I was aksed to write what i learned when i owned my duplex. I would like to share that experience here on this thread to let new people know what NOT to do.
In buying the property I actually did almost everything right. It was a great time. i got great financing and the property was sound and in a great middleclass neighborhood.
After that things got a little out of hand.
1. Do not forgive late fees. I tend to see the good in people and try to help them out. However if you forgive late fees for late payments you are asking for it. the tenant will continually be late as a result and hinder your ability to keep your mortgage current. He will realize he can put you off while trying to pay another debt ot bill.
2. If you do not know how to do something get help or hire a pro. I'm a pretty good number cruncher but Not so much a handy man. Sure I can unclog a toilet or change an outlet but major rehabs are not my thing. If you don't have the skills Hire a professional.
3. Keep a reserve fund for emergencies. I ended up using credit cards. My rents paid 2/3 of my mortgage. I did not build any reserve fund. It would have been great to have that when the hot water heater broke.
4. If you are owner occupied and considering leaving the property to buy another Make sure you update all the major things before you leave. I wanted to put central air and fix the roof and paint. None of these things were accomplished. My flatroof on the back addition cracked and I had a total ceiling collapse. I could not get my rents much higher becasue I had window AC units. the paint began to peel on the property.
5. DO NOT ALLOW PETS. they do almost as much damage as kids! But we have to allow kids! LOL
6. Do background checks on tenants. Don't be cheap on this. The money spent will usher out the riff raff and deadbeats. It's worth the money. I let this one guy in simply because we worked in the same busineess. in two months completely trashed my front unit. Including the brand new carpet.
6.5 Which reminds me. Do not use carpet. Use highly durable tile. Let the tenants buy rugs that they can trash temselves.
7. If you find yourself in a finacial hard spot Get help. I ended up 15000 in debt plus medical expenses simply becasue I thought I could do everything. I went to one bank and was told I could not get any equity out of my rental because it had not appreciated enough and it was not owner occupied anymore.
8. I filed bankruptcy in 2001. the next year real estate prices doubled and even tripled in some areas. Had I held on for another year I could have eliminated my debt but i was so burned out I just let it all go. someone got a great deal from me.
If I remember more I'll post it here but these were my lessons.:smx5:
In buying the property I actually did almost everything right. It was a great time. i got great financing and the property was sound and in a great middleclass neighborhood.
After that things got a little out of hand.
1. Do not forgive late fees. I tend to see the good in people and try to help them out. However if you forgive late fees for late payments you are asking for it. the tenant will continually be late as a result and hinder your ability to keep your mortgage current. He will realize he can put you off while trying to pay another debt ot bill.
2. If you do not know how to do something get help or hire a pro. I'm a pretty good number cruncher but Not so much a handy man. Sure I can unclog a toilet or change an outlet but major rehabs are not my thing. If you don't have the skills Hire a professional.
3. Keep a reserve fund for emergencies. I ended up using credit cards. My rents paid 2/3 of my mortgage. I did not build any reserve fund. It would have been great to have that when the hot water heater broke.
4. If you are owner occupied and considering leaving the property to buy another Make sure you update all the major things before you leave. I wanted to put central air and fix the roof and paint. None of these things were accomplished. My flatroof on the back addition cracked and I had a total ceiling collapse. I could not get my rents much higher becasue I had window AC units. the paint began to peel on the property.
5. DO NOT ALLOW PETS. they do almost as much damage as kids! But we have to allow kids! LOL
6. Do background checks on tenants. Don't be cheap on this. The money spent will usher out the riff raff and deadbeats. It's worth the money. I let this one guy in simply because we worked in the same busineess. in two months completely trashed my front unit. Including the brand new carpet.
6.5 Which reminds me. Do not use carpet. Use highly durable tile. Let the tenants buy rugs that they can trash temselves.
7. If you find yourself in a finacial hard spot Get help. I ended up 15000 in debt plus medical expenses simply becasue I thought I could do everything. I went to one bank and was told I could not get any equity out of my rental because it had not appreciated enough and it was not owner occupied anymore.
8. I filed bankruptcy in 2001. the next year real estate prices doubled and even tripled in some areas. Had I held on for another year I could have eliminated my debt but i was so burned out I just let it all go. someone got a great deal from me.
If I remember more I'll post it here but these were my lessons.:smx5:
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