Do you have what it takes to be a landlord?

Rental properties: Not for the faint of heart

Which is correct?

A) Owning rental properties can be a great investment.

B) Owning rental properties can be a nightmare.

C) All of the above.

Yes, take it from someone who’s seen both sides of the rental equation, they can be both.

I still have the two-bedroom, one-bath home I bought decades ago with my G.I. Bill — when I wondered how I’d ever come up with the $311 a month for the mortgage. It’s since been a steady rental for years, a great retirement investment.

But a rental house I had in Texas was invaded by a growing family of possums (yes, possums), who ate through the air-conditioning pipes, relieved themselves in the closets and had babies behind the dishwasher. And air-conditioning units and roofs in different properties have failed in the same month (not cheap), and renters have fled in the middle of the night, leaving unpaid rent and a cockroach-infested garbage pit to clean up.

So rental properties may be a good investment for people in Las Vegas, but you have to be prepared, educated and informed.

Paige Yahraus, a decades-long Realtor who is owner, broker and property manager for the Las Vegas-based US Realty &Property Management, manages about 180 rentals for others, plus nearly a dozen of her own. She has both success and horror stories about rentals.

The keys, she said, are to buy correctly, rent to the right people, make it clear what the contract requires and hold them accountable.

The biggest advantage is positive cash flow in the most passive area you can get and with an appreciating asset. If you buy and rent correctly, this is no small payoff. Nor a small “if.”

Disadvantages include renters who create more damage and headaches than revenue, liability issues and repairs and maintenance — whether caused by the tenants or the life cycle of things like air-conditioning units, appliances, plumbing and the like.

It’s important to do background checks on potential tenants, and several companies do that quickly and cheaply. You’ll want to know not only if they pay bills on time but if they have a criminal history, as some rentals have been turned into meth houses and used for other illegal activities. You also should pay attention to your gut.

“It’s important to screen your people up front,” Yahraus recommended. “We meet the potential tenant in person. I have to see their face.”

It’s not their home, and tenants don’t put the same value on the property as the owner does, so you have to be clear with them up front about their responsibilities. That includes what will cause them to lose their deposit and what repairs and maintenance are their responsibility. You don’t want to field calls in the middle of the night because they can’t get the lightbulb out of the ceiling fan, she said.

Other recommendations:

Insurance: Yahraus sticks with major insurance companies that understand rentals, particularly when it comes to liability. She told of a renter whose guest’s dog bit someone on the property, and that wasn’t covered, sticking the owner with a big legal and damages bill.

Pets: Speaking of pets, some insurance companies exclude some breeds of dogs, so make sure you understand that. Pets can cause damage, so if the owner allows them, that should be spelled out and involve separate security agreements.

Get a home warranty and understand what it covers: Particularly with older homes, air-conditioning units, plumbing and appliances can go out.

You may pay several hundred dollars for a warranty, but then you won’t have to worry about sudden expenses. Make sure, however, that you read and compare policies so you know what is and what’s not covered.

Check crime statistics: If you buy in a high-crime area, expect to have turn-over. Families don’t want to stay in a house that’s been burglarized.

Older homes: You can buy them more cheaply, but remember that their systems are older and more prone to break, so be prepared for the expense and inconvenience if that’s the route you pick.

Inspect: You can’t barge in on tenants, but it’s a good idea to have someone drive by occasionally to see how they’re taking care of the property. A trashed outside is a good indicator of what’s inside.

Smoking: Don’t allow it – period — except outside. It gets in the walls, the carpets, the drapes and then you can’t rent the property.

Plumbing: Yahraus has had to deal with repeatedly backed-up sewers because tenants were throwing baby wipes in the toilet. “There’s a whole page in my lease agreement about what is flushed down the toilet,” she said.

Cycles: Recognize that rental prices swing up and down, and factor that in.

Support: If you’re going to get into this business, Yahraus recommends you find professionals you can trust, especially the real estate professional and property manager, who must be honest, savvy and knowledgeable. That’s especially true if your rental property is far away, like in another state. You need someone on the ground to hold renters accountable and to fix things before headaches turn into serious problems.

Final thoughts: “Hire someone who knows the city,” Yahraus said. “Know what you’re buying and buy right. Otherwise, forget it.”

Please send real estate questions, comments or ideas to hdekeyser@reviewjournal.com.