The St. Louis Post-Dispatch had a good, short piece on landlording. It’s pretty good, but misses a couple of things.
First, an easy rule of thumb when buying a property is to make sure you can rent it out for 1% of what you pay for the property. So don’t buy a $100,000 house if you can’t get $1,000 a month in rent for it. There are other equations out there for figuring out what a rental property is worth, but they’re more work than the one-percent rule, and they work out frighteningly close to 1% anyway.
And the advice to be careful when screening can’t be overemphasized. The better you screen, the fewer problems you’ll have. Your realtor or someone else in the office should know a good screening service, so ask. Find a screener who’s incredibly picky, then be nice to the renters who make it through. Going above and beyond reduces those midnight phone calls.
And I can speak from experience that neighbors call and complain about rental properties. About a year ago, I got a code citation for noxious weeds. I found one weed that I’d missed the last time I mowed that had grown above the legal limit of six inches. One weed! And a couple of months ago, my tenants cleaned out their garage. The county cited me for debris in the yard. The “debris” was the boxes my tenants cleaned out, and it sat in the yard for two days. They dragged them out on Sunday, and the garbage truck hauled them away on Wednesday.
I think the real key is to buy and rent out properties that you wouldn’t mind living in yourself. I get a lot of phone calls from people trying to lowball me on rent–one guy asked me last week to come down from $900 to $550–but that goes with the territory. I painted my house interiors a dark beige–I used a Valspar designer color called “The Loop” on the last one–because it looks equally good with dark woodwork or white, updated the appliances, and fixed any major issues inside. Once prospective tenants see the inside, they fight to rent it. If they don’t have to feel ashamed to have people over, they’re a lot more willing to pay market rate.