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Looking for some opinions here....

A little background - I live in a very rural area about 10 miles outside our little town. I'm wanting to buy a piece of property near my home - some acreage, a small pond and a doublewide trailer. I want it for a variety of reasons, but sufficed to say I'd prefer it if the trailer wasn't there.

Here's the rub though...at the current asking price the only way I can possibly pull it off would be if I rented out the trailer, and applied the rental to the payment.

Having never rented property I'm a little leery...here's where I'm at on the pros/cons list:

PRO - I get the property I want
PRO - the rental is very close to my own home so monitoring and/or maintenance won't be too burdensome
PRO - I can somewhat control who lives there
CON - the PITA I predict from having renters
CON - increasing maintenance costs due to the general breakdown of the trailer

Ideally what I'd like to do is buy the property and get rid of the trailer...but the current owner is asking too much to be able to do that. The property has been for sale for 6 months or so with very little traffic - they've dropped the price a very small amount recently. What I'm worried about is someone coming in and snatching it up. On the other hand, I really don't want to overextend myself.

What do y'all think?

Several things to look at doing. 1 make an offer that is lower than asking price borderline ridiculous, had a friend that used to buy things that way. 2 buy it and sell the trailer . Renting is fine for some but not for me unless I knew the people.

Food for thought...if you would need the rental money to make the loan payment, keep in mind that the tenant could decide to move and leave the trailer empty with no income coming in until you can find another tenant. Are a lot of folks looking to rent trailers in your area?

Unfortunately I offered better than market price for the place before they listed it. They said no. Current asking price is almost 35% above my offer. Most everyone locally says the same thing I do - they're asking way too much. But as the man says, there's a sucker born every minute. If they wait long enough someone will probably come along with more money than sense.

That's my ideal situation, sell the trailer. But like I said I would have to have the rental $ to make the payment.

Totally right on the money there...it's riskier than I prefer to have to rely on that $ to make the payment. But it's the only game in town at the current asking price.

I'd say that a house in the country in our area is a good commodity as a rental...there are very few that come up for rent, and as soon as they do they rent out. So I don't think that getting renters would be an issue.

GOOD renters is a totally different story though....

Dale you are stuck between a rock and a hard place,but if you can't afford it sit on your hands and wait- I feel your pain, if it's meant to be it will be

Dale, there are companies that specialize in reselling mobile homes. Look a couple up and see what kind of offer they will make...maybe it would lower your land payment considerably, and you get it removed...

I have 2 rental houses. NOBODY takes care of your house like they would their own.

If they have a financial emergency, their problems become your problem.

Dman, I was a landlord for 23 yrs and have horror stories you might not be able to believe.
A guy gets pissed and shoots his wife. He goes to jail, she moves back in with momma and Bob-O gets to clean up the crime scene.
Be patient, like Pat said, if it's meant to be it will.
Trailers lose there value faster than an aging hooker. Look on Craigs list to see how cheap ya can get one. Occasionally there are free ones just to get em moved or for scrap.
Depending on rent to make a payment is about as smart as borrowing money to buy stock.

D-man,

Whoever said the two best days of your life are when you buy a boat and the day you sell that boat was NEVER a landlord. I hope to never do that again. Some questions and fleeting thoughts that come to mind;

-How did you, or they, determine fair market value? Even if they ordered an appraisal already, I would do a sanity check on it. Sales data is available from you county tax assessors office and is probably available online for free. Pull a sales report and look for comparable (comps) sales transactions within the past year.
-If they have had it on the market and have lowered the price, it suggests a little anxiety on their part. Have you considered an offer without the trailer? Let them sell and move it!
-You said you need the rental to make the mortgage, are you positioned financially to endure several months of vacancy? Possibly spend thousands on maintenance if a big ticket items goes ka-plooey?
-Are they using a realtor? When does their contract expire? When their contract expires they will be saving 5-10%, depending on the contract commissions. This should factor into your offer.
-If you’re going to be a landlord, you may as well go big time. Is it an option to rent a few more trailer spaces and let others park their trailers next door to yours? Your financial liability would be minimal but would enhance your revenue stream.
-When you make your next offer, do it with a signed contract and earnest money in hand. You know that old saying, “money talks and…..”, I forget the rest.

