Investment Property Part I: How Not to Become a Slumlord

After riding the ups and downs of the stock market roller coaster for a while, an increasing number of investors are looking into property investment as a more stable alternative. With hot markets in many parts of the United States, the time may be ripe for you to get into this potentially lucrative trade. I would suggest, however, that you keep reading before you jump on the first property you find. You just might find something in this article that will keep you from breaking the bank and your back.

The hope of any investor is to build long-term wealth; this is a fairly straightforward principle and probably the reason you're reading this article. There are however, some rules to play by in the property investment game if you don't want to end up taking a shotgun with you every time rent needs to be collected. I'm talking about how to avoid becoming a 'slumlord'.

In order to best relate the rules of being a successful landlord, let me share a story experienced by some extended family members. It's a great example of what NOT to do if you want to get the most out of your investment property. After the story we'll see what rules and lessons we can learn. Names have been changed to protect the identity of the innocent.

Ben bought a beater single-family investment property in a very bad area and he his two sons, Josh and Nathan, all got busy. They put in hardwood floors-don't want to have to replace carpet every time you have turn over, right? And then they thought they'd use really good paint-don't want have to repaint every time, right? And then they decided to splurge on good cabinetry and bathroom fixtures-a happy renter is a good renter, right? And to top it off, they put in nice towels on nice racks that said, "We are Family." Renters would appreciate that, right?

Right.

The first family to move in removed the bedroom and cupboard doors for firewood, tore out the nice bathroom fixtures and sold them at the swap meet, and fired small caliber rounds through the new hardwood floors. Ben discovered this when he received a call that the roof was leaking and he should, "Get your *** down here and fix it!" He patiently tried to explain that roofs do that when you pull shingles for kindling. Other wonderful visits ensued, prompted by similar calls.

It only took eight months to get them out of the house; turns out that tenant rights as outlined by the county enumerate more rights than the rest of us enjoy collectively. As the family moved out he noticed that mom and the two older boys all sported matching shirts stitched with "We are Family." The rest carried various pieces of the house.

Ben, Josh, and Nathan began to rebuild the house, finding all sorts of interesting changes to its structure. Nothing really serious other than a supporting beam was chain-sawed out (apparently more firewood), tile pried up in one bathroom-no clear reason why, gang signs scratched into all the glass and mirrors that weren't broken and other little surprises.

While helping restring some crawl space electrical wire-later found strung in the closet for hangers-Josh found a rusted out .32 caliber handgun. Somehow the tenants had managed to pry bricks out of the chimney, which Ben needed to replace in order to meet code. Apparently someone had driven an M1A1 Abrams up the driveway; there was no other way to explain the huge cracks in a driveway that had remained perfect for 20 years.

What can we learn from this horrific, yet unfortunately true story?

Rule #1
Location, Location, Location. Ok, so this might seem a little cliché, but it's a fact that the location of your investment property will determine the kinds of tenants you will attract, and how much rent you can fairly charge. Remember, at some point in time in the future it may become necessary for you and your family to live there; what kind of neighborhood do you want to be in?

Rule #2
Don't go overboard when you're fixing up an investment property. You ought to expect reasonable wear and tear. Keep in mind that 'reasonable wear and tear' means something entirely different to a person whose renting than it does to an owner. And for goodness sake forget the, "We are Family" hand towels!

Rule #3
Know how to make basic repairs. Luckily for Ben and sons they had quite a bit of experience in various construction trades. Otherwise they may have lost even more money than they did through hiring out help. Knowing how to fix electrical wiring, repair drains, and replace windows will save you quite a bit of money down the road.

Rule #4
Screen your tenants as if they were moving in to live with you. This may be the most important step to avoid becoming a slumlord. Ask for and check references. Call previous landlords and ask questions like, "Did they pay rent on time? How was the condition of the house/apartment when they left? Did they ever disturb neighbors with loud music or yelling matches? How often would you have to make special trips for untimely repairs?" Being as informed as possible about who you rent to will make a huge difference in the profitability of your investment property.

Rule #5
Know your rights as a landlord. Be familiar with the eviction process in order to avoid long, drawn out disputes with tenants. Most states and counties provide online information about tenant and landlord rights.

