The real estate market sucks.
The plan is to find income by renting my late Mother’s house.
Relate your joys and horrors, please.
Mostly, I presume, horrors.
The real estate market sucks.
We’ve owned a rental house for the last 20 years or so. Things were much easier after we hired a property management firm to do all the administrative things. We’ve been fortunate in that we’ve always had tenants, and they’ve tended to stay for several years each, with one or two offering to buy if we ever wanted to sell.
Overall, pretty easy, because we could charge enough to cover the cost of management fees. Through the management company we’ve replaced the roof and the furnace, and probably the water heater, so be sure you’ve got funds available for unexpected repairs, same as for your own home. We’ve never been asked (nor have we offered) to make major cosmetic updates to the kitchen or bathrooms.
My advice would be to talk with a property management company or two, plus someone at your local real estate office for advice about your local market. Is your mother’s house in a desirable neighborhood (schools, etc)? Does it fit whatever’s currently popular for bedroom & bathroom numbers?
I’ve had a rental for the last several years, and I would strongly suggest that you consider a property management company. When our last tenants decided to stop paying on time and not watering the yard, I simply told the management Co to move 'em out. Took less than a month, and they made them pay for damages to the tune of $3500. The only thing that I do is collect the money and do a drive by inspection every few months
I’m not trying to scare you off…just the opposite. My parents were landlords (2 rental houses) and had great experiences. It really depends on the tenants that you get.
In fact, given the local real estate market, I’m thinking about getting another rental. I pay cash, and enjoy the monthly income to augment my retirement funds…plus have the benefit of any increase in property values…although I will never beat my non-real estate investment paybacks.
I’d watch out about the Property Management firms.
My mother owns some rental property on the west farm, and she was worrying too much about it, so we kids advised her to hire a Property Management firm.
It ended up being a big mistake. Soon she was still worrying about the property, and now about the Property Management firm, too.
They were a total rip-off. Failed to keep the properties occupied (which was the main task we gave them). More vacancies than when Mom was doing it herself. This in a college town with a shortage of rental housing. And they charged a percentage of the rent, and tried to charge that even when the units were empty!
Then there were constant ‘fees’ they charged for everything they did. They charged her for all the ads they ran (in the wrong places) and then an additional ‘placement fee’ for calling them into the paper. Once tenants finally came over to her with a plumbing problem, one they had reported the last two months with their rent payments. Mom called the plumber, then called the management firm to ask about this. At the end of that month, they added a fee for a ‘plumbing service call’.
When we finally got fed up enough to fire them, they tried to claim the agreement was for a full year (no such language I could see in the signed agreement). I told them to go F*** themself. They threatened to take Mom to court. I told them to go right ahead. She’s an 80+ year old woman who’s lived in that small town for 60+ years. The Sheriff’s sons come out to her farm weekly for 4-H dog-training sessions. The County Judge stands next to her in the church choir, and his granddaughters took riding lessons from her. The court bailiff was her brother-in-law. Yeah, good luck suing her in court in that small town.
Maybe we just got a bad apple of a Property Management firm. But we checked them out before hiring, and this was the ‘good’ one!
Probably an obvious precaution, but one we learned the hard way. Get references. Do a credit check. BEFORE signing the lease with a new tenant.
My dad has rented houses and apartments for years and his criteria are:
First and last month’s rent, and a deposit
Proof of income
No pets of any kind (and don’t try to sneak them, he’ll find out)
And I’m not sure about references and such. I’ve said to him, “How can you expect people who are renting to pay so much in the beginning? Who can afford to do that?” And he said that’s ok because he doesn’t want the kind of renters who don’t have that kind of money saved.
None of his rentals have ever gone vacant for very long. These dream tenants do exist, so don’t be afraid to have strict criteria.
And then there’s the process of removing bad tenants. Once they get a month or two (if he’s feeling generous) behind on rent they get a call that tells them to have their stuff out by X date. And then he tells them if they are NOT out by that date they will find their stuff on the curb waiting for the garbage man. As far as I know, that’s only actually happened a couple of times.
…Indiana is too far away to get him to do it for a cut.
I’ll second both the recommendation for, and the caution against, using a property management company.[ul][li]For: My parents rented out our house for the 3 years that we lived overseas, and the tenants weren’t good. They actually had a small kitchen fire that we didn’t find out about until we moved back in the house! A property manager – especially when the tentants were thousands of miles away from the homeowners – probably would have been a very good idea.[/li]Caution: I have been a renter for 13 years, and my last property management company was horrible. They didn’t give a crap about the house, they only did one inspection (they should have done 3, one each year), and they put off HOA-mandated repairs until they were threatened with significant fines. They were horrible to me, too. If I’d had any way of getting in touch with the homeowner, I would have recommended that she look for a better company.[/ul]
That would be quite illegal in all 50 states.
Great, add attorney fees to the cost. :rolleyes:
If you’re going to rent, make sure the rental is in your neighborhood. When we moved from SC to Florida we relied on a property manager to handle the tenants. Then we decided to sell, and upon going up to SC to get the house ready for the market, we found
- Uncut lawn (the tenant did not own a lawnmower)
- Bug infested like you would not believe. We bombed the house three times and still had to get the pest guy out. TWICE. I stored my purse in the fridge, there was no way I was leaving it on the counter.
