The Financial Truth About Being a Landlord
Some 39% of prospective homebuyers nationwide plan to become first time landlords, according to RedFin, but many like Uzzin, find this seemingly positive arrangement to be a Pandora's box.
The 28-year-old found a married couple to pay $1,200 a month. For three years Uzzin's tenants paid on time, but just this year, the couple flaked altogether. "The wife wore very expensive clothes, carried a designer purse and her nails were always done," Uzzin told MainStreet. "She was a working professional but now their checks are bouncing."
Uzzin has filed a $4,200 lawsuit in small claims court and is paying an attorney $1,300 to help evict them.
"Before you rent to a tenant , do some investigation because not everyone tells you the truth," Uzzin said. "Bringing someone inside is easy but evicting them is very hard."
For now, Uzzin says her nightmare tenants are living in her home rent free and trying to claim disability to continue to evade eviction.
"When I see them, they threaten me since I am a single woman," said Uzzin. "They scratched my car, and when I try to collect the rent, the wife yells and cries."
One of their biggest mistakes landlords make is attempting to manage properties without help.
"Owning and managing real estate is more complex than some might think," said Dylan Pichulik, CEO of XL Real Property Management, a property management firm in New York. "Engaging a property manager can provide protection and save money."
Dylan advises pre-qualifying tenants to avoid deadbeat renters.
"We pay attention to income and credit score , because if a potential tenant has a history of late payments, it's an immediate red flag," Pichulik told MainStreet. "The eviction process is very messy and we want to do everything we can do to avoid it."
Landlords can prosper by buying rental properties in cities where tenants are a dime a dozen so that when one renter moves out there's another one coming.
The top city for renters on the move is New Orleans, according to a Rent.com/FlateRateMoving study.
The rental vacancy rate is 15.9% and a one bedroom goes for an average of $735 a month.
"New Orleans' low cost of living, vibrant culture and laissez-faire lifestyle make it an ideal place for renters to move," said Niccole Schreck, consumer insights and marketing manager with Rent.com. "The city also is home to two major universities, which brings a fresh, young vibe."