New! Take the plunge? First time landlord in Los Angeles!

[Jeffrey Waldron]

Hi I'm Jeff in LA. This is an update to a previous post 11 months ago. 

We're ready to move up from our starter home in LA's Eagle Rock neighborhood, and would like to retain our small home as a rental. The house is paid off and has been well-maintained (by us!) and seen big upgrades in the last seven years: new AC unit, sewer line, hazard removal, garage conversion (to office), etc. -- most of the major maintenance surprises have already happened. It's a nice little house in a nice neighborhood, we can likely ask $3,000/mo, and I believe we'll have our pick of clean, trustworthy renters (too optimistic!?).

I've never been a landlord. Many people I talk to for advice (outside of the real estate investment world) warn that it's going to be hell, that renters have all the rights, they'll trash the place, you'll end up in court -- somehow I'll be screwed and it's best to cash out, take the capital gains tax exemption and move along. I don't have a community of folks here who have done this, or a community of real estate investment-minded people to encourage this move. 

It's a gut move for me -- I've always wanted to be a real estate investor -- I like owning property and this cashflows immediately. I'd like to build towards a portfolio of a couple of income-producing properties. 

Why does everybody want to talk me out of this (financial advisor, in-laws, etc.)? Do we take this plunge? For a year or two and see how we do? 

-Jeff 
 

[Lee Ripma]

@Jeffrey Waldron

I have a rule - if I don’t want what you have, I don’t listen to your advice. So I don’t listen to most people’s fear-based mediocre advice.

If you want to be a landlord and keep this property as a rental - then do it!

You'll get to pick your tenants and SFH are not subject to the City of LA RSO (google it). Is there likely a better return on equity out there? yes. But this is what you want to do. In 20 years will that house be worth less or more? Do what you want in life, if you're not happy with the result then you'll make a new plan!

[Zoia Smith]

Hi @Jeffrey Waldron.  Of course, I’m bias because I’m a real estate investor and I recommend that you go ahead and rent your house. I agree with @Lee Ripma, if you want to be a landlord and use your house as a rental then go ahead and do it.  If it doesn’t work out with the tenant and if you change your mind about being a landlord then you can always sell it afterwards. Just do your due diligenece on being a landlord ( BP has plenty of great books about rental property, being a landlord, etc) that will help you get better prepared. If you then don’t like being a lanlord, you can hire property manager to do the landlording. And if that doesnt work, you can then sell your house.     A win-win.    All the best to you. 

Zoia Smith 

[Jon Schwartz]

@Jeffrey Waldron, do it! Nobody has anything good to say about real estate who hasn't been involved in real estate.

I took the plunge about nine months ago by buying a duplex near Larchmont Village and selling our cute house in Echo Park. (I would have loved to have kept it as a rental, but it wasn't financially feasible at the time.) We renovated the duplex for three months, then moved in and advertised for renters. Long story short, we have great renters because it's a really great property. If you loved your house and you think somebody else will love your house, you'll find a good tenant.

Here's some advice as a recent plunger:

All you need to understand landlording are these forums and this book:

https://store.nolo.com/products/the-california-landlords-law-book-lbrt.html

Buy it, read it cover to cover, underline the important stuff, and refer to it often the first few months.

Also, though it's time-consuming, show your house to potential applicants one at a time by appointment. (Actually, that's probably the only way to show a unit for the foreseeable future.) You want to do a thorough background check, but you also want to meet your applicants and see how you communicate with them, etc. I showed our rental unit to... gosh... eight or nine candidates. I followed up the candidates I liked. Two applied, and the one we chose is awesome.

Plunge away, man!

[Layne T.]

@Jeffrey Waldron
As you have the house paid off, you likely won't struggle for cash flow vs. someone buying something brand new in LA today as a rental.

At your price point, you likely won't have people 'trashing' the place either. 

As far as 'landlord issues,' because you live local and can always verify anything/repair-wise, also not a huge issue. Worst case, if you don't want to deal with a tenant at all you can find a good property management company for 8-10% of monthly rent, but probably not necessary.

Go for it, and keep the house for future appreciation. 

[Clarence Johnson]

@Jeffrey Waldron rent it sir.  If you came to me to sell it I would very likely tell you the same thing.