How did you get into landlording?

[meerkat]

Since there are quite a few landlords on these forums I was curious how you got into it. Was your first rental a house you used to live in? Was it a purchase you made specifically to have as a rental? Was it a property you inherited?

After you had your first rental, for those of you with more than one, how and when did you acquire the second one?

[meerkat]

I'll start - I have one rental that I got from my mom. She got caught up in the real estate craze and had a bunch of rentals at one point, most of them were sold for a loss. This one was a good little reliable unit with a long term tenant (she literally lived there till she died a couple years ago). I am incredibly lucky in that my mom gave it to me mortgage-free when she retired because she did not want to deal with the hassle of a rental unit several hours away from where she was living at the time, and I live in the same city as the rental. I have no plans to do a second rental unit any time in the next few years - I have enough other stuff on my plate - but maybe one day if I can find the right one(s). Part of why I started this thread is because I'm assuming most people didn't have an opportunity like this essentially handed to them.

[Ensign1999]

I purchased a house in Jacksonville, FL when I was stationed there.  I more than likely should have sold it when I was transferred based on what I now know about being a landlord, but I figured I might get stationed there again so I kept it and started renting it out.  For the most part it has done OK for me but the money would have been better invested someplace else.

I purchased a second home in Maryland.  Same story, but the market had crashed and I would have lost my shirt if I had sold it when I transferred.  Again, it is doing OK.

In a few years they will be both paid off and will supply some pretty stable income right about when my kids are old enough to head off to college.  They have both been rentals long enough now to where the taxes would be a hard pill to swallow if I were to sell, but at least I know I could walk away with money in my pocket vs being upside down on the mortgages.

[JLee]

I bought a house, lived in it for a couple of years, then accepted a job on the other side of the country. I rented it out to friends, and here I am!

[sunshine]

We bought our first rental last year. We bought a second at auction this summer.

[Lmoot]

When I  bought my house at 25, my best friend lived in the detached apartment building on the property while I lived in and fixed up the main house. After she moved out, a coworker moved in.

Eventually through a conversation with some coworkers who needed a place, I leased out the main house.I have another job which is a short walk from the house, so convenient for these coworkers). They moved out and I will be having another coworker move in, in January for $250 more (what can I say, folks will pay to walk to work).

Anyway, because of rental income I was able to take a munch needed mental break, and quit my job and run away for a few months. That sampling of "the good life" is what I wanted long-term and since I have a true interest in and passion for real estate, that's the holy grail I am chasing. Since I don't earn much money, it's more palatable to me than merely investing in the market, because I can only invest so much. With investment property, how much rent you earn is not dependent on how much cash you've put down on a loan. Leveraging is my new best friend and I'm saving for my second property now, hoping to buy in 2017, right before a career change (to appease lenders). I got my mortgage down to about $40k to lower future DTI, and would like to borrow no more than $60-70k for the next property, with at least 25% down (so something under $100k...doable in my area). I am tempted to buy 2 cheap student condos since my city contains a state college, vs another SFR...but we'll see.

[Drifterrider]

My father did well with rentals.  He bought his first in 1956.  My mother still owns it.

I guess I learned from him.

[leighb]

My father had invested in a few rentals in the 80s and 90s on the side. As his primary business started to wane he invested more in rentals to keep his employees busy. During the housing crisis I started finding houses at sheriff sales and listed on the MLS for less than $10,000. I would forward them on to him. Then in 2011 I had money I didn't know how to invest and I asked for his advice. At that point I joined him and bought my first rental property a little 2br 1ba house for $9900. Two years later I bought a duplex for $23,000. He has since passed away and I have inherited many of his rentals and employees. I've bought two more houses since his passing. I don't know if I will continue to invest, stop where I am, sell the troubled properties... I get tons of conflicting advice. While it makes me sad to have lost my partner. Not having my dad as my partner has made me more confident in myself and much more conservative in my investments.

