The idea with being a small landlord was to have passive income- and the plan was to have a couple rentals to supplement what might not be a great SSI benefit in retirement. Until then to have it as a fallback and then do other work on the side. So I cashed in my inadequate 401K, flipped a small house for more cash, got the properties, renovated them furhter myself, and here I am.

I had worked out a goal of 5 units in a couple buildings, and no more..... not a lot of leasing, but enough to make it worth writing leases, and spreading the property tax burden out and having enough coming in to offset tenants who may refuse to pay rent. And not so much that you never have a life, can never go anywhere and are dealing with tenants all day long. Because you don't make a whole lot on each unit after all the expenses as you probably know.

The reality though, after being in this about 6 years, is I still feel like I never have a break! Its one crisis after another...... tenants not paying, tenants damaging property, getting in trouble with law, fighting with each other. Tenants getting a wandering eye and bolting on leases, leaving them full of grime and trash. Roaches, infestations from sloppy tenants who refuse to be told how to live. It seems with 5 units, every 2 months or so there's a vacancy for any reason under the sun.

Renovations, repairs, upkeep, yard maintenance, blocked sewer lines from who knows what they throw in, etc. Small landlords have to do EVERYTHING themselves, there just isn't a budget for lawyers or property managers, or even to hire out mowing. In all honesty I've never been able to get things together and start that "second something", because there's always a crisis with these rentals!

My question is, what are other people experiencing? Is anyone retired with a few rentals successfully, or is this something you retire FROM.

I hear endless stories of people quitting, saying they can't handle being a landlord. But surely that isn't always the case.

If you are a small landlord and are feeling confident you could retire with a few rentals, what are some of the things you are doing, that you've found makes it easier to manage? Or is the idea of retiring peacefully with 5 or so units (and all that entails, dealing with tenants), really a pipe dream?

I started out with the only properties I could afford when I started out. They were in so-so areas. They were so-so quality and the tenants I attracted were sometimes less than so-so. Any idea how I was performing as a Landlord? Sometimes less than so-so.

It is so easy to get trapped in that rat race and wonder if there is a way out of it. I found out out though, if I improve the quality of the places just a tad bit, and screened that much harder - that the quality of my sometimes less than so-so tenants also improved. If I was focused it would have been hard for me to actually see the difference. The differences came in though at my turn overs. Instead of fear, I found that if I inspect a place periodically instead of hoping the turn over would be good....that the place would be better.

Fear is a big obstacle to over come.

Hellannoy, I agree with Ray-N-PA that better properties will attract better tenants. Also, doing home visits of prospective tenants will allow you to make sure they will take care of your rentals. You may also want to put in a criteria I learned from someone else on this group which is to make sure the prospective tenant hasn't moved more than 3 times in the last 5 years.

I was not pleased with the eviction moratorium and feel the governments, local and fed, are not finished with us yet. I have managed 16 units for 22 years and retired at an early age in 2018. It was plenty sufficient income for me to live with a full time handyman as well. I will not touch my retirement accounts until forced by maximum age. But, I live cheap on a farm with no water/sewer bill and an off grid energy system with less than 1000KW per year usage, and I heat with wood, and grow my own food. Car is 15 years old and no debt.

I think that the concept is solid. The problem is our definition of retirement is not well defined. You will need a manager for your property. I don’t know if you can be a manager and meet your goal of being retired.

Perhaps you should explore hiring your property management work.

Having a vacancy every 2 months with only 5 units is not normal. That equates to a 120% annual turnover, 8-10% is more normal. Having that many turnovers tends to burn you out and unless your monthly cash-flow is very high, will lead to less than optimum returns.

After looking at the list of things that are causing problems the common theme is tenant issues. So, first question, how are you screening your applicants and selecting tenants? Not all tenants are created equal. If you generally lumped tenants into A-F categories (A being best tenant ever, C being solid tenant with an occasional issue like late rent, and F being a professional tenant scammer) you generally find the kind of problems you are seeing in D and F tenants. You are after the A-C tenant's. You need to at a minimum be looking at their credit report, getting a reference from a past landlord, verifying their income with paystubs, and doing an in-home inspection of where they are living now to verify housekeeping issues. The legwork up front will cut way down on the drama on the back end.

The second thought, if you looked at your rentals how would you score them using the A-F categories)? (A being the newest and best neighborhoods, C being smaller and older reasonably well kept neighborhoods, and F being the burned out slums). If you're properties are in D-F neighborhoods your choices of tenants will likely be almost all D-F tenants, occasionally you will get a C tenant. As Ray said, many of us started out with D-F properties (which, though a headache, are very profitable by the way) and upgraded over the years to have less management hassles.

Finding the right property is like buying a used car. You have to do your homework and decide if you're buying a fixer upper or a turn-key investment.

Next when you look for a tenant, you need to select you method of advertising and screening -- not taking risks.

