Let me say that I am not a landlord expert but I am often shocked at the horrendous advice offered up as wisdom on landlording forums. Don't get me wrong, networking groups (online and in-person) can be a great resource as you try to learn the ropes but be wary of some advice - even if it's what you want to hear!
So here it is, the worst advice you can take when starting your landlording journey and my alternative advice!
1) Get an FHA loan, even if you're not going to live in the house.
When someone is trying to buy a property but doesn't have enough money to put down, "get an HA loan" is often tossed out but this kind of loan is only for owner occupied properties and when you apply for it you're agreeing to live in the house for a certain length of time. I am shocked when I see this suggested to people online, not only is it mortgage fraud but those suggesting it are pretty cavalier to suggest it to others because it always make me think they've done it!
I can understand that it's hard to save up the money you need for your down payment, it takes so long but don't commit a crime as a short cut. Be patient.
2) Violate fair-housing laws
I have seen many people be pretty blase about violating fair housing laws. Federal law protects against discrimination in housing based on race, color, sex, religion, family status, handicap and national origin but state and local laws might have more classes that are protected, such as sexual orientation. Read up on your local landlord tenant laws so you don't violate them.
Set your criteria for income and background and apply them to everyone who applies the same.
All I want is a tenant who pays rent on time and keeps the house clean, as long as they do that, I don't care about anything else.
3) Invest with no money
"How to invest with no money down" schemes abound on the internet. Now, you can possibly buy a cheap property with little to no money down but what are you going to do when you have tenants in place and something breaks? You need to fix it and you need money to do that. Investing with no money down and nothing in the bank is very risky.
Also, something is going to break at the worst possible time. When did our property have a roof leak? The month before we spent a fortune on our wedding. When did the drain line back up? The week we went under contract on another house with a huge down payment.
As I said in #1, I know it's hard but be patient and save. I can't count the number of times I've seen what I thought would be a great deal but wasn't ready to buy it but another one always comes along.
While landlord groups can be a great resource for new landlords to learn the ropes, be wary of some of the sketchy advice offered. I have learned a great deal from some of these forums and it's interesting to see what some are dealing with as they manage their properties day to day, there seem to be a 100 possible scenarios!
So here it is, the worst advice you can take when starting your landlording journey and my alternative advice!
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Photo by PhotoMIX Ltd. from Pexels
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1) Get an FHA loan, even if you're not going to live in the house.
When someone is trying to buy a property but doesn't have enough money to put down, "get an HA loan" is often tossed out but this kind of loan is only for owner occupied properties and when you apply for it you're agreeing to live in the house for a certain length of time. I am shocked when I see this suggested to people online, not only is it mortgage fraud but those suggesting it are pretty cavalier to suggest it to others because it always make me think they've done it!
I can understand that it's hard to save up the money you need for your down payment, it takes so long but don't commit a crime as a short cut. Be patient.
2) Violate fair-housing laws
I have seen many people be pretty blase about violating fair housing laws. Federal law protects against discrimination in housing based on race, color, sex, religion, family status, handicap and national origin but state and local laws might have more classes that are protected, such as sexual orientation. Read up on your local landlord tenant laws so you don't violate them.
Set your criteria for income and background and apply them to everyone who applies the same.
All I want is a tenant who pays rent on time and keeps the house clean, as long as they do that, I don't care about anything else.
 |
| Photo by rawpixel.com from Pexels |
"How to invest with no money down" schemes abound on the internet. Now, you can possibly buy a cheap property with little to no money down but what are you going to do when you have tenants in place and something breaks? You need to fix it and you need money to do that. Investing with no money down and nothing in the bank is very risky.
Also, something is going to break at the worst possible time. When did our property have a roof leak? The month before we spent a fortune on our wedding. When did the drain line back up? The week we went under contract on another house with a huge down payment.
As I said in #1, I know it's hard but be patient and save. I can't count the number of times I've seen what I thought would be a great deal but wasn't ready to buy it but another one always comes along.
While landlord groups can be a great resource for new landlords to learn the ropes, be wary of some of the sketchy advice offered. I have learned a great deal from some of these forums and it's interesting to see what some are dealing with as they manage their properties day to day, there seem to be a 100 possible scenarios!
Hi I love your blog what I've read so far is there some way to get your blog daily emailed?
ReplyDeleteI am glad you like the blog! I don't post very often so the email would be more like...once every few months :) but you can subscribe to the RSS feed.
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