Any landlords/owners of rental homes? need tips and advice.

[Italiahaircolor]

Re: Any landlords/owners of rental homes? need tips and advi

Another really good nugget of advice is to contact your local fire department/police department, every month or so they offer landlord training classes. This is an awesome way to learn the laws as they pertain to you in your area and to really get a good feel for the task you'll be undertaking.

If you're planning to landlord yourself without hiring a company, I would find a great handyman NOW (Angies List is a good place to look). Unlike when you live in a home and can live with minor imperfections for extended periods of time, tenants often feel that anything that pops up should be handled immediately--as in 5 minutes ago. It's so much easier to have someone on speed dial should an emergency arise as opposed to having the emergency come up and then start looking.

Contracts are your best friend, and you need to think like a renter to really cover yourself as a landlord. When you go to have a contract drawn up, make sure you put in provisions for paint, early termination fees, what is included in their rent and what isn't. Think of it like a business, because at the end of the lease you don't want to be left with a ton of work. When I rented, I allowed my tenants to paint...however, in my contract I made it clear that they would have to repaint themselves before moving. I also offered "perks" for taking care of the property...along the lines of tending to things themselves...say, a light switch broke, if they fixed it themselves as opposed to me calling my service provider, I took $$ off their rent.

Another thing to consider, especially in this market now that FHA is gone, is renting to own. If you're willing to part with the property, then this is something you should look into. This is what I finally did when I was tired of carrying my condo. I found a couple who couldn't afford to buy right now but wanted to buy in the eventual. It's more complicated and takes more work on your end, but it's a nice offering and it's a great way to plan for the future as well.

 

[rubybeth]

Re: Any landlords/owners of rental homes? need tips and advi

Charbie, not sure where you're located but I know that in my city, properties need to be zoned as rental units, even if it's your house that you're renting out. City zoning prevents someone from building a huge Wal-Mart on your cul-de-sac, and also from someone building a house next to an industrial site. You can apply for re-zoning with the city, but I also know that in my neighborhood, there was a temporary 2-year moratorium on re-zoning properties as rentals, since it seemed that every other house was turning into a rental and then not being maintained. I'm not sure how much trouble someone would be in if they just rented out their home without the proper zoning, but neighbors could complain to the city about renters and then the jig would be up. Good luck!!

 

[EricaR]

Re: Any landlords/owners of rental homes? need tips and advi

I'm a renter and I like the house where we are living right now. I'd LOVE it if there were a few small changes but our landlord has been very resistant. This is the first home they ever owned and I think they are too emotionally attached to it and think it is perfect. Right now the fridge and dishwasher need to be replaced and two of the recessed lights in the living room need to be rewired. We approached the landlord and offered to pay for all these things out of pocket. The fridge we would take with us when we move and we would leave the dishwasher. The answer we got was a firm no.

Right now there is a water leak under the dishwasher but the landlord (who installed the previous dishwasher) refuses to believe us. My husband used to work for Rotor-Rooter and had one of his former employees come out and write something up, including photographic proof of the leaking hose. Landlord still refused to believe it and he won't send out a plumber of his own. I was at the Sears outlet looking for refrigerators and came across a $700 dishwasher that was selling for $300 (the sides were both completed scratched but those would be covered). The landlord just laughed and said that the old one had worked for them for ten years and that we should just deal.

I’m not even getting into the dripping faucet in the kitchen or the missing door moldings. Or the smashed up mirrored closet door…

We are far from bad renters. The place is immaculate, their formerly bare patio is now bright and cheerful, and we are taking very very good care of things. And we aren’t asking them to pay for a thing. Frustrating frustrating frustrating! We have done a few repairs on our own without telling them (replaced broken mini blinds, had an electrician re-wire some broken and smashed outlets, etc) just because those were things that made the house almost unlivable. I would have had no problem telling them IF I had known they would be open to it, but I know they would have shot us down and having usable electric outlets in our office was sort of important. Prior to having the electrician out there was one single plug we could use - the rest were broken and/or wired incorrectly.

 

[LGK]

Re: Any landlords/owners of rental homes? need tips and advi

Best piece of advice - Decide now that you will have a GREAT tenant in your place, or no tenant at all.

Of course, read all about the landlord obligations in your state. However, if you have a nightmare tenant (and ANY red flags, alarm bells or twinges of something might not be right should be heeded to BEFORE signing the lease), that tenant will make sure you know EVERY piece of that legislation/regulation before and after she leaves.

If you have a great tenant, just collect the rent, come and go as you please (within reason), and pay to maintain your property whenever they call (bursted pipes, broken fridge, etc.). Easy-peasy.

