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My family has been in commercial property rental for a long time, but never residential. Residential is seen as an easier path to being a landlord because the

My family has been in commercial property rental for a long time, but never residential. Residential is seen as an easier path to being a landlord because the capital requirements are lower, but I caution everyone considering buying a rental property to ask a very simple question: "Are you willing to kick someone out of their home?" Would you be prepared to evict a human being not that different from yourself, who may have lost their job, have kids, medical problems, etc? In addition most jurisdictions stack the laws against residential landlords (I'm in Canada) for both legitimate and populist reasons. It's not quite as blatant with commercial. Buying delinquent mortgages that are so underwater that lenders will sell them to collection requires a whole new level of commitment. You will need to become one of those people who call at dinner every single day, call employers, stalk online, harrass, even threaten - you're literally trying to squeeze money out of the people who have the least to spare. I'm not going to judge the collectors, debtors or the business model, but it's definitely not for me.

technofiend 8y ago
It's anecdotal of course but before my wife and I married we negotiated two rules: no going into politics and no being a landlord. The latter was the result of her parents holding commercial properties and having one tenant who upon eviction for non-payment broke into second floor they weren't rented and stealing everything. Sure enough every few years that particular motorcycle dealership has a going out of business sale and move locations, so it seems like a pattern. But the point is even in commercial real estate you may be completely in the right and still get ripped off by professional scam artists or left spending tens of thousands pursuing justice in the courts as my in laws had to do.
refurb 8y ago
The successful landlords I know told me their number 1 rule was “hold tenants to the contract”. 1 day late on rent with no heads up from the tenant? Start the eviction process. If you give an inch, they’ll take a mile and pretty quickly you’re running a charity.
- rhexs 8y ago
  I've heard that advice as well, and I'm guessing it's either from slum-lords or landlords that haven't encountered tenants willing to hire lawyers. Probably a viable strategy for very-low income tenants and college students. Shady as hell though.
  - ars 8y ago
    It's shady to hold people to a contact? Or do you mean it's shady for the tenant to hire a lawyer?
  - Cyphase 8y ago
    Why do you assume such an action is indicative of a slumlord? Why is it shady? How long should a landlord wait before starting the eviction process (and it is a process, to varying degrees in various places).
    - perennate 8y ago
      What if the mail got lost or delayed? Why would any sane landlord immediately spend the effort to begin eviction process before contacting their tenant, when there are countless reasons that they didn't receive a check for the current month? MA enforces what I think is a reasonable policy: the landlord must send a written notice to quit to end the tenancy, and may not file an eviction case until a 14-day notice period ends. The tenant cannot be evicted if they pay the owed rent with interest by the end of the notice period.
      - Jach 8y ago
        Usually jurisdictions have some grace period of a few days to account for mail delays around the first, but you can just start the process a couple days after the first. When I first moved to my own apartment, it had a no-nonsense manager. My roommate and I would usually deposit two checks together, but once he couldn't pay his rent on time so it was just my check for half. A couple days later I came home to a "notice of eviction, vacate before date x" on the front door, which is what is meant by "begin the eviction process". That is them contacting the tenant, now it's my turn to contact them and maybe the excuse is "I mailed it already days ago, maybe it got lost, let me mail another and let's set up an autopay system so this doesn't happen again." In my case it was just me hoping my friend would deposit his check soon. I took the notice and another check down to the property manager and explained, and learned a lesson myself on what joint liability really means. I had no ill will for the property manager enforcing the contract.
