Investing in Real Estate and Renting Properties. Our experience with the good the bad and the ugly.

My husband Bob and I moved to Florida from Wisconsin in 1994. After settling in an apartment for a few months we bought our first home. Even this was a new experience for both of us. After a few years Bob was injured at work and needed back surgery. He was no longer able to work so we needed to do something with the small settlement that he received.

After much thought and very much research, we decided to invest in rental properties. Since we didn’t have a lot of money to invest, we did tons of research and spent many weekends driving around looking at areas that we hoped would appreciate in value.

Since Florida is known as more of a transient state than Wisconsin we both knew that it could be risky. After weighing all the odds we purchased our first property consisting of a main house and a smaller cottage in the rear, in June 1999.

We immediately started doing our own fixing up, painting, new carpet and cleaning. Then we put together out tenants application, which consisted of job references, current landlord, how many children and any pets. We thought we had all our bases covered. We even charged a $25 fee to process for a credit check background, in hopes that this would scare off any unwanted tenants.

Well, we did rent out both houses. Then we did almost the unthinkable and purchased another property in November 1999 and yet another in December of 1999. Again the work began. (This sounds almost insane to me as I write this!) We had now purchased three properties consisting of five rental homes in just six months.

Eventually, we had all of them rented, with one year leases. HOORAY! Now all we had to do was sit back and collect rent on the 1st of the month, right? WRONG!

You will find out in a hurry that there is ALWAYS some excuse for not having rent on time, so you’d better make sure that you can cover the mortgage payments until your tenants get around to paying you. Since renters have no vested interest in your property, they really don’t care. Don’t get me wrong, we did have some good tenants, but no matter how much you prescreen on applications you never really know what to expect.

A lot of it comes from just a gut feeling that you’re renting to the right people. After a lot of trial and error we added a line to the application asking what their rent was, because it seemed they all wanted to live in a nicer property, only to find out that they couldn’t afford that much each month.

There are so many crazy stories that I think I could write a novel. When I say crazy, I mean they would make a great show for Jerry Springer!

One case in particular comes to mind. We had a couple that usually paid rent on time. They even renewed on a 2nd year-lease. The wife then became very ill and was diagnosed with a late stage lung cancer. Truly, it was a sad situation.

Her husband continued to pay his rent for about two months and then suddenly vanished. The phone was disconnected and everything in the house was gone. He was nowhere to be found and we needed to cover the mortgage payment. The house needed extensive cleaning.

We finally rented it out again to a single professional woman with two children. She wanted that house so much and seemed to be the best of all the applicants. Everything was great for a few months and rent was on time, but then she started having job and transportation issues that now became OUR issues.

Bob would even pick her up to take her to work. Next, her phone was disconnected. Here we go again. So Bob went to the property to see what was going on and who should answer the door but the previous tenant whose wife had passed away! This was probably six months after her death, and he was now living with our new tenant!

Apparently the neighbors introduced them and they were now engaged to be married. Turns out he never told her that he had lived in the house before. She did know of his wife passing, but that’s all. Once she found out she wanted out of the engagement and to break her lease. We did let her out of her lease.

Enough was enough and it was time to sell. So less than five years later we put it up for sale. Why did we put up with some of the things we did? That’s because of the strict Landlord & Tenant laws in Florida regarding the eviction process. We had gone through it before, and it is timely and cost consuming.

The following was taken from the Florida Statutes Section 83 of the Landlord & Tenant Laws:

Tenants Failure To Pay Rent

• The landlord must serve you, the tenant, a written notice allowing three days (excluding weekends and legal holidays) for you to pay the rent or move. If you do not pay rent or move, the landlord may begin action to evict you.
• In order for the landlord to gain payment of the rent or possession of the dwelling, he must file suit in county court, and provide the court with a copy of the three-day notice.
• You will be served with eviction papers from the court in writing. You then have five days (excluding weekends and legal holidays) to respond, also in writing, to the court. You must also pay the rent money into the registry at the Clerk of Court. Failure to pay owed rent money into the registry at the Clerk of Court will result in an automatic eviction judgment against you.
• If you don’t respond or a judgment is entered against you, the Clerk of the County Clerk will issue a “writ of possession” to the sheriff who will notify you
• that you will be evicted in 24 hours.
• You have the right to stay in your apartment until the landlord files an eviction case and a judge decides your case. The landlord must deliver an eviction notice before he can file an eviction case. The landlord cannot put you out unless he wins the eviction case in court.

We had gone through this process with other tenants, which is why we decided to just let the above-mentioned tenant out her lease. When we did go through the legal process, the tenants did leave and were never to be found. All we had left was a house with a lot of damage, such as broken windows, burn holes in the carpet, and graffiti on the walls.

Bottom line is we were stuck with the bills and all they had was a lien slapped against them.

1. My advice, think of being a landlord as a full-time job.
2. Have at least a minimum of three months of mortgage payments.
3. Be prepared for unexpected repairs, and cost increases of taxes and hazard insurance.
4. Get as much information as possible from the application, such as references from former landlord and job references. Credit worthiness, criminal background, and what they currently pay for rent.
5. Make sure that the person whose references you are checking are for the same person that will be the one living in the property! (That’s another story)
6. Be prepared to pick up the rent in person, if you think it’s coming in the mail, guess again.
7. Charge a late fee on the rent if it is over 3 days late from the due date.
8. Get a cashiers check, or be prepared for NSF personal checks.
9. Get a full month’s security deposit. If they break the lease, keep the security as default on the contract.

So, you still want to purchase investment property?

Then you need to do your homework! Since no matter where you buy, the three best words of advice are LOCATION, LOCATION, LOCATION! This will apply whether you are buying in the USA or in Costa Rica. Also good timing. We did buy all are properties for an excellent price, and will have a nice profit once they are all sold. Real estate is still an excellent investment. I would not want to discourage anyone from doing this.

The intent of this article is to inform you that while money can be made renting real estate to others, it may not be as EASY as it sounds.

As for Bob and I? We’ve had enough. We just listed another of our properties for sale last week. Our goal is to purchase some land in Costa Rica, and build a home in the next 2-3 years to live year round. Maybe a small vacation rental for extra income. Time will tell.

What I do know is that it’s OUR time for PURA VIDA!!!

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A million thanks to Debbie Hempel, VIP Member of WeLoveCostaRica for writing this article to help educate and protect others who are planning to buy and rent properties anywhere in the world.

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.