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Posted: 8/2/2022 9:27:16 AM EDT
I will be closing soon on a home, to be used as a rental property.  Estimate that I can bring in about 130% of mortgage payment in rent.  Not a huge amount, but buying the property is meant more as a hedge against inflation and an investment, than as a source of income.

I have created an LLC, that the title will be transferred to before I rent it, to protect my other assets.

I would appreciate any advice from those with experience in Tx as I move forward.  How did you do background/credit checks on prospective renters?  Where did you get a contract from?  Do you have a business account for the property, or use your own bank accounts?  I will not be using a management company, and am hoping to buy 2 more properties to rent by the end of the year.  Anyone with experience managing their own properties?

Link Posted: 8/2/2022 10:28:16 AM EDT
[Last Edit: jbntex] [#1]
I was a landlord in Temple for many years and owned a dozen rental units at the peak.  I had a property management company to help run triage and assume some of the risk as well and it was still such a nightmare that I finally sold off everything a little over a year ago.

I went over to look at properties in Killeen a few times and decided it was too high risk for me.  Even the property mgmt company advice was "don't buy any rentals in Killeen" and there were some areas of Killeen the property mgmt company wouldn't service due to risk to their employees.   Maybe there are nice sections of Killeen I never visited but most of Killeen looked pretty rough to me and Temple is no beauty queen either.

The biggest issue I faced as a landlord was uncompensated damage wear/tear to the property.   You can only reasonably get so much in a damage deposit and still get somebody to rent your place and the amount of damage people can do in a short period of time can be mind boggling.

You may theoretically "make money" during the year until the tenant moves out. Then they move out and you are looking at a $4000 damage/repair bill with a $1000 damage deposit, so are on the hook for $3000 and at best you realize you just broke even or maybe even lost money for the year.    No ex-tenant will ever pay you above and beyond what the damage deposit covers and in most cases its not worth going to court and getting a judgement for a couple thousand bucks.  Even if you do get a judgement have fun chasing them trying to get them to pay it.

Just replacing the carpet in a unit can be more than your average damage deposit will cover and many renters can wreck the carpet within a year (unauthorized pet, smoking, ethnic food odors, knocked over big gulp stains, etc.) and if you can't find the same carpet you may be in store for replacing larger sections so you don't end up with a quilt of different carpet types.

You add up changing out some damaged carpet/flooring, fixing some damaged cabinets/counter-tops, replacing broken electrical outlets, some minor drywall repair and paint, having the AC coils cleaned because the filters didn't get changed regularly, getting the yard cleaned up, removing oil stains on the driveway,  paying somebody to scrub toilets that have not been cleaned in  year or replacing the caulk in the shower/tub that is stained and mildewed,  etc.  Trust me restoring a house back to where it was before you rented it adds up quick.

If you get a "bad" tenant in my experience you can easily be looking at a five digit damage/repair bill.  Especially if you have a  vindictive tenant that feels you wronged them in some way (usually because they were late on rent and got charged a late fee).  I think my worst unit was about $15,000 in repairs which basically meant I lost money on that multi-year tenant after they moved out.  I have seen other landlord who had the tenant plugged the upstairs bathtub and turn the water on as they leave in the middle of the night.

In terms of liability don't just rely upon an LLC to shield you from liability and risk.   Best case the plaintiff's take the LLC property and you will be on the hook for making the mortgage lender whole as most likely you are personally signing for the loan even if the LLC is bankrupt.   A single member LLC is also an easy target for an attorney to breach the legal entity and come after you personally if there is something with serious dollars on the hook like a potential wrongful death case.   As crazy as it sounds I had two different homes where drunk drivers went off the road, drove through the yard and then through the wall of the house.  I got lucky nobody in the unit was killed or injured in either of those cases as I would probably have been sued since the drivers had nothing to take and I was the only one with assets to go after.

Just the attorney fees to try and protect the integrity of the LLC to keep them from coming after you personally could be significant.  I would suggest at least a $1M property liability policy and maybe more depending upon your current net worth.

This is probably not what you want to hear, but my personal take is that I wouldn't be a landlord for one or two units in Killeen as the risk and personal time investment is not going to be worth the profit margin.   Maybe if this is the first property on your path to get to scale with 20+ units and can do it as a full time job and try and eek out a decent profit  from all the units blended together...maybe.  Otherwise you are one bad renter or situation from having your life turned upside down.

If this is just a real estate inflation hedge and/or capital appreciation play for one or two units I would personally probably rather let the units sit empty vs. rent them.

Just my nickle's worth as a former landlord.
Link Posted: 8/2/2022 11:06:02 AM EDT
[#2]
Then you had the whole Covid moratorium on rent.  Just think about not getting paid for a year.  No way in HELL would I have a rental property.  You would have more fun (losing money) in sponsoring a race car team.
Link Posted: 8/2/2022 12:33:26 PM EDT
[#3]
DO NOT DO THIS OP. Pipeline stocks (EPD & KMI) pay almost 8% TAX FREE with no risk and NO RENTAL ISSUES.
Link Posted: 8/2/2022 12:43:34 PM EDT
[#4]
Rental in Killeen?

It's a Army Town & that means Everything that goes with that.  No disrespect to our Brave men & women in uniform, but Killeen is an Army Town & that it is what it is.

No Way would I ever consider owning a Rental in Killeen, unless you are just completely crazy & enjoy the drama of a never ending pain in the ass.

You want stable, mature, financially responsible long term renters.  That's not really Killeen.

Do you live in Killeen (or very near by) to deal with the issues & repairs?  

Do you know the legal qualifications on who & why you can decide not to rent too and not get sued?

As others have said, maybe "explore other options" is the better choice.  

Bigger_Hammer
Link Posted: 8/2/2022 2:36:50 PM EDT
[#5]
Nope Nope and Nope
Link Posted: 8/2/2022 7:33:01 PM EDT
[#6]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By NoMoAMMO:
Nope Nope and Nope X100
View Quote


FIFY -

Kinda know the place (went to KHS my freshman year before we were shipped to Italy, wife graduated from KHS) and a good friend who has houses and apartment complexes and oh he hates it. The stories he's told me. Do what you feel is right but I know the area and have many friends there. Not a good choice.
Link Posted: 8/2/2022 9:16:18 PM EDT
[#7]
Killeen is a shithole. It's a shithole because of the majority of the people living in Killeen.

0/10 course of action. Do not recommend.
Link Posted: 8/5/2022 10:56:12 AM EDT
[#8]
When the property is still standing after a year, you might call that a win.

Not only in Killeen, but NEVER look at rental properties within say, a 50 mile commute of Ft Hood. Not only residential but commercial too.
Link Posted: 8/10/2022 9:25:19 AM EDT
[#9]
I am a landowner/landlord in a good part of Texas. Do not buy property to rent out. It is a pain. If you do. Hire a property manager. Evictions are a pain. I do not recommend it.
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