ForHackernews 8y ago
Or you could buy an underwater mortgage and forgive it, right? http://rollingjubilee.org/ http://rollingjubilee.org/
- intopieces 8y ago
  I like the idea of Rolling Jubilee, but I don’t like how misleading their website is in terms of statistics. “77% of households are in debt” and “40% of indebted households use credit cards to pay for basic expenses” are both not particularly indicative of financial health. A household that has both a mortgage and buys groceries with a card they pay off at the end of every month would be included in that statistic.
  - SmellyGeekBoy 8y ago
    Indeed. I pay for absolutely everything on my credit card - from my fuel to my lunch, then I pay it off in full every month. The perks are well worth it (I have an AMEX card). It's a habit I picked up from my parents and well worth getting into if you have the discipline to stay within your means. We also have a mortgage, so I'd fall into that 77% / 40% even though my financial situation is perfectly healthy.
jldugger 8y ago
The one exception to this rule is a pretty astounding scam: buying your own delinquent debt. I can't find the citations for a story I read about a guy who did this at the million dollar condo level, but the idea is pretty simple. Bad debt trades at a fraction of the nominal price, so it might be easier to buy the rights to collect on your own debt than pay off the current debt owner. The hard part, of course, is getting someone to sell it to you without their knowledge.
- deleted 8y ago
  [deleted]
- delecti 8y ago
  How could someone with delinquent debt (presumably someone unable to pay their obligations) be able to afford buying their own delinquent debt?
  - maxxxxx 8y ago
    You could probably use somebody else buying the loan.
  - ghshephard 8y ago
    Depending on how delinquent it is, Debt can sell for pennies on the dollar. The irony, of course, is the more delinquent you are, the less your debt is worth. Therefore, those who show the least attention to repaying their debt, are the ones who get the best deal on settling. You just have to deal with Debt Collector harassing you for 2-3 years, and take a pretty big hit to your credit, and you can often settle debt for nothing more than the original principal loaned. Of course, good luck trying to borrow money for the next 7-8 years...
    - dmurray 8y ago
      "Nothing more than the original principal loaned" is a much less attractive deal than "pennies on the dollar"!
FireBeyond 8y ago
> You will need to become one of those people who call at dinner every single day, call employers, stalk online, harrass, even threaten Most, near all of those things are explicitly illegal. > I'm not going to judge the collectors, debtors or the business model, but it's definitely not for me. In that case, I would definitely judge them.
gammateam 8y ago
Thats what the management company is for.
- ceejayoz 8y ago
  In that case, that's where most of the profits go, too.
  - gammateam 8y ago
    No it isnt, you talk yourself out of everything that way?
  - IAmGraydon 8y ago
    Management companies are usually only 10%, but the real reason they’re necessary is because you simply cannot scale without them. Guys who think like you end up with a small portfolio that has them working 80 hour weeks. It’s better to make a smaller margin on massive volume than to keep all of the revenue. Also, the name of the game here is equity, not NOI.
rinchik 8y ago
It's understandable that residential property ownership is not for the weak or the squeamish, but portraying landlords as some heartless monsters is not professional (and simply not right). It is a hard business to be in, no argument. And as long as you are certain that you are running a business and not a charity (different values, income sources, taxes, meetings, relationships etc etc), these "difficult" decisions come quite easily, to be honest. There are people depending on you, yourself (largely undervalued statement), your family, your employees, your employees' families, your contractors, your suppliers. There are a lot of nuances in this business. It IS hard. There is no such a thing as "easy business". There will be tough moments and difficult decisions, and if you are not ready for that, quite shortly you'll be reporting an apology to your CUSTOMERS live on youtube, holding back tears, just like we saw earlier in one of the posts with the article from Bloomberg.