It is better to leave your home vacant an additional month than to settle for a less than ideal tenant. Any feeling AT ALL that a potential candidate is less than ideal NEEDS TO BE listened to. They should treat it like their home, and want to make a home - stable, good income, dressed properly, good hygiene, etc... and read the soft, subtle signals - whether they are partiers, nit-picky complainers, hoarders, etc.

If you're allowing pets, meet the pets. I was a property manager for a while, and you wouldn't believe the mangy animals I saw with their relatively well-dressed owners. Yes, I agree that there was likely a lot of quick, unfounded judgments being made about potential tenants - fairly or unfairly, but this is YOUR property and bad tenants become YOUR problem when you sign a lease.

A bad tenant will make YOU pay. Most (and it feels like all) state laws FAVOR the tenant, not the landlord. It also takes quite a while to evict a bad tenant (months!), even when they stop paying rent and are destroying the place.
If you have a great, responsible tenant - no worries, when they find a place close to their new workplace, or have built up the nestegg for their new home - they'll give you plenty of notice for you to find the next set of ideal tenants. The place will already be clean and the lawn will be well kept, so it's easy to show good tenants what their new home will look like. The good tenants will trust you to show the place whenever you like, or will open the doors at all reasonable hours for you to come in.

In short - regardless of the neighbourhood, you want to find that gem of a tenant. Fix up your place if necessary to attract them (new coat of neutral paint works wonders, clean up the lawn, remove clutter/personal artifacts, etc.). Strangely, sometimes I find increasing the requested rent nets you some really good candidates. You just hope they like the place when they see it. No matter what though - trust your gut, check their references, and don't settle.

Ditto to all of this, but especially that. We rent commercial property and people just decide to screw you sometimes. One guy owes us something like $6K in back rent- he just stopped paying, and evicting him was a ginormous pain. Never will see that $.

I presume it's the same in residential is it is in commercial, but you can employ a broker to write up the lease if you don't feel confident in that aspect of it, and to help you find prospective tenants. For commercial the typical fee is 5% of the lease, if there's two brokers involved (yours and the tenant's) it's split between them 50/50.

 

[MyDiamondSparkles]

Re: Any landlords/owners of rental homes? need tips and advi

I'm a Realtor and I also have rentals.

Can I ask why you want to move? Are you being relocated? The reason I am asking is because you have only been in your home for a few years, so I worry about renting this house and buying another house in this economy. Sure you can rent your current home, but even the best screening in the world won't weed out triple A tenants that loose their jobs and cut out half way into their lease. It happens, ask me how I know. Yes, you can afford two mortgages but for how long? Yes, it would suck, but how long are you willing to live with a "suck" budget? Realistically? What if the economy worsens and one of you looses your job or your child/ parent/ you becomes ill requiring one of you to take an extended leave of abscence from work? Just all things to think about...

Nothing is worse than house repairs that tenants cause. New puppy (and no they didn't ask you!) peed all over the carpets and they need to be replaced--children love sharpies and we can't get them to stop "expressing their creative side all over the walls, cabinets, carpets. Funny how rent generally covers the mortgage and not "extra" expenses like that. Or how about the tenants that clog the drain up and use Draino or Liquid Plumber, therby eating holes in your plumbing?

Does your current lender know you are going to be leasing your home? You'd better read up on the mortgage and aks an attorney to look at it if you are unsure, because some don't allow it and most that will, require extra paperwork as to who the rent gets paid to if you default on your mortgage. What??? Yes, that is right, you might not remember it (so many papers to sign at closing) but most title companies that close your home had you sign a piece of paper for the lender that said you would be living in the property as your main residence. Oh, are you changing that mortage????...well then the lender might like extra interest paid because the interest rate you received was based on you residing in the home. Rental homes are always charged a higher rate of interest because if you do have two mortgages and things go bad, which one are you more likely to pay? Yes, the one you live in.

Are you in a neighborhood with deed restrictions? Do the deed restrictions allow you to rent? Again all things to think about.

Okay so when the tenant moves out...the insurance companies around here get wind of that and will triple your premiums or drop you like a hot potato.

What about higher property taxes? You are longer are elligible for a "Homestead exemption" if you don't live in the home.

What about when you go to sell the home? Have you lived there for 2 out of the last 5 years? No? You are going to be paying taxes on the money you make between the price you paid for the home and what it went up...wheras, if you live in the house and sell it, you don't pay those taxes.

I'm not trying to be a Debbie Downer, but if i had a nickle for everyone I know who decided it was a "good idea" to rent and found out it was not such a great idea afterall....