[cchrissyy]

I bought a house to live in and soon afterward the local rental market got hot.

It was worth more $ in the minds of renters than it was to me. Does that make sense?  Like, say it rented for $4k per month, but was not worth $4k TO ME as a place to live. So I easily decided to get out of there and let somebody else pay me that figure, it was too substantial to pass up. I rent myself somewhere cheaper.

[SwordGuy]

How did we get into landlording?

Pretty mundanely.

I read about it on this forum and realized it might be feasible for us.  So we spent the next year reading, looking at properties, learning about prices, costs, and laws.

When we were ready, we went out and bought our first property.  We're up to 2 rented and 2 being fixed up (one of them is our old home).

[clarkfan1979]

I bought my first rental when I was in grad school in Colorado. I was 27 and bought a 4 bed/2 bath for 182K in 2007. I worked for 2 years in between undergrad and grad school to save the money (2002-2004). I didn't make much money, but I lived at home for free and saved enough for a down payment. I also used a tiny bit of student loan money to make it work.

The total mortgage, taxes and insurance was $1040 and the rent from renting out 3 bedrooms was $1050. I refinanced 2 years later because rates dropped from 6% to 4.75% and my mortgage dropped to $950. I lived there for 4 years. For my 5th year, I moved to Florida for a job. My roommates still wanted to live at the house, so they found someone to rent my room. One year later, I started renting to random college students on craigslist. I'm now renting it for $2,000/month. I'm also turning it into a 5 bedroom for next year and going to ask for $2200-$2300/month.

For my second rental home, I also purchased as a primary residence in January 2012. It was a 3 bed/2 bath single family for 95K. I was able to come up with a down payment only after 6 months of working my first real job, because I was living at home again. My dad had purchased a vacation/retirement home in 2006 that was in the same town as my first job in 2011. I lived there for 6 months and had 15K for a down payment and closing costs. I started renting that house out in August 2015 because I got a better job in Hawaii. The mortgage, taxes and insurance is $650/month. I rent it for $1700/month.

I'm hoping to make my 3rd purchase in Hawaii within the next 12 months. I'm looking to buy a 3 bed/2 bath house, with a 1 bed/1 bath attached studio (ADU). The ADU will get about $1,100/month in rent. I'm looking at purchasing a house in the 300K-500K range. With 20% down, that will put my total mortgage in the $1,350-$2,100/month range. However, that will be off-set by $1,100/month in rental income from the ADU.

I'm thinking of refinancing my Colorado house and pulling out $110,000, so I can put 20% down. However, I haven't decided yet. If I don't do that, I'm looking at putting down 5% and having to wait 2 years, instead of 1 for a house purchase here.

[fishnfool]

I bought my first rental when I was in grad school in Colorado. I was 27 and bought a 4 bed/2 bath for 182K in 2007. I worked for 2 years in between undergrad and grad school to save the money (2002-2004). I didn't make much money, but I lived at home for free and saved enough for a down payment. I also used a tiny bit of student loan money to make it work.

The total mortgage, taxes and insurance was $1040 and the rent from renting out 3 bedrooms was $1050. I refinanced 2 years later because rates dropped from 6% to 4.75% and my mortgage dropped to $950. I lived there for 4 years. For my 5th year, I moved to Florida for a job. My roommates still wanted to live at the house, so they found someone to rent my room. One year later, I started renting to random college students on craigslist. I'm now renting it for $2,000/month. I'm also turning it into a 5 bedroom for next year and going to ask for $2200-$2300/month.

For my second rental home, I also purchased as a primary residence in January 2012. It was a 3 bed/2 bath single family for 95K. I was able to come up with a down payment only after 6 months of working my first real job, because I was living at home again. My dad had purchased a vacation/retirement home in 2006 that was in the same town as my first job in 2011. I lived there for 6 months and had 15K for a down payment and closing costs. I started renting that house out in August 2015 because I got a better job in Hawaii. The mortgage, taxes and insurance is $650/month. I rent it for $1700/month.