- thaumasiotes 8y ago
  > portraying landlords as some heartless monsters is not professional (and simply not right) You wouldn't have done well in Maoist China. "Landlords" are to Chinese communism as "capitalism" is to the most extreme American leftists, the source of everything evil in the world. In https://en.wikipedia.org/wiki/To_Live_(1994_film) https://en.wikipedia.org/wiki/To_Live_(1994_film), there's a scene in which a family is publicly executed for the crime of having owned property pre-revolution.
  - dahdum 8y ago
    Saw that movie decades ago and I still think about it from time to time, especially the steamed buns part.
    - thaumasiotes 8y ago
      For others who might be interested: the movie is very good, but "tragedy" doesn't even begin to describe it. In the steamed buns scene, the protagonist's daughter is giving birth. There are complications, and she requires a doctor, but there are no doctors available because they're all rotting in prison for being educated. The daughter's husband, a Red Guard, is able to have a doctor pulled out of jail to help with the birth. He arrives, but, since humane treatment of class enemies is not a priority, he hasn't eaten in days. The protagonist, appalled, goes out to buy buns for the doctor. He returns with a big bag of buns, and the doctor immediately devours them all, then goes more or less insensate. The daughter dies. Every part of the movie is like this.
14 8y ago
I really appreciate the insight your comment provided me. It does take a certain person to do those things you mentioned. I don't think I have the heart for it, or rather too big of a heart for it. I would not want to evict a person with children or someone who lost their job because of something out of their control. Also, the only experience I have with a rental is my sons mom renting a house out. Constant problems. Finally they gave notice, before the lease was up, which at that point she was just happy to be rid of them and forget the end of the lease. But when she came on the last day they were supposed to be there, they were gone and they had broke the water line to the dishwasher and left it run as a F-you. The insurance company found a flaw in the policy, some fine print that stated she had to be in the house within a certain time period and denied her claim. She was out about 25000$ fixing the water and other damage. Renting is not easy money and definitely not for me.
y_tho 8y ago
"Are you willing to kick someone out of their home?" Yes. A tennent's inability to fulfill a contract, even through no fault of their own, will cause me the inability to fulfill contracts* of my own, through fall of my own. *My bills, my rent, my mortgage, etc.
- ryanwaggoner 8y ago
  I feel the same as a landlord, but it still sucks. I can understand someone not wanting to do it. I don’t have much sympathy for people who portray landlords as greedy assholes for not letting tenants camp out indefinitely for free. If you’ve been a landlord for awhile, you see the situation more clearly.
deleted 8y ago
[deleted]
shard972 8y ago
Why not just enter the property and change the locks? If you have the deed then the cops should assist you if they try to break in? Maybe some countries are super lax but i would have thought most western countries don't just allow people with no valid agreement to stay somewhere.
- SmellyGeekBoy 8y ago
  Here in the UK tenants have a lot of protection. It's very difficult to evict someone, and it's illegal for the landlord to enter the property without prior agreement from the tenant whether they're behind on their rent or not.
- ryanwaggoner 8y ago
  In probably every state in the US, it’s illegal to change the locks without legally evicting a tenant. Which usually requires months of court battles, which if they don’t leave voluntarily, culminates in law enforcement forcibly removing them while you pile their stuff on the street. As a landlord, I’ve come within days of that outcome a few times. It’s both sad and infuriating. Sad because I don’t want to put someone on the street regardless of circumstances. Infuriating because we only got to that point after months of lies, broken promises, legal costs, and essentially open theft. At some point you don’t have much choice but it still sucks.

