but for me many of my properties are in iffy neighborhoods. I will not put in nice carpet due to the likelihood of it being trashed, I will however put in a good furnace as it decreases HVAC related problems and decreases my long term costs.

Spend more time on finding a deal than anywhere else. You make the most money when you buy, not when you're renting it out or dealing with the property. Next week I'm closing on a duplex I got for $9,000 because I was the only one that bid at auction on the property. It'll bring in $1,100 per month before expenses. After expenses are considered it'll pay itself off very, very quick.

Why would the management companies not care if its vacant? The commission is mighty low when rent is 0. Around here it would be 7 percent of 0, which isnt much.

Thats typically the only thing they care about.

All the ones I've met have advertising fees each time they secure a new tenant for a property and every time a lease is renewed. Most of what I've seen is 1 month equivalent of rent, a few are half a month.

So, those 8% are usually dwarfed by a full month's rent (8.33% of total yearly rents) making it 16% of effective gross rents, or nearly 25% if the tenant turns over twice in one year. Of course that might not happen with every rental, but from the landlords I've talked to that try and do turnkey stuff , the rate is MUCH higher than when you manage them.

Sounds to me like they are motivated to keep tenants in the property then. If it takes 6 months to place a tenant they still get the same amount as if it takes 3 days. No tenant, no money.

The big motivation is every repair job they do to maintain the property they make money on if they are using their in house guys. So far i havent seen a motivation for them to keep the property empty but i may be missing something.

I started a trial a year ago using a property management company on half of my rentals, im going to let them take the rest over in January.

Id rather manage them myself but i already have too many irons in the fire. My pm cost according to my past turnover rates should stay around 12 percent. Tenants seldom stay only a year here. I figured that my pm cost would be 17 percent worst case scenario on average.

Before you do anything, download and examine IRS form 8825.  Then recalculate last year's taxes with this form. Then see if it's worth it.

How the heck have you gotten loans for 25 properties? I assume you dont make 3 mill a year in your day job? That has always been something that i can't figure out.

What dont you understand?

With banks around here, as long as their balance sheet is good and want to lend you can get loans if  you maintain 20 to 25 percent equity or have that much for a downpayment. For me i build equity in existing properties and when i have enough they lend me more with no money down and it dillutes my equity in existing properties.

They dont use the same standards as they do for a primary residence, except on your first one possibly.

What i didn't understand specifically is how you got past the debt to income ratio. Unless you made a boat load of money. But if the standards are different that makes more sense.

With mine, they took into account that although that's adding to your debt and monthly expenses, it's also adding to the income. I had some extra set aside to pay the mortgage and big repairs if the first year didn't go well. I ran my first property under my personal finances the first year. Once I saw that it wasn't just a trial and was going to be a big deal, then I separated it and did it right.

After that it's always been a self supporting business. The finances are completely separated with no intermingling. It's not much different if you go buy a $1,000,000 piece of equipment for your machine shop. It has very little to do with your personal finances unless it's a startup.

I make above average money but nothing spectacular. Just a blue collar guy.