401k and other retirement plans: have you raided yours yet?

[Barrister]

I have no idea why the relatively simple notion that businesses carry risks and this is a business with more risk than most retirees who are looking at it as being relatively safe know about, as I've seen myself from frantic requests for legal advice should cause such huffing. Naturally, lawyers are going to have a better notion of the downsides of such a business than non-lawyers - it is, after all, our trade to deal with such downsides.

Anyway I did not mean to bring up any bad associations there Malthus I was just using it as an example of what some people have been forced to do with money being less able to make money right now.

Personally, my retirement plan is to become a Walmart greeter. 

I'm going to open a defence shop.  I heard one defence lawyer ask another if he knew anyone who would want to rent an office from him - $600 a month.  I could easily cover the rent and then some and only have to work part-time.

[Admiral Yi]

Anyway I did not mean to bring up any bad associations there Malthus I was just using it as an example of what some people have been forced to do with money being less able to make money right now.

This is one of the biggest downsides to the Fed's easy money policy.

[The Brain]

I have no idea why the relatively simple notion that businesses carry risks and this is a business with more risk than most retirees who are looking at it as being relatively safe know about, as I've seen myself from frantic requests for legal advice should cause such huffing. Naturally, lawyers are going to have a better notion of the downsides of such a business than non-lawyers - it is, after all, our trade to deal with such downsides.

Anyway I did not mean to bring up any bad associations there Malthus I was just using it as an example of what some people have been forced to do with money being less able to make money right now.

Personally, my retirement plan is to become a Walmart greeter. 

I'm going to open a defence shop.  I heard one defence lawyer ask another if he knew anyone who would want to rent an office from him - $600 a month.  I could easily cover the rent and then some and only have to work part-time.

What's wrong with your car?

[merithyn]

Maybe Meri has a perfect idea of how much work being a landlord can be.  I can't read her mind of course.  But I have my doubts.

Of course you do.

[The Brain]

I'm an absinthe landlord.

[Malthus]

I'm going to open a defence shop.  I heard one defence lawyer ask another if he knew anyone who would want to rent an office from him - $600 a month.  I could easily cover the rent and then some and only have to work part-time.

Heh I bet it would be odd to be working the other side of the fence. 

[Phillip V]

How much do property management companies charge to handle the landlord stuff?

[merithyn]

How much do property management companies charge to handle the landlord stuff?

Depends on where you live. Where I live, it's around 8-10% of the rent collected. So, if you charge $1000/month for rent, you pay them $80-100/month. If your mortgage is $750, that's a good chunk of your income for that property.

[The Minsky Moment]

I have no idea why the relatively simple notion that businesses carry risks and this is a business with more risk than most retirees who are looking at it as being relatively safe know about, as I've seen myself from frantic requests for legal advice should cause such huffing. Naturally, lawyers are going to have a better notion of the downsides of such a business than non-lawyers - it is, after all, our trade to deal with such downsides.

Agreed.
A regular person could run a landlording business and chances are nothing will ever go seriously wrong.  But there still is that 5 percent chance that something could go horribly wrong.  Not so much of a problem if you are a big property company or a REIT that can spread that risk over lots of properties.  Bigger problem if you are small potatoes and only have a few.
The question is to what extent does the regular Joe accurately discount or somehow insure against the catastrophic risk?

[Admiral Yi]

What, pray tell, are the catastrophic risks of rental property ownership?

[Malthus]

What, pray tell, are the catastrophic risks of rental property ownership?

Well, to give a specific example I've seen in Real Life(tm) ... renter in multi-unit rental property turns out to have previously undisclosed mental illness (he was fine as long as he took his meds - landlord never noticed anything - but hates taking them); other renters all move out because living next to a mental patient isn't optimal (suffice it to say he never did anything actually criminal, but just very upsetting).

Turns out in Ontario it is very, very difficult to remove a tenant suffering from mental illness. Particularly if his parents regularly pay his rent.

Landlord ends up stuck with mostly empty building, containing 1 apparently immovable lunatic. [Solved the problem in the usual way - i.e., converting rental property into personal]

[garbon]

My father had his house rental burnt to the ground.  Though that actually ended up better as with no house, no renter.

[merithyn]

Well, to give a specific example I've seen in Real Life(tm) ... renter in multi-unit rental property turns out to have previously undisclosed mental illness (he was fine as long as he took his meds - landlord never noticed anything - but hates taking them); other renters all move out because living next to a mental patient isn't optimal (suffice it to say he never did anything actually criminal, but just very upsetting).

Turns out in Ontario it is very, very difficult to remove a tenant suffering from mental illness. Particularly if his parents regularly pay his rent.

Landlord ends up stuck with mostly empty building, containing 1 apparently immovable lunatic. [Solved the problem in the usual way - i.e., converting rental property into personal]

And if you only purchase/rent out single-family homes?

[Barrister]

How much do property management companies charge to handle the landlord stuff?

Depends on where you live. Where I live, it's around 8-10% of the rent collected. So, if you charge $1000/month for rent, you pay them $80-100/month. If your mortgage is $750, that's a good chunk of your income for that property.

If you have that kind of mortgage on your rental property what you have is a highly leveraged investment.

Would you borrow $100,000 from the bank and invest it in the stock market?  If not, why would you do it with a rental property.

With a $750 mortgage and $1000 rent you're in a very thin edge.  If the water heater goes, there goes your profit for several months.  If you can't find a tenant for a month, there goes your profit for several months.

[Barrister]

Well, to give a specific example I've seen in Real Life(tm) ... renter in multi-unit rental property turns out to have previously undisclosed mental illness (he was fine as long as he took his meds - landlord never noticed anything - but hates taking them); other renters all move out because living next to a mental patient isn't optimal (suffice it to say he never did anything actually criminal, but just very upsetting).

Turns out in Ontario it is very, very difficult to remove a tenant suffering from mental illness. Particularly if his parents regularly pay his rent.

Landlord ends up stuck with mostly empty building, containing 1 apparently immovable lunatic. [Solved the problem in the usual way - i.e., converting rental property into personal]

And if you only purchase/rent out single-family homes?

Well if you want a malthusian nightmare scenario...

Your single family home gets rented out.  Six months later the police bust down the front door to discover a grow up (substitute meth lab if you'd like).  The risk of mold means you have to rip out all of the drywall, and now you have to disclose it as a former grow up when you try to rent it.