Once You Retire, You Are So Screwed!

Once you retire, you are lucky to be on a fixed income. Some people are on no income. Some people think they are fine because they have a pension and Social Security. But when it comes time to retire, they find out that they are getting $500 per month on a Pension and $300 per month in Social Security. The shock, they still have to pay taxes.

The furnace breaks down, the air conditioner is out, the place needs to be upgraded, and the house keeps heat like a box with large holes in it. It starts to rain and you feel this "drip, drip, drip" from the upstairs bedroom light. Your car is over 12 years old and it runs when it feels like it. You are putting $1,000 per year in repairs on your car. To buy a new car, you must pay twice as much to get a car smaller than the one you have with less options. On top of all this, you owe over $2,000 in credit card bills.

You might have a house that was built before World War II. The house is paid for but the Utilities are running $392 per month. Your county, school, and municipal taxes are running $2,500 to $6,000 per year. You find out that you still need to make money to stay in your home.

At this point, you wish that you would have plan for all this 10 to 20 years ago while you had the money.

The dream couple making money from renting their home.

With this big house, you start thinking about becoming a landlord. After all, it is easy money. The tenants come in and they pay you on time. They may even help you around the house. Wake up old people, wake up!

The Retired Old Lady
The picture shows what a disgruntled tenant can do to your property. I have a friend who decided to rent out three rooms in her home of 20 years. She had no clue of what she was doing. She did not have them sign a lease. The tenants could travel freely through her home and garage. Most of her tenants fell behind on their rent.

She found that once that happened, it was a “bear” to collect the rent. She usually ended up losing one to two months’ rent including the cost of utilities. A two week old tennant move out. Two weeks later she found out she owed the electric company $251.61 for one months usage.

Her property was not always fully rented, leaving a gap in here income. After a while she found that she could not pay her living expenses and replace the damages that her renters made.

If that is all that happened to her then she should be happy. Recently, a tenant was living in her best room with a connecting bathroom. In the months that he was there, he destroyed her blinds at the windows and destroyed the drapes. He broke much of the furniture in the room. The tenant disconnected the cable to the other tenant’s rooms. The toilet no longer flushes because he clogged the toilet with rages. She had to call a plumber to fix the toilet and sink in the bathroom.

When she finally told him to leave, he gave her $50.00 and told her to have a nice day. I suspect that he got the money from selling many items in her house and was paying her rent from that money. She is still trying to put that room back in shape.

You say sue him! She can sue and she can win but collection of money from people who have none is a different story. Plus you paid court cost and lawyer's fees. Lawyers do not care who pays. You the victim paying is fine.

The upstairs bedroom tenant was not as bad. All he did was not pay the rent. We will not talk about the trash that he never took out. He just through his trash under the bed and into a closet. Instead of washing his clothing, he would buy clothing then once dirty, through them into a closet. He pushed a broken Motor Cycle into her yard and abandoned it there. It is her problem now. The Motor Cycle did not belong to him and she has to have permission in writting from the police to have a salvage company take it away. After the landlord was out 2 months’ rent, she spent several weeks putting that room back together and taking out a years’ worth of trash.

You think that is all that happened to her? The landlords water bill kept increasing. She went into the basement and found out that her furnace is leaking all over the floor. It cost $5,000 for a new furnace.

Like my friend here, you can have cash in the bank from rent receipts and you may look like you are doing fine. My friend was doing well for 20 years. She took trips using her rent money. She bought more junk than what she needed. But she never figured out her income and expenses. She never accounted for depreciation of her assets. In other words, she never learned a thing about managing her property. This is where most “landlord want to bees” go wrong.

Being a landlord is not as easy and financially rewarding as they make it sound on TV. As people found out in the past 10 years, property values go down as well as up. Being a landlord is work and you have to do an investigation of your prospective tenants. You must manage your property financially and by using good maintenance policies. If you are dispirit and let anyone in, you could end up like my friend or even put your life in harm’s way.

What should be done before bringing in Renters!

Things you should do before bringing in boarders.

1. Ask for proof of income such as two recent pay stubs and a copy of their credit report. If they can’t produce a pay stub or their credit report looks as if they do not pay creditors, you don’t need them. Call the previous landlord and asks about the tenant. You may want to get online and run a criminal background check.
http://criminalbackgroundcheck4u.net/

2. Create and have them sign a lease. Below is a copy of a sample lease.
http://www.totalrealestatesolutions.com/realestateforms/html/RentalContract.html

3. Ask for a Security Deposit to cover damages. Make sure that you have spelled out in the lease that you have the right to inspect the room on a bi-weekly or monthly base.

4. When they are moving out, go over an exit list with them. This will determine if they are going to get their Security Deposit back. Look at the sample below.

http://housing.ucsc.edu/cro/pdf/condition-checklist.pdf