Glad I do not own single family houses!
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
Glad I do not own single family houses!
Most Popular Reply
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9yI disagree. I LOVE SFR. The tenants are more stable and often stay for years. You can get a bad tenant in any type of property. SW Fl has had terrific appreciation over the past several years. The only down side is the tax bills:(
49 Replies
- Member since 2016 · 13k+ posts · 12k+ votes9y
I agree SFHs are far too much risk for too little reward. Best left to the inexperienced beginners and speculators seeking appreciation.
The growth of corporate ownership is going to have a serious trickle down effect on hobby landlords. Hobby owners of SFHs are going to see a sharp climb in the number of bad tenants as the corporate owners push them to the street. Bad tenants have always preferred to target hobby landlords owning SFHs so this will defiantly increase the risk if investing in SFHs in the future. Increased difficulty of managing tenants and greater delinquency rates from these undesirable tenant will push the kind hearted hobby landlords to the brink of bankruptcy.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes9y
I disagree. I LOVE SFR. The tenants are more stable and often stay for years. You can get a bad tenant in any type of property. SW Fl has had terrific appreciation over the past several years. The only down side is the tax bills:(
- Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes9y
All real estate investments are great - I own SFH's, Aparrments and commercial real estate. The cash flow is iwonderful - it has always been my goal to watch my net worth increase and having free and clear properties - it is the best retirement ever. At 75 years old that means a sense of freedom.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes9y
Yeah John I think Naples has a better tenant base than some areas. I think it is mainly retirees but not sure. Another broker friend lives in Naples that does a lot of SFR REO and I remember how low those price were 4 to 5 years back.
The article talking about Atlanta is talking mainly about downtown Atlanta and those types of tenants. Areas that are not that great compared to nicer suburban counties.
I just know those types of tenants and houses and do not want to do deal with that. I like my peace and do not want tenant calls at night or on the weekend or to hear their life stories. One landlord person I know for SFR just goes to the door each time and ask if they are going to pay the rent in full this month? If they start going on with a life story they just walk away and file eviction right away. lol
- Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes9y
Big firms don't bother vetting tenants, and in turn, don't bother hearing their sob stories. What's the problem? Don't know how they make money with 33%+ vacancy rates though. I guess they get them in, get them out and keep the deposits? No debt service on the risky homes?
I like the one story about the lady who had $1200 worth of water/electric bills due to broke pipe/bad HVAC, was credited $1800 ($600 more) AND STILL didn't pay her rent. You had $600 extra dollars lady.... c'mon.
The last lady stayed past her lease and obviously the company didn't want to renew. Very cryptic...
I'm glad I don't own SFH rentals in that part of Georgia either.
- Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes9y
If you do it right, SF can be really profitable. BUT, yes... it is a full time job and takes a certain kind of person to make it a living. You work for every last penny. I would never do it because, Joel and I have a similar feeling about residential tenants, generally, even the multi-family ones. Unless you have a major corporation that owns tons of apartment buildings more akin to commercial investments, or a big enough building that it makes sense to pay a management company to deal with everything and send you a check every month, it's just too much effort for my liking.
Not to sound heartless, but their problems are just that... their problems, and yet somehow, the landlord always seems to take a hit. It's a shame because often (not always, but often) the SFH investors are either starting out, or have less capital to invest in commercial or larger assets, or they are in the construction business and bust their butts to renovate houses and hold and lease. Either way, when you don't pay your rent to Kushner, it's not right, but he can probably still pay his bills and feed his family. When you don't pay Joe Smith who is investing in these properties to make a living...neither are ok, but the latter is really awful.
I can't deal with emotional tenants and their home is an emotional thing. Same reason I try not to do any personal home sales as a lawyer. Everyone has their life woes, believe me, I probably rank up there with the best of them in that category, but a big national commercial tenant is much less likely to convince a judge they haven't paid rent in months, but they would be out on the street with their kids if they were evicted, or to call you crying when they can't make the rent and tell you why you should just agree not to make any money this month because their sister's boyfriend's cat died and it's been tough on the family. Oh and by the way, our toilet is not flushing properly, and we need our vents cleaned...no thank you!
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes9y
- Investor · Alpharetta, GA · Member since 2015 · 241 posts · 185 votes9y
My two cents on the topic: Imagine the scenerio that you buy a SFR. You upgrade it nicely - not too extravagant, and you decide to rent it. The tenant pays his rent monthly. Everything is fine...works as planned, and the landlord makes his money. Everybody is happy.