- Broken windows
- Filthy carpet (she didn’t own a vacuum cleaner either)
- The gate to our chain link fence was thrown in the back yard.
But, she paid her rent every month, so we had no clue. What we learned from this experience is if the property is not near where you can visit it at least once a month easily, it’s too far.
We are trying to sell our current rental property. We’ve had one tenant we had to evict, and another good tenant who stayed for a year. The tenant we have now is short term, but his boss paid for the rental, so we’re thinking he won’t do anything to put his boss in a bad light. Plus, the realtor has driven by a few times and said it doesn’t look like anybody is living there, which is fine by us.
What we’ve learned from this experience is make sure you have enough of a cushion so that if you must evict and spend money to clean, you won’t be strapped. Also, have enough of a cushion so you can spend a few months finding a new good tenant, and not have to “settle” just to get the mortgage paid on the rental.
Also, in our duplex, we’ve found that the best way to find good tenants is to ask the remaining tenant in the other side for a recommendation. Ask them if they know of somebody looking for a place; someone that they would enjoy having live right next to them. Generally, you will get very good suggestions from them, because they want good neighbors. Good enough to be worth paying for. Mom has paid the tenant (given rent credit) equal to what she would have paid for an ad if the person they recommend is still there & paid up 3 months later.
We once had a tenant call Mom and say she had posted the vacancy on the bulletin board at the hospital where she worked, and that she was likely to get calls from 2 or 3 people looking to rent. And she told Mom which of them she suggested renting to – and warned her to definitely avoid another one.
Maybe I misunderstood your post, but in Florida, you MUST go through the courts to evict somebody. This changing the locks and throwing the stuff out on the curb is not done anymore.
No, just something else I hadn’t thought of.
Where did you guys find a lease? I presume the law varies by state.
I’ve been waiting for someone to ask this question. I rented a condominium to a woman whose mother cosigned for the lease. The woman got married to a guy with a union job. His job site went on strike. They could never pay me back rent until I sold the place and they were moving in with her mother. And yet the older kid had a new bike, there was a big screen tv…so things weren’t that bad for them. They would have been difficult and expensive to evict. I’d never be a landlord again.
Selecting tenants always worried me. We just ran ads in the local paper and always had multiple applicants. Would someone not selected turn around and sue for discrimination? Would the people we chose end up not paying, or trashing the property?
We used to pick up forms from the an office supply store–they had a file cabinet full of stock business forms. I’d be surprised if anyone still sells forms like that, though.
My landlords are the pickiest people on earth, and they still got screwed. Our lease is more than 20 pages long, and details every detail imaginable, including a rider for us that we can operate one business from this property. We’re decent tenants, pay two months ahead, and do most repairs and maintenance ourselves. Criminal, background and credit check required.
They rented another property to a family who, within six weeks, demolished the drywall, broke the blades off the ceiling fans, ruined the carpets, broke every single door in the house, and took off on vacation while leaving the dog in the garage with no water. My landlords evicted them immediately.
One of the landlords is a private investigator, so I imagine he can track down his delinquent tenants. He’s a bit of a hard-ass, but he’s honest and takes care of his properties. It does seem to quite a hassle, though, from what he and his wife tell us, so they’re already looking to sell off at least one of their properties.
We found ours online. I think we paid about $6 to download both an application form and a lease agreement valid in our state.
justpassingthrough, unless you are truly discriminating against a tenant on the basis of race, gender, etc, you can rent who you want to. It’s your property, and if someone’s application doesn’t check out you are under no obligation to rent to them.
We had one woman call up and ask to see the property. We agreed on a meeting time, went there a little early to turn on the AC, lights, etc, and waited. And waited. And waited. Finally, 15 minutes AFTER our appointment time, she called and said she was on her way. We told her not to bother coming out. We figured if she couldn’t get to an appointment on time, she may have the same difficulty paying rent on time.
I work in rental property management, and I could tell you some unbelievable stories. One of my favorites was a person who had a kitchen fire, claimed nobody was at home when it started and it “just happened” and, when we were trying to get the permits to do the repairs, complained to the City that she had no kitchen! There was also a bitch who went to the City citing needed repairs, but never contacted us about them!
Check references very very carefully. Don’t just call the number for their ex-landlord–in this day and age of cell phones, you could be talking to a friend. Get the ex-landlord’s address and check the number.
Put a clause in the lease that the first six months is a month-to-month rental, and either party can terminate with thirty days notice. Also state that any legal fees used to collect the rent are to be added to the rent and considered additional rent.
Self-help evictions are illegal. Don’t do it. Go through the courts.
Contact your City and ask about the legal stuff involved in renting. Usually you have to register the property and get a Certificate of Rental Property. If you don’t do this, your tenants can take you to court citing an “illegal rental.”
Call your local police station, explain your situation, and ask if they are aware of your prospective tenants.
Get a credit report. If they don’t pay their bills on time, that usually includes the rent.
The first time they are late with the rent, contact them on the fifth of the month and tell them you are filing charges with Tenancy Court if they don’t pay immediately. Then do it. If you have to go court, tell the judge you want them to pay today or leave. Don’t accept stories about how they will pay the rent.
If you have a good tenant who has been there at least a year who comes to you and explains why the rent is late and agrees to pay a late fee, don’t go to court.
Always put a five percent late fee is rent is paid after the fifth. And that the rent has to be paid in cash or certified funds.