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Small-Scale Question Sunday for August 27, 2023

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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I've had rental property before. A few notes:

The economics of it are a little tricky and rather different than buying as a personal home. You have to know all of, what you can actually buy the property for, what kind of financing you can get, and what you can actually rent it for, and balance them to make it actually profitable. Specifically, it's not to your benefit to make rental property too nice. In most markets, rent that tenants will actually pay is mostly based on location and bedroom count, most updates and amenities won't get you anything in higher rent. Being truly broken down or a dump won't rent, but it's not to your benefit to buy or make a property significantly nicer than the average rental in the market you're targeting.

You need to be familiar with the landlord-tenant laws in your jurisdiction. Know what's involved in evicting somebody, what obligations you have for security deposits, and any other requirements that might be in place.

You may or may not want a realtor for the property purchase, but you'll need one for the rental. You need somebody who knows how and where to advertise to tenants, screen tenants, and set up rental contracts. You definitely need a standard, good-quality contract, and you definitely need to screen, as a bad tenant can seriously wreck your finances, especially if eviction is difficult in your jurisdiction.

There will be some management work too. You need to know who to call when things break down, and it helps a lot if you are personally handy enough to deal with minor issues without hiring more contractors. Plan on needing to take time off during business hours to meet contractors or delivery people at least once a year. If you can't do it yourself due to your own work obligations or being too far away, you need somebody else who is local and reliably available on call to handle that sort of thing.