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!!!!!!!!!!!