When I was close to retiring and wanted to reduce my daily land lording responsibilities. I had to make a plan. I had "A", "B", "C" and "D" rentals -- ranging in ages from 20 to over 100 years of age.

I had purchased 20+ year old single family homes that were turning 50. I had always keep things in good maintenance condition. But a 50 year old home would still need monthly repairs unless upgraded. SO I did the Un-thinkable. I upgraded everything. New kitchens, pipes, roofs, electrical, plumbing, windows, blinds. paint, stucco coating, central heat and air plus a lot more.

Now my single family homes wouldn't need any major repairs, just something once is a while. Instead of monthly it was only once or twice a year when a tenant would need my help.

When my grade "C" buildings were in low income area's, I'd have weekly repairs. Now that I 1031 exchanged them for "B+" areas and over hauled them, I had maintenance issues only one or two times a month.

So instead of taking care of my rentals 6 out of 7 days a week, now I only have a couple times a week that I have to drive out and make a repair.

I was in a similar situation...had a high-paying full-time job but wanted some passive income and (this was my MAIN reason for getting into rentals) I wanted to diversify out of the stock market. I had 5 units, all SFH. Have since sold some at today's high prices.

You asked what you can do differently? Well, IMO having multi-family causes a lot of the paint points you mention. Of course it's a trade off...as you get higher margins on multi-family. Getting people to live in harmony is difficult IMO.

Many of the other issues you mention can be minimized with good screening, an excellent lease, and good enforcement. Make a list of the issues you've had and separate them into categories that make sense. Then look for "root causes" and put in place processes or systems to eliminate the issues. For example, if you find a lot of things breaking and you get emergency calls, maybe do what many LLs on here do...eliminate those items from your units...things like garbage disposals come to mind.

Maybe it's the age of the units you are buying? I was a licensed home inspector and I cannot stress enough how much MORE maintenance is required of "older" homes. Although there is no exact definition of "older", I'd say stay with properties that were built in the mid '70s or later. Houses older than that have galvanized plumbing, orangeburg drain pipes, 1 1/4" sink drains, improper surface water drainage, no perimeter drains around basements, antiquated wiring, fuse panels, and the list goes on and on.

One thing I've always done is to never do "band aid" approaches. If you find a galvanized pipe with a leak from a rusted hole, don't just cut out a 1-foot section and replace it...you KNOW you'll have another hole come soon...replace either ALL galvanized pipe or AT LEAST all of it in that leg of the plumbing system. It will cost you more, but your problems will begin to disappear as you get rid of these old, aging systems.

I retired 20 years ago, but I gave up active management about 20 months ago. Ny answer was to get a manager.

Can one depend on a manager? Well, I'm on my third manager from the first year. The first lasted 24 hours, the second about 9 months (until the first test of his integrity), now I am on #3.

Hiring the right manager is indeed a chore, but it is a necessary to do it right. My present manager was recommended by a fellow landlord, he's not perfect, but he has a particular ethnicity (Chinese) and he seems to be well respected in the Chinese community. He believes in solving most problems by convincing tenants to follow a reasonable course. He collects rents by Zelle, provides a monthly report, doesn't take any actions without consulting me,

doesn't require a maintenance account and is willing to use MY lease instead of the lease form from the California Real Estate Association (loaded with terms and conditions that benefit (guess who) the manager).

One other piece of advice to those starting out;

you will be money ahead by leaving the rental empty as apposed to putting a bad tenant in and hoping for the best.

On advice of friends who had apartments I went for B +

A - single family homes. My tenant’s are minimum $90,000 wage earners with degrees and non degree technical type. Over 52 years 97 % good tenants and 3 % head aches.

During Covid zero rents lost.

At 81 I still manage but I keep looking for a manager.

So much excellent advice, as usual. If you ignore it, you're destined to continue to have the same problems.

We started with many of the same goals as you over 20 years ago. Eventually we bought 10 rental properties. We learned from our mistakes and continually revised and improved our practices. I'll restate what others have told you: Having good tenants makes all the difference. A well-defined screening process is essential.

We both retired from our day jobs at age 57. We paid off all of our properties while we were still working, so now have the income from rent to supplement our retirement.

We want to slow down, so we began selling properties when the prices went crazy high. We have sold four so far. The remaining properties all have long term tenants who don't cause problems.

Your big mistake was thinking that rentals are passive income. But you have figured that out by now.

You can save yourself a lot of trouble by learning how to screen tough to keep the troublemakers out.

Every time you have a vacancy, go over the property with a fine toothed comb and fix everything, no matter how tiny. If it wobbles, tighten it, clear the drains so they flow freely, test the plumbing, test every light switch and if they are wonky, replace them, check for vermin, get all that stuff done all at once and you won't have complaints dribbling in over several months, one repair at a time.