I'm hoping to make my 3rd purchase in Hawaii within the next 12 months. I'm looking to buy a 3 bed/2 bath house, with a 1 bed/1 bath attached studio (ADU). The ADU will get about $1,100/month in rent. I'm looking at purchasing a house in the 300K-500K range. With 20% down, that will put my total mortgage in the $1,350-$2,100/month range. However, that will be off-set by $1,100/month in rental income from the ADU.

I'm thinking of refinancing my Colorado house and pulling out $110,000, so I can put 20% down. However, I haven't decided yet. If I don't do that, I'm looking at putting down 5% and having to wait 2 years, instead of 1 for a house purchase here.

You've made some good rental investments, great cash flow. Hopefully you'll be able to make your next purchase soon and get in on these super low interest rates.

Aloha

[ketchup]

Bought a small house owner-financed for *very* cheap at the bottom of the market in 2012.  Age 20 (GF was 19).  Lived in for a year with roommates, then rented to a friend-of-a-friend (bad idea), then another friend-of-a-friend that desperately needed somewhere to live (worse idea), and then the second FoaF's undisclosed roommate by himself (actually not as bad as the second renter).  Now rented out sensibly to the original roommates of mine that I would trust with anything.  Nearly paid-off (5yr note) with modest cash-flow.  IRR around 25-30% even with all my fuckups.

[JLee]

I bought my first rental when I was in grad school in Colorado. I was 27 and bought a 4 bed/2 bath for 182K in 2007. I worked for 2 years in between undergrad and grad school to save the money (2002-2004). I didn't make much money, but I lived at home for free and saved enough for a down payment. I also used a tiny bit of student loan money to make it work.

The total mortgage, taxes and insurance was $1040 and the rent from renting out 3 bedrooms was $1050. I refinanced 2 years later because rates dropped from 6% to 4.75% and my mortgage dropped to $950. I lived there for 4 years. For my 5th year, I moved to Florida for a job. My roommates still wanted to live at the house, so they found someone to rent my room. One year later, I started renting to random college students on craigslist. I'm now renting it for $2,000/month. I'm also turning it into a 5 bedroom for next year and going to ask for $2200-$2300/month.

For my second rental home, I also purchased as a primary residence in January 2012. It was a 3 bed/2 bath single family for 95K. I was able to come up with a down payment only after 6 months of working my first real job, because I was living at home again. My dad had purchased a vacation/retirement home in 2006 that was in the same town as my first job in 2011. I lived there for 6 months and had 15K for a down payment and closing costs. I started renting that house out in August 2015 because I got a better job in Hawaii. The mortgage, taxes and insurance is $650/month. I rent it for $1700/month.

I'm hoping to make my 3rd purchase in Hawaii within the next 12 months. I'm looking to buy a 3 bed/2 bath house, with a 1 bed/1 bath attached studio (ADU). The ADU will get about $1,100/month in rent. I'm looking at purchasing a house in the 300K-500K range. With 20% down, that will put my total mortgage in the $1,350-$2,100/month range. However, that will be off-set by $1,100/month in rental income from the ADU.

I'm thinking of refinancing my Colorado house and pulling out $110,000, so I can put 20% down. However, I haven't decided yet. If I don't do that, I'm looking at putting down 5% and having to wait 2 years, instead of 1 for a house purchase here.

Wow, that's pretty awesome.  I was hoping to buy another house in Phoenix in a year or two, but the market is going up so fast that I don't think it's worth buying another place now.

[Rust]

I was an accidental landlord. Wasn't something I was looking for.

