Investment question

[CMike11]

I need some advice.

My wife and I have been struggeling for some time financially.

I have a small business.

Since last november my business has gone ballistic and I am doing very well.

We currently live in a small two bedroom apartment.

I am in Michigan which has a horrible economy. I also can't get a mortgage now because the prior two years for us our income was too low . Our income has increased about 15 times.

We are pondering buying an inexpensive house for cash staying in it for a while then renting it out, and buying a nicer house when I can get a mortgage.

However, we have some concerns

Renting...

It can stay unrented for a while...

It's probably hard to collect rent

It cost money to fix things. I am jewish so I can't fix anything:))

On the other hand what else is there to invest in these days?

It would nice to have a steady stream of income if I can get it.

Advice please?

Is it worth it?

Thank you

[jungulator]

I tried renting a house I owned and it was just a nightmare doing it on my own. My advice would be to look into a property management firm to find you a renter and collect for you. You will pay them a percentage, but the quality of renter and the headaches you will save would be worth it imo.

[CMike11]

Is it worth it?

That's the big question.

[Spaceman Spiff]

CMike, it sounds like a good plan to me.

[jimjames418]

I also live in Michigan. I have several rental properties and it can be a great investment if handled properly. Read and become familiar with the laws regarding Landlord/Tenant (http://www.megalaw.com/mi/top/milandlord.php)relations in this state.

Whatever you do, if you do rent, make sure you get the tenants signature on the condition of the property before letting then take possession. I have found that is where most the problems occur when they leave. And they will leave. And without that signed agreement, you will be unable to collect for any damage to the property.

[CMike11]

Thank you, I appreciate the input.

[Late2TheParty]

I need some advice.
They say advice is worth what you pay for it.... although it has been my experience that paid advice is often extremely overpriced and self-serving to the advisor. This applies to the accountants I have had, as well as a few stock "professionals" who mis-"managed" my account.

I have experience in small times rentals (my dad has 3 extra houses I played renovator and part-time handyman for).

I advise for small time rentals - don't depend on the money. People can and will be flaky. You also can't be a softie, many people will take advantage of it. Get a professional contract made.

Also, think twice before renting out to the young, especially college students. Some are responsible, but more often than not, once a house was rented to a college student, they had an entire crew living there and by the time they moved out, the damage was way more than the deposit covered.

Learn to fix things. You will not make money otherwise. Contractors often charge a lot and too much. At least learn how things work so you don't get charged for services you don't need. There will be unavoidable repairs like the heater and what not that will take a professional, but surely repairing a hole in the wall, repainting, and simple plumbing and electrical work is within your grasp?

Having rented and owned houses, I still think most houses are overpriced compared to renting. It really depends on how big your family is. Having a kid probably will push someone to a house.

But having a small business.... you probably will want to devote time toward it and not maintaining a house, let alone 2 or 3.

People poo-poo on renting, but an apartment, you don't have to mow, clean the gutters, or other joys of maintenance. Besides costing money for equipment, they just steal your time if your work brings in more money and is more productive. If you're a 9-5er, well, it really doesn't matter then.

Just my experience. BTW, never seen a truly guaranteed investment in my life, they all have risks somewhere.

[CMike11]

Thank you, do you (generic you) have any idea what percent (more or less) a property management company takes?

[jimjames418]

Thank you, do you (generic you) have any idea what percent (more or less) a property management company takes?
I have a family member who is quite a handyman manage my properties. His pay is rent free use of one of the properties for him and his wife and another for his daughter and son-in-law. More as a favor for him than saving cash.

Most management concerns I believe charge either a per centage (10% is common) of the rent or a fixed amount, depending on the contract they have. Before signing a contract investigate the history of the firm and get referals from current and former customers. There are many new managers entering the field right now, and some of them are fly by night operations.

[stoked]

Actually, my bro went through Century 21 Realty and they charge about 10%. As far as realtors go, they did the best job they could (in the lousy market) and when that failed they offered the PM service. I recommended them to him in the first place because they did a real good job for me when I had to sell my mom's mobile home. Even though he'd rather have sold the place, it's working out real well with the PM.