Don't repeat the mistakes made by Ben and his sons. Granted, getting into the investment property business takes hard work and you'll have to put up with things you normally wouldn't put up with. At the same time there are steps you can take to limit your liability while preventing yourself from becoming a 'slumlord'.

In the next portion of this two-part article we will be discussing some of the financial aspects you should be familiar with in order to find the best deal possible on your first investment property.

Cameron Brown is an internet marketer specializing in ranking automation. For information on investment property, visit Security National Capital.

---

New Homes in Ridgefield

Location:Frequent travelers will absolutely delight in this town! As part... Read More

10 Frequently Asked Short Sale Questions

1. What happens to the seller's credit rating when they... Read More

Property Investing Secrets 6

Property Investing Secrets:What No One Ever Tells You-How Real Estate... Read More

3 Top Real Estate Investing Methods for Maximum Wealth

Real Estate investing can be used to gain wealth in... Read More

Mancos Real Estate

Real estate: availability and costIn 2000, the median home value... Read More

Real Estate Investing with Bad Credit!

By being creative, you can play the game of real... Read More

Real Estate, Real Property and Leased Land; Definitions, Discussion and Explanations

Delaware, and the rest of the original British Colonies, has... Read More

3 of the 5 Ways Real Estate Can Take Advantage of Blogs and RSS

Earlier this month, Realtor Magazine announced that they would be... Read More

Many Ways To Make Money In Real Estate!

Real Estate is a multi-faceted investment arena - there are... Read More

5 Simple Steps to Sell Your House Fast!

The decision to sell your house wasn't made on the... Read More

Why Selling on Lease Options is Glorified Landlording

I might upset some folks with this one, but that's... Read More

Home Not Selling In Todays Hot Market? Tips and Ideas to Help You Sell

So, your selling your home. Prepare yourself both physically and... Read More

Cheap, Bargain, Real Estate; Good Deals, Below Market, Low Priced Properties Are Available...

Cheap, Bargain, Real Estate; Good Deals, Below Market, Low Priced... Read More

How to Decrease the Value of Your Own House

Owning a house is part of the American Dream. Depending... Read More

Condo Hotels Offer Luxury and Great Investment Potential

Not Your Typical Vacation HomeWhat could be more perfect that... Read More

Theres More To Making Money Than A Tertiary Education

An education of some sort is a prerequisite these days... Read More

Market Reaching its Peak

I do not profess to "Know" what the real estate... Read More

Why Do Realtors Advertise Your Home in Print,on the Radio, on Television, etc.?

Why Do Realtors Advertise Your Home in Print,on the Radio,... Read More

Setting Goals for Real Estate Success

The power of goal setting has been well documented and... Read More

10 Home Purchase Abroad Tips For Success

Are you seeking your little corner of sun drenched heaven... Read More

Investing in Real Estate Vehicle for Wealth Building

Real estate is one of the best vehicles of building... Read More

Log Homes - What is the Log-Home Lifestyle?

Typical log home company advertisements in popular log home magazines... Read More

Guide To Finding The Perfect Central Illinois House

Central Illinois is an area rich in cultural activities and... Read More

Selling Your House Fast!

The physical senses of buyers respond to a home's design,... Read More

What To Expect In Closing Costs On A Home Purchase

Many are taking advantage of this year's low mortgage rates... Read More

How to Find and Buy a Bargain House with Little or No-Money Down

Real estate investors know how to make money buying distressed... Read More

An Investors 1st and Most Important Lesson

Are you ready for the lesson that will put you... Read More

FSBO - Selling Your Home FSBO (for sale by owner) ? Is It Worth It?

FSBO, what is it? FSBO means For Sale by Owner,... Read More

What You Can Do To Sell Your Home Fast

Yes, you want to sell your home and you want... Read More

7 Different Ways Anyone Can Become a Real Estate Investor

Being a real estate investor is not really that hard,... Read More

Budgeting Your Log Home - Creating a Checklist

If you've read my first article, BUDGETING YOUR LOG HOME:... Read More

Buying a Home -- Is a Home Inspection a Good Idea?

To avoid "buying a pig in a poke," buyers have... Read More

Real Estate Investing ? ?The Neighborhood Factor?

Real estate investing can be a dream career when the... Read More