2 Old

I would make the best offer I could afford without relying on trailer rental income. If their realtor considers it fair, he/she will encourage them to accept. At the same time, talk to your loan source. Ask them what happens if you pay more than the property appraises for. My guess is that they will expect you to come up with the difference. Can you afford that?
Good luck.

FWIW whenever I put in an offer to buy real estate I always include a clause in the offer that the property must appraise for my offer or more. If not, I get my ernest money back or, at my option, I can continue with the deal even though I know I am purchasing at above appraised value.

A friend of mine (whose never been a landlord) keeps advising me to buy rental properties.."great investment" blah blah.

I tell him I am looking more to retire in a few years instead of taking on new headaches.

I hear these days you practically have to sue to get a non-paying tenant out and almost anything that goes wrong as far as injury makes the landlord liable. Not sure it's true, but I heard a guy attacked his wife and the wife sued the landlord for damages.

I am sure lots of money has been made with rental property, but for me between non-payers, late payers, dog hoarders, smokers, partiers, old cars/boats, and litigation....I'll pass for now.

I forgot to mention, there's an old Michael Keaton movie named "Pacific Heights" that is all about being a slum-lord. You should rent it, or better yet, see if it's in the $5 bin at Walmart so you can watch it over and over!

How nice of shape is the trailer in? If it's in good shape I would think about buying it and renting (contrary to most opinions).

I built a house when I got my first teaching job. A small 2 bedroom 2 bath with 2 car garage. About 1100 square feet. Great little house. I moved a few years later to a bigger house but started renting instead of selling it, even though the 40k would have been nice to roll into my new house. I have been renting it for 6 years and have been lucky, I have no horror stories. But since it's a really nice little house (right on the Ohio River) I can be very selective with my tenants. First time I rented to a fellow teacher, his wife, and their newborn. Great tenants. Paid rent on time every month, usually in cash. Took really good care of the place and stayed for about 3 years until they could afford to buy. Only things I did when they moved out were patch a few small holes in walls from hanging things and put new carpet in (it was worn from old age, not abuse).

My current tenants have been there 3 years now. An elderly couple that is spry and really like to travel. They are here about 2.5 weeks a month on average. They taken immaculate care of it, better than I ever did as a single guy in my mid 20's! It's spotless. They do have a miniature schnauzer but they take care of him and he doesn't do damage.

So I have a house with a 400 dollar mortgage. I could get 800-850 out of it with a family with several kids or a couple 20 something kids. But the headaches and abuse are not worth it. I rent to the elderly couple for 675 a month. They love having a two car garage connected and nice yard. I do mow it for them but it's about 25 minutes on my rider. Worth it to me to rent cheaper and have the right tenants. That just about covers my mortgage, taxes, insurance. If something goes out that comes out of my pocket. But I have added 30k in equity from the house the past 6 years for minimal problems and expense. Worth it to me and glad I didn't sell at the time. It'll be paid off in about 6 more years then it becomes a true money maker.

D-lo,
It is a unique situation when you can find someone (renter) to take care of your property. The only way my father found was to live right in the middle of the properties and rent extremely cheap, that way the renters want to stay there forever. I thought I wanted to be a landlord while working my oil patch job. People stole from me, wouldn't pay their rent when it was due. One had a cat, which I adamantly forbid...she left me in the middle of the night with 60-80 mounds of cat feces on the bedroom floor. Did you know the acid in cat feces will eat the finish off of hardwood flooring...sorry, I digress. I have a friend that builds homes in the Houston area. The economy got slow, so he started renting some of his new homes. A particular person refused to pay rent, no one with a legal background would listen to him. Evicting her, was a long tedious process. So, the only way he could get her to leave was to remove the A/C unit from the home in the month of August. She left 3 days later. Dlowrance, listen to Bob-O, Zep, and 2old2soon. You may get the most perfect renters in the world. I've been through too much to believe any different. I also agree with Pat W., when you are not sure what to do, don't do anything. If you are supposed to have the property...you will.
Charlie

Remember this also...You may be able to pick and choose who you rent to but you have no say so in who they have come to visit or stay with them a length of time. If you are going to finance,the first thing a bank is going to order is a appraisal and probably at your expence since it will be considered a lenders fee. Do keep in mind that EVERYTHING IS NEGOTIABLE.In the purchase agreement anyway.

