THE LANDLORD CHRONICLES

AuthorHouse

Contents

1 WHAT'S YOUR NICHE?.....................................................12 FINDING THAT GEM OF A DEAL.............................................93 FINANCINGTHE "F" WORD..................................................234 GO AHEAD, MAKE AN OFFER................................................315 INSURANCE AND LIABILITY................................................356. GOT IT! (NOW WHAT??)..................................................417. THE FINE ART OF FINDING GOOD TENANTS..................................678 FAST FOOD LIVING (GETTING 'EM IN, GETTING 'EM OUT).....................819. MAINTAINING THE APARTMENT.............................................10910. PESTS (INCLUDING THE TWO-LEGGED VARIETY).............................12511. ACCOUNTING (EENIE, MEENIE, MINEY, MO)................................13712. CHANGING GEARS.......................................................15713. YOU CAN DO THIS......................................................191

Chapter One

So, have you already purchased that first rental, or are you merely toying with the idea? Either way, you've picked up the right book. I wish I'd had a hands-on guide to help me stumble through it all, several years ago. At age 46, one might think middle-aged wisdom would see me through. Unfortunately, no. Even though I read everything I could get my hands on, I still managed to make just about every mistake in the book. The goal of this book is to save you from repeating those same mistakes.

Since embarking on this journey, I've been approached by a variety of individuals who want information and advice about starting up their own real estate investing career. They're people who:

Are newly divorced or widowed

Are in their 20s and 30s and want to supplement their income

Are in their 40s and 50s , looking to escape the 9-to-5 grind associated with their jobs

Are unemployed due to downsizing at their companies

Have faced discrimination in the corporate world and decided to control their own destiny by striking out on their own

Are in high income tax brackets and want to take advantage of the incredible tax breaks available to real estate investors

Have taken early (or even late) retirement, in good health, and are "re-inventing" themselves as they take a new direction in the business world

Real estate investing is an attractive alternative for a wide variety of individuals. Unlike many other business ventures, it's possible to get started with very little money. The beauty is that, as you're earning income from the rental, the value of the home is (hopefully) increasing each year. A wise purchase will provide you with income quickly, but is also a growth investment over the long haul.

Over the past few years, we've seen a plateau in home prices, and in places where the market was soaring, there's been a significant drop in price. Thousands of foreclosures are appearing in the real estate market throughout the country. Savvy investors are taking advantage of the situation. With foreclosures on the rise and credit becoming more elusive for people with less than stellar credit scores, a greater number of Americans will be forced into rental homes instead of becoming buyers; the demand for rentals will increase. The current climate represents a tremendous opportunity for the smart investor who is interested in getting into rental properties.

Do you enjoy people? Are you willing to listen and learn from others? Are you good about record keeping? Does the idea of running your own show excite you? If you're willing to participate in the rehab process and manage your properties on your own, this book will provide you with a simple, solid plan that will ensure personal and financial freedom for you. Sound crazy? It's not. Most people I know spend their lives working the daily grind, taking very few vacations or days off, hoping their pensions or social security will be there for them when they retire. Doesn't sound very uplifting, does it?

My close friend Darren has several single-family homes in this area. He's built his portfolio over several years and although he's only in his mid-thirties, he has a lot of free time on his hands. He's busy through the first week and a half of the month when rents are due, but aside from move-outs and occasional repair issues, he's on the proverbial Easy Street. With his spare time, he's vacationing with his family and starting up another business. Not because he needs the money to survive, but because his entrepreneurial spirit is leading him there. With this type of investing, it's very possible to earn full-time income and put in part-time hours. It's a beautiful thing.

When I began purchasing rental property, I didn't have much money to invest in the venture, so I looked at low-priced homes. I also researched the rental market itself. According to the 2004 U.S. Census, 40.3% of American households earn less than $35,000 per year. Of that 40.3%, more than a quarter earn $25,000 or less. A large portion of people in these income brackets will be renters for life - creating a stable long-term market, offering tons of opportunity for someone like me, or you. Armed with this information, I began my search for a low-priced home in need of a little TLC.

Please note: Inexpensive rentals are not synonymous with slums! There are thousands of affordable rental properties being rented by decent, hardworking Americans whose income places them in low and middle-income brackets. The focus of this book will be on those types of rental properties.

SINGLE-FAMILY: GET YOUR FEET WET

You may want to consider buying a single-family rental property if you already have a full-time job or other obligations that take a fair amount of your time. Also, if risk-taking isn't something you embrace, the single-family option will feel less like jumping off a bridge than a duplex.

It's less labor-intensive to buy the single family home, for the following reasons:

It's easier to manage one tenant, rather than two or three, under one roof

The tenant will pay their own utilities, may be on a one-year lease, and will pay the rent by the month, rather than weekly or biweekly

In most cases, a single-family home takes less time (and money) to rehabilitate

Buying a single-family rental will give you a taste of what it's like to be a landlord, and if you decide you've made the worst mistake of your life, selling that home may be easier than trying to get rid of a multi-family dwelling.

However, there's a down side to the single-family, middle-income home. If mortgage interest rates take a dive, your tenants may explore the possibility of buying their own home, and you'll be looking for new tenants. (Unless, of course, it's your rental they want to buy. In that case, you may want to structure the deal and look for another property to buy. More about that later ...)

MULTI-FAMILY: THE MORE THE MERRIER

When I looked into buying my first rental property, my research showed there was better earning potential in multi-family rather than single family rentals. Throughout this guide, I'm referring to multifamily rentals as buildings with four or less units. Anything above four units is treated as commercial instead of...