technofiend 8y ago

It's anecdotal of course but before my wife and I married we negotiated two rules: no going into politics and no being a landlord. The latter was the result of her parents holding commercial properties and having one tenant who upon eviction for non-payment broke into second floor they weren't rented and stealing everything. Sure enough every few years that particular motorcycle dealership has a going out of business sale and move locations, so it seems like a pattern. But the point is even in commercial real estate you may be completely in the right and still get ripped off by professional scam artists or left spending tens of thousands pursuing justice in the courts as my in laws had to do.

refurb 8y ago

The successful landlords I know told me their number 1 rule was “hold tenants to the contract”. 1 day late on rent with no heads up from the tenant? Start the eviction process. If you give an inch, they’ll take a mile and pretty quickly you’re running a charity.

rhexs 8y ago
I've heard that advice as well, and I'm guessing it's either from slum-lords or landlords that haven't encountered tenants willing to hire lawyers. Probably a viable strategy for very-low income tenants and college students. Shady as hell though.
- ars 8y ago
  It's shady to hold people to a contact? Or do you mean it's shady for the tenant to hire a lawyer?
- Cyphase 8y ago
  Why do you assume such an action is indicative of a slumlord? Why is it shady? How long should a landlord wait before starting the eviction process (and it is a process, to varying degrees in various places).
  - perennate 8y ago
    What if the mail got lost or delayed? Why would any sane landlord immediately spend the effort to begin eviction process before contacting their tenant, when there are countless reasons that they didn't receive a check for the current month? MA enforces what I think is a reasonable policy: the landlord must send a written notice to quit to end the tenancy, and may not file an eviction case until a 14-day notice period ends. The tenant cannot be evicted if they pay the owed rent with interest by the end of the notice period.
    - Jach 8y ago
      Usually jurisdictions have some grace period of a few days to account for mail delays around the first, but you can just start the process a couple days after the first. When I first moved to my own apartment, it had a no-nonsense manager. My roommate and I would usually deposit two checks together, but once he couldn't pay his rent on time so it was just my check for half. A couple days later I came home to a "notice of eviction, vacate before date x" on the front door, which is what is meant by "begin the eviction process". That is them contacting the tenant, now it's my turn to contact them and maybe the excuse is "I mailed it already days ago, maybe it got lost, let me mail another and let's set up an autopay system so this doesn't happen again." In my case it was just me hoping my friend would deposit his check soon. I took the notice and another check down to the property manager and explained, and learned a lesson myself on what joint liability really means. I had no ill will for the property manager enforcing the contract.

ForHackernews 8y ago

Or you could buy an underwater mortgage and forgive it, right? http://rollingjubilee.org/ http://rollingjubilee.org/

intopieces 8y ago
I like the idea of Rolling Jubilee, but I don’t like how misleading their website is in terms of statistics. “77% of households are in debt” and “40% of indebted households use credit cards to pay for basic expenses” are both not particularly indicative of financial health. A household that has both a mortgage and buys groceries with a card they pay off at the end of every month would be included in that statistic.
- SmellyGeekBoy 8y ago
  Indeed. I pay for absolutely everything on my credit card - from my fuel to my lunch, then I pay it off in full every month. The perks are well worth it (I have an AMEX card). It's a habit I picked up from my parents and well worth getting into if you have the discipline to stay within your means. We also have a mortgage, so I'd fall into that 77% / 40% even though my financial situation is perfectly healthy.

jldugger 8y ago

The one exception to this rule is a pretty astounding scam: buying your own delinquent debt. I can't find the citations for a story I read about a guy who did this at the million dollar condo level, but the idea is pretty simple. Bad debt trades at a fraction of the nominal price, so it might be easier to buy the rights to collect on your own debt than pay off the current debt owner. The hard part, of course, is getting someone to sell it to you without their knowledge.

deleted 8y ago
[deleted]
delecti 8y ago
How could someone with delinquent debt (presumably someone unable to pay their obligations) be able to afford buying their own delinquent debt?
- maxxxxx 8y ago
  You could probably use somebody else buying the loan.
- ghshephard 8y ago
  Depending on how delinquent it is, Debt can sell for pennies on the dollar. The irony, of course, is the more delinquent you are, the less your debt is worth. Therefore, those who show the least attention to repaying their debt, are the ones who get the best deal on settling. You just have to deal with Debt Collector harassing you for 2-3 years, and take a pretty big hit to your credit, and you can often settle debt for nothing more than the original principal loaned. Of course, good luck trying to borrow money for the next 7-8 years...
  - dmurray 8y ago
    "Nothing more than the original principal loaned" is a much less attractive deal than "pennies on the dollar"!

FireBeyond 8y ago

> You will need to become one of those people who call at dinner every single day, call employers, stalk online, harrass, even threaten Most, near all of those things are explicitly illegal. > I'm not going to judge the collectors, debtors or the business model, but it's definitely not for me. In that case, I would definitely judge them.

gammateam 8y ago

Thats what the management company is for.

ceejayoz 8y ago
In that case, that's where most of the profits go, too.
- gammateam 8y ago
  No it isnt, you talk yourself out of everything that way?
- IAmGraydon 8y ago
  Management companies are usually only 10%, but the real reason they’re necessary is because you simply cannot scale without them. Guys who think like you end up with a small portfolio that has them working 80 hour weeks. It’s better to make a smaller margin on massive volume than to keep all of the revenue. Also, the name of the game here is equity, not NOI.