I do sfh's, and am still in aggressive growth mode. Every penny gets churned back into the biz. I know it's super-conservative, but when you're retirement plans hinge on it, it's better to come out ahead of expectations rather than to underestimate the expenses of keeping the biz running--- so if I expect to gross $x/year, I only count on 1/3 x to be spending money, and 2/3 x is going to go pay property taxes, insurance, vacancy, turnover, maintenance, renovation, major systems replacements... Some years, there might be nothing, and other years, you've got three roofs and two HVAC systems that need replacing. We all know what happens to LLs who don't set aside enough funds to sustain their biz. :(

For apartments, the rule of thumb used to be an expectation of 1/3 turnover. If you had less turnover, you were under-market. If you had more turnover, there was a reason for it. It might be overpriced, overprice-for-the-neighborhood, bad neighbors, lack of maintenance, crime, location, whatever... the details change, but high turnover is a signal of a bigger problem.

You say you have "5 units in a couple of buildings." Is that "you bought 5 condos in various locations" or do you have 100% ownership of the buildings your units are located in?

One of the plus's about multis is that everything is concentrated. You have one yard, one roof, one sewerline, one whatever. But one of the negatives about multis is that everything is concentrated. All your people are in the same location. All your problems are in the same location. If a tenant brings mice or roaches into a sfh, the problem is isolated. But if a tenant brings mice or roaches into a quad--- it's now my problem x4. If I get a belligerent person who slips through screening in a sfh, it's not really a big deal. If I get a belligerent person who slips through screening in a triplex, I might lose two good tenants who prefer not to share walls with him, before I'm able to identify there's a problem and get him out.

In our LCOL area, we figured we needed 30 houses in order to be confident our retirement needs would be met. In a HCOL area, 5ish might very well bring in the same income.

It's doable. But it's definitely not passive.

You are at the right website! This is landlording 101 and 102. Also, you get the graduate school stuff at the same time. This where we learned to screen carefully, the importance of a good lease and some great lease clauses that benefit YOU, and how to maintain our properties all at the same time.

In addition to all the other excellent advice above, I'll share four words that are a game changer to avoiding trash tenants that are house beaters:

2 minute in-home inspection.

It's the final step in the application screening and founded on such a rock solid, basic principle you'll wonder why you never thought of it. I sure did. This is the principle:

"However they are treating their CURRENT home is how they will treat YOUR home."

So what does it involve? After EVERYTHING ELSE is done and they look good, I GO TO their house and take a look, a listen, and a sniff. My house will LOOk, SOUND, and SMELL like their current house within 2-4 weeks of them moving in.

Cars parked on the yard? They will park in your yard.

Miniblinds broken? They will break your mini blinds.

Screaming children slamming doors into walls? Their screaming children will slam your doors into your walls?

Cockroaches skittering across the kitchen floor? Cock roaches will skitter across your kitchen floor.

So on and so forth. If you see it, hear it, or smell it where they are now, it's 100% guaranteed you will see it, hear it, and smell it in your house after they move in.

Here's the thing: people are creatures of habit. They will not change no matter what you or your lease say. You can say, "Must no park on the lawn." Your lease can say, "TENANT agrees not to park on the lawn." But if they are parking on the lawn now, they will smile at you when you talk, sign your lease, then park on the lawn.

Fact of life.

"Oh, but I feel like it would be intruding to go see someone else in their current house!"

Nope. It would be smart. Be smart. Go see, listen, and smell. This has been a game changer in my business. Midnight move outs down 90%. Trashed units down 75%. Move out damage bills down 55%. All because I did ONE THING.

I went. I looked. I listened. I smelled. It literaly takes 2 minutes or less.

Invent a reason to go. Print out a sheet with you ad on it and swing by so they can sign it as a confirmation of what all is included.

"Um, I can't meet you at home, how about (somewhere else?"

Nope. That's your sign they don't want you to see, hear, or smell where they live. People who have clean, well-kept homes are proud of their homes. They don't refuse you permission to come over. You can even be 100% honest and just say, "This is what we do to verify a house is well-kept." The truth doesn't hurt. The home wreckers will not let you come over, or if they do you'll know in less than 30 seconds that you need to block their phone and email and walk the other way.

It's free. It takes almost no time. It works. Do the 2 minute in-home inspection.

EXCELLENT Comments. For less aggravation SCREEN SCREEN SCREEN - DO NOT get in a hurry to rent. Been there done that

You may consider having the prospect send a letter of reference from their previous LL. Works for me. One thing I have found over the years in screening tenants. A clean tenant is a good tenant. I stress cleanliness during the initial screen and the face to face walk through.

And I talk to my tenants when they pay the rent - how are they doing - any thing wrong with the house - how is the neighbors. I will always mention something in the Rental Agreement that is my responsibility and what is the tenants responsibility - you got to train em.

As others have noted when you make repairs - don't just patch up - do it right.