Bought my first house in March of 2008, market still hasn't recovered to what I originally paid for the house. In 2012 I found a foreclosure at a price I couldn't say no to that was closer to work and a very nice neighborhood. I bought that house and was faced with the problem of either renting my first house or selling it with little to no proceeds from the sale. We've been renting it for the past four years to the same family, cash flow positive of $300 a month. We've had to spend about $5k in out of pocket expenses over that four year time frame so we've come out ahead about 10k in cash flow, 13k the principal portion of the note the renters have paid down and about another 20K in market appreciation. So far 43k over the four years.

When the current tenants move out I'll re-evaluate if we will continue renting it or sell it.

[Unstoppable]

My GF and I bought a house at a foreclosure auction. We moved into it and rented out rooms to two friends. This made our monthly payment about $100 each. We bought another straight rental 9 months later, one five months after that and another two months after that.

This was 2006/07 as the market was crashing. So while we bought them at a discount, it fell further. But we were able to get them all with 10% down, which is why we bought them so quickly. Come up with 5-6K each for downpayment and closing and we were off...

Rough start, but I wouldn't trade it for the world. The sky is the limit. RE is what I am supposed to be doing, and it just so happens to be fantastic for wealth generation.

[bpleshek]

I lived in my first house and purposely kept it when I bought my second house to rent out.  $35k left on the mortgage.  Going to pay that off next month with a HELOC which will drop my rate a number of percentage points at no cost.  The second rental was purchased with cash on an auction website for about 59% of market value.  Will have it on the market shortly with a desire to have it rented 11/1(target).  The next property will be searched for starting after this is rented out.  I have about $20k in cash left and can tap another 85k from the aforementioned HELOC.  Assuming I pay about the same for the next property that will leave me with $25k to fix it up.  My current fix up project is looking like it will cost around $6500.  In May or June next year, I'll also be getting a lump sum from another source which will bring my available funds to just about where they need to be for another property.  I have been saving between 2000 and 2500 per month toward my "investment/house" fund.  Add to that another 1200 from the rent of the 11/1 house and that will be another 22k by May.  So together that will be just enough to invest in one more property at that time.

So in June 2017 my hope will be to have 4 SFH rentals.

My wife, before we were married has owned another 5+ rentals in another state.  She just kept going out and purchasing whenever she felt like it.  We have since sold all those off because they were not great returns on investment.  It was not fun to have over $1.3M in mortgages on 4 properties worth $1.8M in 2008.  Losing a tenant was a bad idea.  We got out with just enough to buy our family home in cash after taxes paid(in a lower CoL state).

Brian

[K-ice]

My story is Duplex live in 1/2 for 5 years.

Buy forever home & rent out all of the Plex.

We rented our basement "suite" for awhile to a friend. It was supposed to be 3 months & we offered a low rate so he stayed 2y.

5 more years & our forever home is mortgage free. We easily have enough saved to buy more but after finding MMM & Canadian couch potato & am investing in Vanguard.

My SO  still likes real-estate so we may get the right 6-plex or something if it falls in our lap.

I also want a (very impractical) vacation rental that we may VROB but I can't pull the plug because the numbers don't work.

[Villanelle]

How did we get in to land lording?

Reluctantly.

We moved overseas for my husband's work and the housing market was shit at the time. Thanks to a healthy downpayment (in part due to the sale of a previous home), we weren't upside down and could afford to walk away, but we feared we'd never be able to afford something again in our area if we sold.  It was a great decision because we've gained about $150k in potential equity in the 6 years since we would have sold.  Initially we were actually losing a small bit of money each month.  Now we are cash positive, even after firing a shitty property manager and paying the new one more.  Rents have gone up and continue to rise dramatically.  I just read an article that they are up about 7% in 2016, so when our lease it up early next year, our numbers will look even better.  But the place is somewhat trashed and will probably need about $10,000k in work before it can be leased again (largely things like new paint and carpet, a very deep cleaning, etc., most of which we can't charge the renter for due to local laws).  We may or may not decide to sell at that point. 

But I don't love being a long distance landlord.  I can see doing it again in the future, but I'd prefer to be local, or at least semi-local.