rinchik 8y ago

It's understandable that residential property ownership is not for the weak or the squeamish, but portraying landlords as some heartless monsters is not professional (and simply not right). It is a hard business to be in, no argument. And as long as you are certain that you are running a business and not a charity (different values, income sources, taxes, meetings, relationships etc etc), these "difficult" decisions come quite easily, to be honest. There are people depending on you, yourself (largely undervalued statement), your family, your employees, your employees' families, your contractors, your suppliers. There are a lot of nuances in this business. It IS hard. There is no such a thing as "easy business". There will be tough moments and difficult decisions, and if you are not ready for that, quite shortly you'll be reporting an apology to your CUSTOMERS live on youtube, holding back tears, just like we saw earlier in one of the posts with the article from Bloomberg.

thaumasiotes 8y ago
> portraying landlords as some heartless monsters is not professional (and simply not right) You wouldn't have done well in Maoist China. "Landlords" are to Chinese communism as "capitalism" is to the most extreme American leftists, the source of everything evil in the world. In https://en.wikipedia.org/wiki/To_Live_(1994_film) https://en.wikipedia.org/wiki/To_Live_(1994_film), there's a scene in which a family is publicly executed for the crime of having owned property pre-revolution.
- dahdum 8y ago
  Saw that movie decades ago and I still think about it from time to time, especially the steamed buns part.
  - thaumasiotes 8y ago
    For others who might be interested: the movie is very good, but "tragedy" doesn't even begin to describe it. In the steamed buns scene, the protagonist's daughter is giving birth. There are complications, and she requires a doctor, but there are no doctors available because they're all rotting in prison for being educated. The daughter's husband, a Red Guard, is able to have a doctor pulled out of jail to help with the birth. He arrives, but, since humane treatment of class enemies is not a priority, he hasn't eaten in days. The protagonist, appalled, goes out to buy buns for the doctor. He returns with a big bag of buns, and the doctor immediately devours them all, then goes more or less insensate. The daughter dies. Every part of the movie is like this.

14 8y ago

I really appreciate the insight your comment provided me. It does take a certain person to do those things you mentioned. I don't think I have the heart for it, or rather too big of a heart for it. I would not want to evict a person with children or someone who lost their job because of something out of their control. Also, the only experience I have with a rental is my sons mom renting a house out. Constant problems. Finally they gave notice, before the lease was up, which at that point she was just happy to be rid of them and forget the end of the lease. But when she came on the last day they were supposed to be there, they were gone and they had broke the water line to the dishwasher and left it run as a F-you. The insurance company found a flaw in the policy, some fine print that stated she had to be in the house within a certain time period and denied her claim. She was out about 25000$ fixing the water and other damage. Renting is not easy money and definitely not for me.

y_tho 8y ago

"Are you willing to kick someone out of their home?" Yes. A tennent's inability to fulfill a contract, even through no fault of their own, will cause me the inability to fulfill contracts* of my own, through fall of my own. *My bills, my rent, my mortgage, etc.

ryanwaggoner 8y ago
I feel the same as a landlord, but it still sucks. I can understand someone not wanting to do it. I don’t have much sympathy for people who portray landlords as greedy assholes for not letting tenants camp out indefinitely for free. If you’ve been a landlord for awhile, you see the situation more clearly.

deleted 8y ago

[deleted]

shard972 8y ago

Why not just enter the property and change the locks? If you have the deed then the cops should assist you if they try to break in? Maybe some countries are super lax but i would have thought most western countries don't just allow people with no valid agreement to stay somewhere.

SmellyGeekBoy 8y ago
Here in the UK tenants have a lot of protection. It's very difficult to evict someone, and it's illegal for the landlord to enter the property without prior agreement from the tenant whether they're behind on their rent or not.
ryanwaggoner 8y ago
In probably every state in the US, it’s illegal to change the locks without legally evicting a tenant. Which usually requires months of court battles, which if they don’t leave voluntarily, culminates in law enforcement forcibly removing them while you pile their stuff on the street. As a landlord, I’ve come within days of that outcome a few times. It’s both sad and infuriating. Sad because I don’t want to put someone on the street regardless of circumstances. Infuriating because we only got to that point after months of lies, broken promises, legal costs, and essentially open theft. At some point you don’t have much choice but it still sucks.