 

[charbie]

Re: Any landlords/owners of rental homes? need tips and advi

Sorry I started this thread and bailed...its been a rollercoaster couple of weeks.
Let's try to catch up:
MDS: thank you! thank you! thank you! the points you make are great things that have helped serve as a checklist for things to be aware of. while we had covered most of the points you raised, it just reminded me of some things to double check. you're not a debbie downer, just being realistic. the decision already had been made to rent the house- even our own real estate agents advised us that it would be the best option given the market and situation, but im glad to have read through your post.

LGK: we had the option of using our agent to draw up the agreement, but we actually were able to use one that my husband's cousin had drawn up went renting his house out, and changed a few terms. we then had it looked over by DH's good friend who is a lawyer and he double checked it to make sure there weren't any holes.

Erica: oh i'm hoping we will be lucky to have renters as good as you. my husband and i are honest with ourselves, and i think the precedent really is that if it isn't something we would want to live with, obviously we would never make our tenants live with it. and while we think the house is in pretty great condition (and have been told so by the people who have toured it)- we understand there will be some things that may need to be fixed/changed.

ruby: thanks for the heads up- i looked it up in my city, and we're lucky that we don't need any zoning permits. whew.

Italia: sounds like you're a very smart landlord. i'm totally looking up the landlord classes. that's awesome advice.

HH: got it covered

Cehra: your experience has been so encouraging. i know now how "in demand" our house was...i don't think we're EVER going to have an issue renting it...so many people are in a position where they have been foreclosed on or short sold and just cannot buy.

Iota: i totally get you on the whole "job interview" thing now- we had our open house, and people were pretty well spaced out. read the rest of my response to learn more about how it all worked out.

MC: while i would LOVE to charge first, last, and deposit all at once, our area just does NOT lend itself to that kind of renter. i wish it did...but i honestly don't know how we could find someone who would have that up front in our area.


SOOOOO.
We had so much interest in the property that i seriously questioned if we put the wrong price on the ad. My phone was ringing off the hook. In the end, we showed the home to 8 families during the open house, and had 5 more who called and couldn't make it, but were unwilling to work within our time frame of having all applications in by today, so we had to shut it off and say, "SORRY!" we received 5 applications, 3 on the spot. we REALLY liked 3 of the families who applied, all for different reasons. two of the families had kids, but also had both recently foreclosed and i had to remind myself this is a business transaction and while i liked them personally, we had to go with the safest option. we were left with two couples- both relocating to the area for jobs. one was a couple owns a home they are trying to sell, her job/income is fairly steady (she JUST started a new job, and i work in the same field as her and understand there is somewhat high turnover), and we liked her personality...and we didn't have the chance to meet her husband since he hasn't moved to the area. the second couple is moving because she is getting stationed in the area as a marine recruiter. income is obviously very steady, housing is paid for by the govn't, she will not be deployed for the next 3 years, and will be stationed here for 3 years, and looking to live in the home for the duration. While we won't have anyone sign a lease longer than 12 months, if they are good tenants, it would be great to have the security of 3 years being leased right off the bat. Both options honestly are great for different reasons, but I think we are going to go with the second couple. I haven't gotten to meet them in person, which is pretty darn scary, but i met her boss who actually came by to see the house for them since they aren't getting into town until next week. He was great, couldn't speak highly enough about her. I've spoken with her on the phone a number of times gathering information. i am a pretty good judge of character, and i honestly feel really comfortable with this couple.

OK- so now that i've written a novel, i again just want to THANK you all for your words of advice, encouragement, warnings, and honesty. obviously there is a risk involved- there always is- but i feel as though we really have turned over all stones to minimize the risk to the best of our ability. im looking forward to getting this show on the road. we are living rent free right now in DH's deceased great aunt's old house, so it'll be nice to continue saving money until we find a home WE want to live in.

 

[Italiahaircolor]

Re: Any landlords/owners of rental homes? need tips and advi

Sounds like you've had some really awesome luck finding a tenant.

I do want to add that you shouldn't count someone out just because they've had a foreclosure. Okay, call me crazy. Foreclosing on a home now isn't the same as foreclosing on a home before. A lot of people got into a position where they were upside down on their mortgage and walked away rather than continuing to sink with the market. This, believe it or not, was actually advised not so long along and lead to an increase in jingle mail. It's not the kiss of death. But, I understand as a first time landlord if you're not comfortable renting to them.

I hope you get the best renters in the world and that things go smoothly for you!

 

[charbie]

Re: Any landlords/owners of rental homes? need tips and advi

Sounds like you've had some really awesome luck finding a tenant.

I do want to add that you shouldn't count someone out just because they've had a foreclosure. Okay, call me crazy. Foreclosing on a home now isn't the same as foreclosing on a home before. A lot of people got into a position where they were upside down on their mortgage and walked away rather than continuing to sink with the market. This, believe it or not, was actually advised not so long along and lead to an increase in jingle mail. It's not the kiss of death. But, I understand as a first time landlord if you're not comfortable renting to them.