Now, you buy a SFR. In fact, since its so easy, you buy multiple SFR's. You must find tenants quickly. You don't have the time, or patience to meet everyone, so you outsource to a "professional" whose job is to place tenants in your multiple homes. Now- things go wrong. 3AM phone calls with toilets, late or no payments, houses trashed. But you heard investing in SFR's make money. Obviously, it's not true. You become disgruntled. It's all bad-you try talking others out of the "game" since things don't work as planned.
What went wrong? Let's compare: The first scenerio has an owner that researched a single home at a time. I bet he/she knows the ARV before even buying the home, and bought is below market, as a good investor must do. They advertised the home, met with the tenants themselves, ran the credit, maybe spoke with a previous landlord, etc - and selected the tenant. The tenant knows who the landlord is - and agreed to his "rules" on the lease. The second scenerio: Let's see...bought too many homes, at too high of a price at the auction - since it was easy to outbid these small investors standing around. Most likely, didn't spend a lot to upgrade the home and make it nice- just enough to make it "clean" - and rather than know the tenants, selected a low cost "professional" - who has other investors as clients, and selects a tenant that meets a minimum standard and quickly fills the house.
Do you really think that this tenant, who never met the landlord, deals with an outside agency one time, and moves into a "clean" house with no real improvements, or anything inside that shows the landlord even cares about the place- will continue to pay to a big corporation - just because they signed a lease? Do you think they even care? They spent their lives taking advantage of the system, many on section 8 and don't even have their money invested at all. No real consequences for them. Does this sound like a failure waiting to happen? Of course. Then, real landlords (like in the first scenerio) read about how SFR doesn't work, it's hard work, the landlord is "lucky", etc. We shake our heads wondering why the big hedge funds are even in this game.
I for one, am wondering about the avalanche/sunami waiting, when the hedge funds pull out and dump the houses on the market. They own 10,000's of homes - maybe millions of homes.
Here in Georgia, it really can't get any easier for landlords. The motto is so true it''s almost ridiculous..."if they don't pay, they don't stay"... period. Even if I go to court- they have no rights, and I have even had their wages garnished if the amount owed was large enough. I used to let it slide - and lost a small fortune. Now- they have 7 days to leave that the judge gave them, and I hire the attorney to start the collection process. Once it's set up, checks arrive, while a new tenant is in the house paying me. As for evicting them if they are still there...file it 7 days after the court date, when you pick up the signed writ from the judge. File with the Sherriff right there, hire an outside eviction company, and they get tossed out in 1-2 weeks. Done. Other states like Florida are not this easy. But...that's why I invest in SFR in Georgia. One more thing...the amount they owe in their garnishment INCLUDES the attorney fee for collecting, and a little extra for my time too. But...I suppose this is too much work for the big hedge funds...!!!!!!!
Yes- a bit of work, but I get monthly cash flow money orders and checks, depreciation to shelter this income, appreciation with a long term capital gains tax rate when i do sell, I gain equity as the tenant pays down the mortgage, etc. I can see how it doesn't work!!!!!!!!!!!
- Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes9y
The link that @Joel Owens provided is a better expose on shoddy journalism than a knock against SFR. This article repeats the same tired storyline that the big, mean company evicted the tenant (who is violating their lease terms), and that the landlord can afford to make all the repairs...as if the repairs in a house are in any way connected to the eviction. There isn't enough story here, so when they quote housing advocates, the advocates only know to blame the landlord. The story here is that tenants that don't pay get evicted. If you are not in this business to profit, you shouldn't be in this business.
- Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes9y
@Richard Balsam Well worded Richard. We are in the midst of choosing a state for our next investment and have rented a SFH for almost 30 years and another in FL for 3 years with barely a hiccup. Attribute that to ethics, proper screening and good luck.
Question we're addressing now relates to what you said here:
"Here in Georgia, it really can't get any easier for landlords. The motto is so true it''s almost ridiculous..."if they don't pay, they don't stay"... period. Even if I go to court- they have no rights,"
Can anyone in IN or PA or FL post about how tenant-friendly or landlord-friendly those states are? In NY tenants have more rights than landlords, plus high taxes, restrictions and you-name-it make it unattractive for us to invest close to home.
Thanks.
