Advice Needed from Landlord Dopers

In My Humble Opinion
1

I’m hoping to move soon. I presently own a three-bedroom ranch house that is in pretty decent shape, good shape structurally, with a brand new roof and siding. I’m planning to move someplace with more land. I have about $40,000 equity in my home. I’m considering keeping my current home as a rental. I figure that I could finance both places on a 15-year mortgage and after that have a nice rental income as I consider retirement (I’m 42).

Please tell me your experience as landlords. Is it difficult to keep the property rented? Do you check references? Do they trash the homes? Would you do it again if you had it to do over again?

Thanks for any advice.

StG

2

I was not a landlord myself, but my parents were for decades. The first and basic rule of tenants is that people treat property that they don’t own like shit. Be very, very careful who you rent to, and even then, don’t do any expensive upgrades to the property; chances are, you’ll be fixing it up every time your tenants move out. Cheap paint, cheap carpet, cheap fixtures.

Make sure you get comprehensive, signed rental contracts. Cover your ass 10 ways from Sunday - in fact, it probably wouldn’t hurt to talk to a lawyer to get your rental contracts made up. Become very familiar with your local rental laws.

Don’t let late rent payments slide even once - start eviction procedings immediately, and it will still take a long time to get deadbeats out. Check up on your property regularly since you won’t be there to see and hear what goes on.

That said, having a rental property can be a great source of income. You will need to take steps to minimize the headaches, though.

3

Oh yeah, you asked about references - yes, get them, and check them, and make sure they’re not family. Get at least two past landlords - don’t rent to people who haven’t had landlords before. You DO NOT want teenagers renting your house.

4

Get your house valued when you move out, as you can deduct it as a primary residence if it’s appreciated in value. Sometimes rental agencies work well, if their insurance covers any damage. Know the laws but they are tending to lean towards the renter these days. But I’m in Canada, and I don’t know where your from, so US laws may be different.

5

And absolutely get a damage deposit. There are contracts renters can sign as well, and if you need one, email me I’ll send you one.

6

I wholeheartedy concur with the preceding posters. If I may add a small bit of advice?

  1. Absolutely, always check references, as stated before.

  2. Credit checks are an ABSOLUTE must. You’d be amazed at how many d"ecent, kind and wonderful" prospective tenants start telling you about all the horrid crap in their past once you say that you’ll be doing a credit check. Suddenly, they remember about their bankruptcy two years ago, their $50,000 in unpaid, defaulted parking tickets, and that abandonment of previous rental three years ago. Pay the $35 dollars, and get the FULL screening done. It helps a lot.

  3. When you are calculating the rent for the place, make SURE to add in enough for a gardener. From previous experience, tenants don’t do yardwork, and they’ll let all your painstakingly planned landscaping die a horrible death because they “forgot to water”. $100/month for a good gardener keeps your property value up. Later on, if they seem to be good people, you can offer them a discount on the rest of $100/month if they maintain the property themselves.

  4. Like Featherlou said – Ironclad contracts, and keep to them! Dont’ let them slide, even in the smallest bit, for the first year. After you have gotten to know them as tenants, then you can afford some kindness. But remember – any inch you give will result in later harm to you.

  5. Do tenants trash the place? Yes and no. If you rent to the right people, then they should take care of the place quite well. However, even the best tenant won’t care for the place like you do. They just won’t SEE the cracks in the ceiling starting, or notice the dry-rot around baseboards.

  6. Be prepared for emergencies at all hours of the day. You WILL get the 3 a.m. “Bathroom flooding!” calls, and they will expect you to handle it immediately. If you are planning on being gone for any length of time, (say for a two week vacation) you will need to arrange for someone to cover emergencies – or suddenly, when the pipe breaks in the kitchen, the tenant will hire the $300/hour plumber to fix things, instead of the $60/hour plumber you usually use.

7… If you won’t be in a position to visually inspect your property at least once every two months, or you don’t have a friend/relative who can drive by the place to check up on things, there are many property managers that can handle all this crap for you – for a 20% fee. If you are living in another state, this could be the best situation.

Now, as to if I would do it again – through all the crap, absolutely. Its a good source of income, and property values never go down over the long run. If done well, with enough caution and foresight, its a very rewarding process.

7

ABSOLUTELY NO PETS!

LET ME REPEAT

ABSOLUTELY NO PETS!

8

I work in rental property management. The above are all good things to do. Especially PUT IT IN WRITING. Stationery stores often carry legal leases. Put in about when the rent is due, what the late charge is, who makes repairs, who is responsible for upkeep, who is allowed to live there (I can’t tell you how many times we’ve rented to a couple with two children that end up with eight people in the house).