As a former landlord I would only go that route if you had to. We bought our house and got a rent house in the front yard as part of the deal. We had Renters and when they moved out we had I think 4 more after them in 8 years. After each one left we had to do about as much work as we made in rental income. In the end the best thing I ever did was tear the house down. Even with it in the front yard it is not worth it. In our case we did not require the income to move forward with the deal. If you move forward with the deal only count on 7-8 mo of rent and upkeep. Remember you will have to pay taxes, have rental insurance, and other expenses. Good luck!!

As said, I have 2 rentals with a combined value of 250 to 300 thousand. There have been problems over the years. I've had to evict people and had to do clean up and maintenance after they have left. On the most recent one, I lost about $5,000 on rent and several thousand on refurbishing. But, they are now both paid for and have helped me be debt free. The gross rent on the 2 is $2,100 per month. There are also insurance, taxes and maintenance that come out of it. One year I actually lost $.

When a renter leaves I lose at least one months rent before I can get a new tenant. When I get rid of someone for non payment due to financial hardship, they somehow come up with enough $ to pay both deposit and the first months rent at another location. Amazing how that happens. I guess I'm just a soft touch for people with small children.

Now, I calculate the annual water bill and add it to the monthly rent. That way, the lawn gets watered. If they don't pay the rent I will have the water turned off and I tell them that when they move in. I just started this practice.

Do a full credit and background check. Trust your instincts and buy cheap carpet. NO PETS!

Don't rent to family members. If family members are in the area, you might feel pressured to help them in times of need. Do I need to say anything else ??

Tracy

I agree with the "if it's meant to be...." statements.

One property I wanted very badly. It was listed too high. I felt sure it would be sold and regret not making an offer higher than I should have. But, the seller knew my price and it became their bottom line, I suppose. After sitting a few years too high, we finally purchased it.

You've made an offer, keep the lines open. If it is priced that high, it'll probably sit a while.

It may sound corny, but visualize owning that property. It'll lead you into conversations and actions you may not normally take. Those thoughts can lead you to own that property. It's worked for me multiple times. I've lost some purchases along the way too, but they weren't meant to be, and in retrospect I'm sitting better now than I could have imagined.

Best of luck to you!!

Agreed North40....buyers basically have all the power. I have always told real estate agents..."seriously I am in no hurry what-so-ever" which gets passed along to the seller...that is not what a seller wants to hear...sellers/realtors want buyers that are smitten and just have to have the property.



So true North40...20 years ago I was visualizing the property. During slow times at work I would sketch-out the lay-out, the pond and the cabins placed around the pond. I would visualize even small details. Sometimes co-workers would laugh and say "good luck on that ever happening"...blah blah. It is pretty amazing how close the property today (bought in '12) resembles those sketches 20 years ago.

Ask for a house inspection as well as appraisal of the property. Make sure the house inspector has insurance for things they may miss that can cost you a bundle later.

These are the most important things to think of when buying any property.

My mother in law just bought a home with a house inspection. After moving in and the things that were in the contract with the sale of the house that needed to be done before possession became a huge problem. Basically its a new house after being completely gutted. All on the dime of the inspectors insurance for a poor inspection.

Mom got the house she wanted in better then ever shape than she could ask for on the lakes edge where she can watch the sun rise every day.

On the rental thing.... renting is great when it gos smooth. Pricing is important too high they don't pay too low you get the riff raff. I have rented land to different tenants since 1992 and it can be stressful but with the right tenant it really can be nice.

Cheers Don.

Being a landlord is usually only good if you don't have a way to make far more money doing something else.

Sure you can get rich in real estate, but you'll also be working more than 40 hours a week, and if you can make more money doing something else in that 40 hours, well.......

Pretty much what I was thinking guys...appreciate the input. Of all the things I've wanted to be in life, a landlord ain't one.

I'm just going to have to hope that it all works out.