- Investor · Grapevine, TX · Member since 2014 · 88 posts · 75 votes9y
I buy and hold SFRs in great neighborhoods and I do not it regret whatsoever. I do serious due diligence before buying. I have a property manager who screens applicants very carefully, and plays it tough when a tenant tries to be abusive. If an applicant seems problematic, I prefer to keep it vacant and wait for better applicants to come. This strategy has proved itself, and I never lost any sleep over my rentals.
However, I have known hobby landlords who tried to save money and ended up with enough pain and drama to inspire a movie or two.
Bottom line, it's a risky game. Do your homework and take calculated risks, or you'll pay for it dearly with your money and health.
- Developer · Hobart, IN · Member since 2014 · 773 posts · 225 votes9y
There are pros and cons to ever type of real estate investments. SFR it's downsides yes and tenants can be crazy but the better you screen them the more success you will have. Take your time and don't rush tenants in and everyone will be better off.
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jessica Zolotorofe prior to the hedge fund craze created by the infamous Buffet comment ( if I was so inclined I would go buy 500k SFR's) SFR rentals has always been a mom and pop business.
in the right areas its a no brainer.. Like here in Portlandia.. as long as you have half a brain and don't let in known felons and tweakers your going to do fine..
What you have in other parts of the country is INNER city tenants with INNER city issues.. its not surprise its the same in every major metro area East of Denver
and WAtts and Comptom in LA Oakland CA Richmond CA etc etc... its the tenant base buy were tenant base is like this and take your chances buy were tenant base is reasonable not so bad and its fine...
My kids both have rentals in PDX as I do and its simply no issue. my tenants are 700 plus fico make 100k a year or more and work for INTEL.. .lol.. no issue there.. and of course we have almost ZERO section 8.... in our area.. not like the deep south were its quite the thing
- Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes9y
Originally posted by @Thomas S.:
I agree SFHs are far too much risk for too little reward. Best left to the inexperienced beginners and speculators seeking appreciation
I completely disagree with your generalization of an entire asset class. Sorry, but your comment is ridiculous and demonstrates that you have no idea what you are talking about.
Actually, with SFR you are much more likely to be able to attract better quality tenants than other types of housing. The obvious reason is because it's the most desirable housing type.
Mismanagement occurs across all property types and is not only applicable to SFR. I manage a portfolio of SFR across 5 markets, have experienced just one eviction in over 10 years, and have all long-term B quality residents.
All leases are 2-3 year escalating leases so I experience less than 7% vacancy rate, which is less than most MF properties. 12%+ COC, 20%+ IRRs
- Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes9y
@Thomas S. above had more value in his hie SFRs awhile back than your portfolio of whatever you buy does. You calling him an inexperienced beginner and speculator? Better yet just get off the site and go post in an I am an elite know it all site of your choosing geez.
This site was dedicated to helping out the mom and pop landlords and folks getting started. Trying to help the new folks, and those who are not sophisticated. It was not started to insult others.
- Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes9y
@Jay Hinrichs you make a lot of good points, though its not just inner cities, but your point is well taken that you get what you pay for. And yes, ton of rent control and section 8 here too, plus when you develop anything there is usually a "COAH" or low income component, so even if your tenant is not, their complaints may be because their neighbors are. I hate to classify any income group generally, either. There are some long term, excellent tenants in all neighborhoods and of all income levels, but with the full understanding that we are probably over-generalizing somewhat, I do agree. That being said... people are generally just annoying, including myself when I rented, I'm sure! And often not unjustified. Things go wrong in houses. It is what it is. I live in a beautiful apartment in a historic building, and if it's not the hvac, it's the electric or plumbing. I rarely catch a break and if I was my tenant living here, I'd be bugging myself daily with issues. Just the nature of the beast. Single family is inherently more hands-on investing.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes9y
I appreciate those investors who are successful and thrive at it. It's just not something (SFR) I have interest in.
That is why I love real estate. Many,many flavors of ice cream you just pick the one you like best............: )
- Investor · Alpharetta, GA · Member since 2015 · 241 posts · 185 votes9y
@Nancy Bachety: I "grew up" in Florida, and became a RE agent in '90 and a broker in '92. What I saw in Florida regarding SFR rentals scared me - and still does today. Yes, there are 1000's of investors right now owning SFR all over the state. Most would say it's fine, although they have higher holding costs than a typical rental unit outside the state, thanks to state mandated a hurricane insurance "pool" that everyone must contribute toward ( a few thousand dollars per year).