Check with your city about Certificate of Rental Occupancies. They want to know how many people are living in the house. If it’s over a certain limit, forget it. And they will want to inspect the house before the tenants can move in.

It’s a good idea to take photos before the tenants move in. That way, they can’t claim the damages were there when they moved in and not pay for them when they move out.

Run your own credit report. Don’t trust the one the prospective tenants hand you. Those things are nortoriously easy to “fix.”

Ask them why they left their last place. And then check with the landlord. And don’t take the prospective tenant’s word as to who even was their landlord. Check with the tax office to see who owns the property.

9

All good advice - Thanks.

I was planning to allow pets (with a hefty security deposit, of course). I have three large dogs in the house with me, and I"m aware of the damage they can do. I can do things like minor plumbing repairs, patching drywall and painting myself. I have pergo in the living room, and was planning to put laminate down in the rest of the carpeted areas as well. It’s durable and easy to clean, versus carpet.

Do you usually rent with all appliances there? Stove, refrigerator, washer and dryer?

Is it hard to find tenants? I’m 5 minutes from the interstate, 10 minutes from the Nissan factory, 30 minutes from downtown Nashville. I’m also about 30 minutes from the local state college, but I’d prefer not to rent to college students. How hard is it to turn down tenants if you don’t like the looks of them? There are laws in place to protect tenants from discrimination. I’m not talking race, of course, but age, number of children (who I think are more damaging than pets), that sort of thing.

Thanks again for the advice.

StG

10

Appliances usually aren’t required in a rental property, but most of them have a stove and frig.

Turning down tenants isn’t that hard. You can simply say “I went with another tenant who seemed better qualified.” You can often rent a house for more than a prospective student can pay.

We’ve found out the hard way that people on governmental assistance (Section 8, rent subsidy) do not usually make good tenants. In fact, they have been some of the worst ones we’ve had. You are only guaranteed what the government will pay you, and they are legendary for not paying their portion, and complaining to the agency about landlords.

In a three bedroom house, the government is probably not going to let you rent to a family with more than three or four children.

11

St.Germain - My wife and I have two rental properties. One in Arizona and one in CT (where we live) One is a house and one is a Condo.

Stove, Refrigerator, and one working Phone are required in the rental in most states. Washer & dryer, and dish washer are not.
The higher your rent the more likely you are to get someone who can afford it, most likely not a teenager going to college. We charge 15 hundred a month for the house (tenant has been there 5 years, great lady, pays on time, has 5 cats) And 2000 a month for the Condo in AZ (it’s very nice in an upper class neighborhood, gated community) The tenant works for Microsoft in AZ and is constantly on travel…

However, things other people have said are correct. You need a lawyer to draft the lease agreement, you need someone to handle all the maintenance if not you.

People can trash the place, this is why you need to screen your perspective tenants. No college students sharing the rent three ways is a good starter. Look for middle aged people who have a steady healthy job. (Sorry all you college students, but come on, what happens at those off campus houses? I’m a prof. I hear the stories)

Use your instincts, when interviewing people ask pointed questions.

Good luck.

12

Ah, you’re aware of the damage your dogs can do, with you watching and telling them to quit scratching the shit out of the door. Tenants just don’t do that. The tenants themselves usually do enough damage through sheer negligence; I wouldn’t open up room for them to allow a dog to wreck your house and yard as well. And you’re right about kids, too.

In some ways, it’s just easier to rent with the appliances included. That saves a lot of wear-and-tear from people moving these things in and out.

Jeeze, I sound really down on tenants, but I guess it’s best to be prepared for the worst and cover your bases than to learn the hard way. You might get great tenants that leave the place in better shape than when you moved out (I’m that kind of tenant myself).

13

My grandmother was a landlord for almost thirty years, and I know from experience that people like you are as rare as giant pandas.

I’d like to add another note about pets. Even if you have it in your lease, periodically check for evidence of animals on the property. (In one of our houses, the family kept two huge dogs hidden in the basement.) Find an excuse as to why this-or-that needs to be looked at, and go around the house looking for dog toys, food pellets in corners, and dog turds in the back yard.

Even with a large damage deposit, your expenses in fixing up the place could easily exceed it. Suing tenants for damages is often only a waste of time. In my state, if the judgment is not paid, you can go back to court, even possibly garnish their wages, but the reality is that you most likely will never see a dime. The laws favor the tenant, not the landlord.

14

I would also check with the FIre Dept. They often have rules and regulations about rental properties. They may required you to get a “Fire Box.” This is a little metal box you put on the outside of your property with your house key(s) on the inside. The Fire Dept. has a master key to it. It’s a good idea to get one, it may help the Fire Dept to avoid kicking in the door and save a life.

