How to Make Money with Rental Properties
I think I have mentioned this before, but just in case I will mention it again. I own a piece of real estate in Vero Beach, Florida. I love the house because it was actually my parents house. Every time I walk through the door I feel like they should be waiting for me in the kitchen or the living room. Unfortunately that is not the case because my parents have already passed on.
However they left me a great home and I have often considered what to do with it. For quite a while I was pretty torn between renting it out short-term or long-term.
I kind of wanted to hold onto it for sentimental reasons and for the possibility that one day I may retire down to that area. Sorry to turn in my man card like that, but yes I am very sentimental.
-But, as you probably know
Any time you want to have your cake and eat it too, you better pay close attention!
Thank god I met B-rad (James). He helped me figure out a better way to have my cake and eat it too.
So, let me tell you this story and how I didn’t see what was coming.
How to make money renting houses
-or may how no to. Wink!
The funny part about renting my house out was that I was very conflicted about long-term versus short-term.
Should I rent it out long term or since it is in a vacation/snowbird area rent it out seasonally?
The advantage of the short-term was that I could leave the house furnished. Note, the house was three quarters of the way furnished at the time when I was making the decision. The other option was I could clear the rest of the stuff out, hence the furniture. Then, I could turn it into a long-term rental.
The downside for long-term was the fact that I would have to sell everything or donate a bunch of stuff and move everything out of the house, which equaled more hassle.
The Decision Tipping Point
But in a moment that all changed. My wife and I were walking through TJ Maxx and we saw a sofa that they had marked down 75%.
Apparently it was the display. I went ahead and bought the sofa brought it home put it in the house and then immediately we were able to see the rest of the vision for turning the house into a short-term rental.
Fast forward to yesterday. The family arrives in town. We all get out of the van. I have five kids in tow because I let my boys bring some friends. It’s Labor Day weekend I thought. Let’s just have some fun!
The neighbor two doors down has already put a few beers down the hatch. He says hello and invites me to bring the boys over to watch the football game.
As we are watching the SEC football game UF versus Auburn my neighbor throws out the words
HEY so what are you going to do with The house?
When he asked me I was immediately a little on guard (felt like the other shoe dropped)
-I told him I’m going to rent it out short-term.
He said you want my opinion on that?
I realize in this moment that I really didn’t care about his opinion on it but he was pretty much going to give it to me anyway.
-Sure I said. What are your thoughts.
Short-term is not the way to go. Vero Beach city has changed a city ordinance so that no one can rent out their property for less than 30 days.
Now, you are in the county but they are looking at doing the same thing out here. I would just hate to see you have short term renters in there and then have a party with a bunch of cars parked out in the street and sadly somebody calls the county on you.
That made me think… Are you going to be that person? Or are you really giving me a heads up about what’s going to happen with the city versus County.
A brief backstory: Apparently the city had quite a few problems over on the beachside with people renting out their homes for special events like a wedding or dance…or some shit like that. A bunch of people would show up party really hard, destroy the area, steal stuff from the neighbors and leave everything behind like the scene out of hangover.
My point of view is what I told my neighbor. I don’t want anybody destroying my property in the process either. It has a high level of sentimental value. I don’t want to have a problem in this neighborhood, but at the same time this house just costs me money every month. Why not get somebody in there short-term to pay for some of the bills. I’m not looking to get rich.
But even if I were, I don’t say anything about you parking your badass truck (it is a really nice truck) in the street either.
SOOOOOO….Here’s another reason that real estate can be a real pain in the ass. I have actually experienced this once before. I had a property that had seven renters within a year. We cycled through so many people that ended up not paying and then just skipping on us. The neighbor lady at the end of the block complained because some of the renters were drinking beer outside the house and other stuff like that.
It was crazy. I’ve had crazy renters. That’s why I love my laptop business. Nobody gives me any shit about what I’m doing online.
It’s legitimate and my neighbors don’t hate me when I make $1 million.
That’s like reason number 479 as to why investing in real estate can suck. (not that I have actually composed a list).
I mean… I get the argument. They’re not making any more real estate these days. Every day there’s more people born that could be potential buyers for your real estate later on.
But, there is always a big risk associated with real estate. If I get the wrong renters in there and they destroy my property. I could be looking at downtime where I can’t rent the place, and it also may cost money to collect from the renters for the damages.
Now you might be shaking your head and say well just make sure you get a good credit card upfront.
But the headaches associated with dealing with all that are much bigger than the ones that I face and my on my marketing business.
So, it’s the sexy laptop business that is gonna keep on prevailing for me.