What it’s like to be a landlord questions the intrusions of a property owner

  • Real estate investor Stephen Yin spoke to Insider about the reality of being a landlord.
  • The time he spends on his portfolio varies, but it’s a relatively passive form of income.
  • Outsource and automate when you can, he advised, and wait for tenant turnover and evictions.

After closing his first real estate investment in 2020, Stephen Yin felt a sense of relief.

In general, the closing process is always going to be tedious, the 27-year-old real estate investor told Insider, “because you’re coordinating between so many parties and there’s a lot of money at stake.”

This was just the beginning of his investment journey. Yin has acquired nine properties in the past two years, Insider has verified. Two of the nine rentals are two-story, meaning he is collecting rent from a total of 11 units.

Yin is based in Los Angeles for his day job, but buys real estate in Birmingham, Alabama, where he grew up.

He spoke to Insider about the realities of being a landlord, from dealing with evictions to responding to messages from holiday renters.

Real estate investing is relatively passive… until it isn’t

“I’m by no means spending a consistent amount of time on my portfolio every week,” said Yin, who has a property manager for eight of his homes and manages one himself. “It’s more episodic.”

If, for example, he’s buying a property, then the weeks leading up to closing day will be busy: “I’ll spend a lot of time making sure all the paperwork is done and the funds are tied up on the right bank. But when I’m not actively buying, I don’t spend a lot of time in real estate.”

Since he’s managing one of his properties, he has to collect rent — his tenants pay him through Venmo — and handle maintenance requests, sometimes at a moment’s notice.

“For example, when I was on vacation in Tokyo two weeks ago, I received a notice from my tenants about a woodpecker problem,” Yin said. “I called pest control and they did the inspection and gave me the report and a recommendation.”

He refers to the “80-20 rule” to summarize how much time and effort goes into maintaining his portfolio: “20% of my houses take up 80% of my time. There are some houses, like my first one, where there are no problems and they are passive in that I don’t have to do anything except pay the mortgage.”

Outsource and automate where you can to save time and energy

Yin delegates property management to every house except the one he directly manages. His property manager, whom he found through referrals, does everything from contacting tenants and filling vacant units to setting rental rates.

Especially if you’re investing out of state, having a good property manager on your team is totally worth the cost, he said.

Yin’s manager charges 10% of the monthly gross rent, which is typical, he said. Additionally, a manager may collect 10% of any maintenance fees you incur and a portion of annual tenant renewal fees, “but most of their income comes from taking a cut of your monthly rent,” he explained.

He also has a team on the ground he trusts and can call on at any time, including a general contractor and pest control, which is especially important in the south, he noted.

One thing that has made Yin’s life as a landlord easier is setting up automatic payments for expenses like home insurance and mortgage payments. It saves time and guarantees he will never miss a payment, which is a mistake he made early on.

“Set a calendar reminder that notifies you when you need to review your home insurance policy,” he advised. “If you don’t renew it, that raises your premiums for the next year and you’re breaking the law because every home has to be insured. That was a mistake I made.”

It also automates his savings, which helps him save for future real estate. On the first of each month, he sends a percentage of his income to three different accounts: his 401(k), a stock investment account, and a high-yield savings account, which he draws from when he needs a cash advance for real estate.

Expect tenant turnover and evictions

Tenants are moving out, which means your home may be temporarily vacant and not generating rental income. It’s important to have an emergency fund to cover months like this, among other unexpected household expenses that may arise.

Yin has some tenants who have been at the property for a decade or more. Another set of tenants are college seniors who will be moving in next spring.

Another of his tenants has not paid rent for the past six months, he said. Yin is currently in the middle of the eviction process, which can be time-consuming and expensive.

“No matter how landlord-friendly the laws are in your state, eviction proceedings are painful,” he said. “In Alabama, the laws are a little more landlord-friendly, but the person who will enforce the eviction order from the judge is usually the county sheriff — and the county sheriff usually has a six-month backlog.

“You can’t just walk into the house and throw someone out. That’s against federal law. You can’t just turn off the power and the water. That’s also against federal law. You have to get law enforcement to go and to carry out an order from a judge. And that takes a long time.”

If you hire an eviction attorney, the attorney’s fees can add up, he added, “but the biggest thing for me is that you lose the monthly rent while also having a mortgage on the house.”

Stress comes with the job of being a landlord. But, in the end, “the stress is worth it,” said Yin, who hopes to build generational wealth through real estate investing.

“When I talk about generational wealth, what I really mean is being able to spend time doing the things I want to do with the people I want to do it with — and then giving my future children options to choose what they want to do with their lives,” he said.

“I don’t want them to feel like they have to do something professionally because it pays so well. I don’t think money should be the main motivation when you make these kinds of important choices. I’m very motivated to give my kids that choice one day.”

Leave a Reply

Your email address will not be published. Required fields are marked *