Make sure there is a clause in the lease that states “ANY ILLEGAL ACTIVITY IS GROUNDS FOR IMMEDIATE EVICTION.” If any rent is paid through drugs or other such activity, you could lose your house!

Check the Police Dept. for calls. Anything involved “Domestic Violence” is a big red flag. Even if the offending party is not living there and they are not together “supposedly,” it often doesn’t turn out that way.

15

Complain about the landlord? How dare they? I mean, the nerve of some people! We all know that every landlord is simply a humble paragon of virtue, concerned with nothing except fulfilling his or her contractual obligations and responding in a timely and appropriate fashion to problems that might occur with the rental prooperty. Never in the history of renting has a leaky roof or a malfunctioning stove or a rusted door lock gone unattended for more than a few hours. Properties are always in perfect condition when the tenant moves in, oh, except maybe that “I haven’t been able to fix that window we talked about yet,” and “I’ll get your mailbox key to you as soon as i can find it.”

Yeah, that evil gummint. Curse them for failing to encourage nineteenth-century tenement levels of occupation.

Seriously folks, it’s nice to know how those of us who have not yet scraped together the money for a deposit are viewed by the rentier class. Just a heads-up: we’re not all actual or likely criminals who take pleasure dwelling in filth and destroying other people’s property.

16

All good advice so far. I currently work as a property manager and also have had the experience of owning a condo and renting it out when I moved out of the country, so let me add the following…

See if there are agencies in your area who will do all the screening, credit checks and showing for you. That’s what I did when I decided to rent my condo and didn’t have the time or resources to do it all myself. And it was worth every penny of the fee, which was equal to whatever one month’s rent to my tenants would be. You still have complete control over who you rent to, but they do all the leg work so you don’t have to bother with anything but interviewing prospective tenants and reviewing the background checks provided by the agency.

They have a ready database of people who are looking for homes to rent, so the process will be more likely to go quickly. And if they don’t have anyone who matches your criteria right now, they pay to run the ads for you. They run the credit checks, verify employment, call previous landlords, etc. They come to your house in the middle of the work day to show it so you don’t have to leave the office or interrupt your family time in the evenings. They have all the forms, (applications, leases, etc.), so you don’t need to go out and buy them or have an attorney draw them up. It’s a great package deal, IMNSHO.

I ended up with tenants who actually took better care of my place than I did and who paid their rent early every single month. And not only that, when they were ready to move out, they had a friend who’d visited and loved the place so much that they referred me to him to buy it – which he did!

Which brings me to my next point – think very hard about whether you want to be a landlord for the long-term. I didn’t realize when I did this that there were time restrictions on reinvesting after having converted my property to rental property from my primary residence for tax purposes. When my tenants were ready to move out, I had decided not to move back to St. Louis at all, so there was no reason to hold onto that property anymore on the chance that I might move back into it. It made more sense for me to simply sell it. However… I didn’t know that I had to buy something else immediately, in order to avoid paying huge capital gains taxes. I had been ill-advised that I had 2 years to turn around my money into a new home before the tax penalty would kick in. Well that would have been true had I never converted my condo into rental property, but once I did, that window went, well, out the window!

So before you do anything, check with an accountant and find out what your tax obligations are going to be!

17

I manage an apartment complex that is subsidized by Section 8 and have 44 units. All of the above is excellent advice.
mhendo-I don’t think that annie-xmas is saying that all landlords are a “humble peragon of virtue”. There certainly are some foul landlords who are not exactly on top of it when it comes to maintenance or valid landlord complaints. But I speak from experience that a lot of my section 8 tenants will call HUD on you to complain about anything and everything and basically just stab you in the back! These are tenants that receive the most assistance from the government and tend to keep their units in sorry ass shape! I have 44 units and there are tennants who believe that if they report a closet door down at 10:00 am on Monday and it is not repaired by 12:00 pm that same day, that we are not attending to their needs quickly enough and they will call HUD! I’ve seen it happen too many times.

18

I also want to add; make sure that if a tenant has a complaint or needs a repair that they put the request or statement in writing with the date and their signature. You can then respond to their issues in writing. Make sure to save copies of everything in case you ever have to go to court to evict. ALso helps to keep a maintenance log with repairs and dates and parts used to make repairs. It may sound like overkill, but it will protect your ass in court most times!

19

In Colorado, you cannot evict a Native American. Weird laws.

20

I just thought of something else…

Check with the HR departments of any large corporations in your area and see if they have an employee relocation program. It’s a great resource for finding people moving into the area who want to rent homes!