But what scares me...Florida ( and many other states that are "judicial states") must, by definition, go through a judge to sign off on an eviction. This takes approx 5-6 months, on average in Florida, sometimes longer. Add to this, a bankruptcy filing that will delay the eviction process until a stay is lifted on the house, and you are easily looking at 1-2 months additional. This is on top of the typical 1-2 months of non-payment of rent before even filing for the eviction! If you want to add up the non-performing months waiting to toss our the deadbeats, you can also add in the time to actually evict them after receiving the judge approved writ of possession. Too long in my opinion to make rentals attractive - which is why I don't own any in Florida.
Of course- there will be others reading this that would dispute that if rentals were that bad in Florida- why would there be any at all? My answer: if 10% are bad apples, that means 90% are fine. If you have one of the 90%, what I mentioned above doesn't apply. If you have one of the 10%, you'd agree. Compare that to Georgia , and there is no contest. But...Florida does have the weather, and a massive winter influx of renters...tempting, but not for me.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes9y
@John Thedford : LOL. I love that picture - mind if I borrow it?
@Jerry W. : Greg is our Sesame Street's "Oscar". I agree with you, but sometimes his approach is a good counterbalance for the newbies who think it's all buttercups and bon bons. Our company does very well with SFR, so I just ignore that part of it (and obviously, some mega-companies do well with them as well, so SFR can't possibly be as unprofitable as he imagines).
@Joel Owens : Thanks for the article. Agree 100%, and there's clues all over the place in the article. One lady gets $1800 in credit for $1200 in costs and still can't make the rent? Others withholding the rent for maintenance complaints? One lady with 5 kids and does not own a home? I'm pretty liberal, but mostly what I see is a lot of problems of their own making.
No one should ever write an article looking favorably upon anyone who withholds rent of their own accord because of some maintenance or other issue. If they feel that things aren't being maintained as they should, they have other options - break the lease; go to court for relief, just for two. No one should be living in a house and not paying rent, even if they are paying rent to the court who holds it while the landlord addresses legal requirements.
Skyline Properties - Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes9y
Hello and welcome to BP! You usually would want somebody besides you to manage your properties and budget accordingly. Be thorough or demand it to your hired property management company on their screening technique. . That will help you go to sleep without worrying about mainteance calls. The only way I would consider buying a SFH is to use them as a person that offer a lease option and be a financer and make money that way.
I have heard a SFH rental unit owner who could not make any money until he changed to being a financer. Not only would he make money off a responsible tenant and not to worry about receiving calls from them except to make improvements at their cost. There is a way into real estate in San Antonio was the way to go. I do not know if you have found Lance Edwards yet but he is pushing Sally apartment complex with enough units that allows you enough money to just hiring A property management company to manage it. You meet with those people regularly to make sure they are doing your expectations.
I tend to agree that SFH's are of less value than the MF's. If YouTube is available to you, it is a great way for learning. I have been on BP about 20 months while I medically recover and I have not made up my mind yet. I am lucky that I have a wife that can take care of me, send our daughter to college, and work. She is a frugal computer programmer who has been saving money since 1982. Her boss has been great about working with her and allow her to come to the office for a half a day but pays her like a full time employer.
I am 60 years old now and have spent the bulk of my days since I was 17 working in the construction business. We live just ouside of Dallas Texas. I was born and raised in the city of Dallas. I agree with Tai Lopez that reading books can help you with confidence and brain power that you can use. Learn about systemizing and hiring out to allow you to do income production.
I have never been in New Jersey but there is seemingly many people who are there are your competitors. Just keep doing learning when you can and just do what is average in that neighberhood. That and location are very important. Always do the math analysis and try to look at the prospective properties of yours or at least have a clause in the sales contract that allows you the time (about 10 days) to make a detailed inspection and possibly back out of the deal without a penalty to hurt you very much.
Having great Team members that are local and experienced in what you do. They can handle the things you do not know or do not want to do. The primary Team members are Attornies, real estate Agents, CPA's, Inspectors, General Contractors, and Handymen. Do not cut any corners to make a property look good on paper. If you have a future game plan that has a sale in it, know what to expect to happen in your area.
Good luck to you!
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes9y
It is under contract. Send $5 non-refundable EMD. Closing in one week. Balance due is $5 at which time you can do with it as you please:)
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