I hope you get the best renters in the world and that things go smoothly for you!

thats exactly why it was so hard not to go with them. i knew they could afford the rent, knew they would be good tenants, and knew they WANTED the home. however, when faced with the option of people with kids who have recently foreclosed vs. couple who wants to live there 3 years with guaranteed income and no kids to draw on the walls...had to make the logical decision. but it pulled SOOOO hard on my heart strings.

 

[Italiahaircolor]

Re: Any landlords/owners of rental homes? need tips and advi

Sounds like you've had some really awesome luck finding a tenant.

I do want to add that you shouldn't count someone out just because they've had a foreclosure. Okay, call me crazy. Foreclosing on a home now isn't the same as foreclosing on a home before. A lot of people got into a position where they were upside down on their mortgage and walked away rather than continuing to sink with the market. This, believe it or not, was actually advised not so long along and lead to an increase in jingle mail. It's not the kiss of death. But, I understand as a first time landlord if you're not comfortable renting to them.

I hope you get the best renters in the world and that things go smoothly for you!

thats exactly why it was so hard not to go with them. i knew they could afford the rent, knew they would be good tenants, and knew they WANTED the home. however, when faced with the option of people with kids who have recently foreclosed vs. couple who wants to live there 3 years with guaranteed income and no kids to draw on the walls...had to make the logical decision. but it pulled SOOOO hard on my heart strings.

Totally understandable. It's a business. You have to go with your gut and trust your comfort level because at the end of terms they walk away but that's still your home.

 

[rockzilla]

Re: Any landlords/owners of rental homes? need tips and advi

Sounds like you've had some really awesome luck finding a tenant.

I do want to add that you shouldn't count someone out just because they've had a foreclosure. Okay, call me crazy. Foreclosing on a home now isn't the same as foreclosing on a home before. A lot of people got into a position where they were upside down on their mortgage and walked away rather than continuing to sink with the market. This, believe it or not, was actually advised not so long along and lead to an increase in jingle mail. It's not the kiss of death. But, I understand as a first time landlord if you're not comfortable renting to them.

I hope you get the best renters in the world and that things go smoothly for you!

thats exactly why it was so hard not to go with them. i knew they could afford the rent, knew they would be good tenants, and knew they WANTED the home. however, when faced with the option of people with kids who have recently foreclosed vs. couple who wants to live there 3 years with guaranteed income and no kids to draw on the walls...had to make the logical decision. but it pulled SOOOO hard on my heart strings.

I just wanted to mention that certain things are fair game to choose/decline a tenant over (such as financial situation, credit, past foreclosure), however, there are other things that are considered protected (such as race, age) and family status/ # of kids is one of them. It is illegal in most (if not all) states to not rent to someone because they have kids, for obvious reasons. I'm sure you didn't mention this the families you didn't accept, but just wanted to point out a potentially sticky legal issue.

Edited to add this link outlining families as a protected class under the Fair Housing Act: http://www.allbusiness.com/personal-finance/real-estate/406721-1.html

 

[charbie]

Re: Any landlords/owners of rental homes? need tips and advi

Sounds like you've had some really awesome luck finding a tenant.

I do want to add that you shouldn't count someone out just because they've had a foreclosure. Okay, call me crazy. Foreclosing on a home now isn't the same as foreclosing on a home before. A lot of people got into a position where they were upside down on their mortgage and walked away rather than continuing to sink with the market. This, believe it or not, was actually advised not so long along and lead to an increase in jingle mail. It's not the kiss of death. But, I understand as a first time landlord if you're not comfortable renting to them.

I hope you get the best renters in the world and that things go smoothly for you!

thats exactly why it was so hard not to go with them. i knew they could afford the rent, knew they would be good tenants, and knew they WANTED the home. however, when faced with the option of people with kids who have recently foreclosed vs. couple who wants to live there 3 years with guaranteed income and no kids to draw on the walls...had to make the logical decision. but it pulled SOOOO hard on my heart strings.

I just wanted to mention that certain things are fair game to choose/decline a tenant over (such as financial situation, credit, past foreclosure), however, there are other things that are considered protected (such as race, age) and family status/ # of kids is one of them. It is illegal in most (if not all) states to not rent to someone because they have kids, for obvious reasons. I'm sure you didn't mention this the families you didn't accept, but just wanted to point out a potentially sticky legal issue.

Yes, im very well aware of this. It just so happened that the families with kids had the credit issues. And it totally broke my heart, because I think my husband and I may have gone with one of the families with kids bc of the comfort level we had with them, but the recent foreclosure, we needed to play it smart.