I’m one of the owners of a property management company, we own several houses and some multi-unit apartment buildings in Virginia. A few things I’ve learned since I got into this business (I bought into it when I retired, my brother and a cousin had built it up before then):
You can get screwed by anyone, and there’s very, very, very little you will ever be able to do about it if it happens. If you aren’t comfortable with that, don’t rent out to people. Something I quickly learned is that the law doesn’t mean anything when it’s hardly enforceable. We’ve had a good number of tenants who have just left and refused to pay last month’s rent. You may be under the illusion that there are legal consequences that they would have to face, but even if you get a judgment you still have to be the one who collects. Your best bet is to sell the debt to a collection agency for a portion of what you’ve lost and wash your hands of it. Trust me when I say litigating is not worth it.
What I worry about more than losing a month’s rent is property damage which can sometimes cost 2-3x monthly rent to repair (if not more, I have some horror stories.) A criminal background check can be a good thing to have done, in my experience people with criminal records are more likely to be destructive, if I see anything relating to alcohol offenses it’s immediately a no-deal. I’ll let a property sit vacant before I’ll let it be destroyed, or before I’ll let a drunk who throws parties into the unit where he/she will cause quality of life concerns for my other tenants.
When it comes to assessing the risk of someone not being able to pay rent I always think about it like this: “How much am I losing by letting it sit vacant every month? What’s my opportunity cost there? Do I think this person is likely to damage the property? How bad will it hurt me if they move in and don’t pay rent?” I know exactly what it takes to get someone evicted as I’ve evicted many people, generally once someone has paid their security deposit and first and last month’s rent (although depending on market conditions we sometimes drop last month’s rent as a requirement) it’s probably a good thing that I rented to them even if they never pay me another dime and I have to evict them–assuming they don’t tear the place up. This is the truth in a “slow” economy, in times when we’ve had many applications for even a single unit then I’m much more selective–this makes sense, you can afford to be.
From what it sounds like you aren’t going to be looking at the best pool of people in this city, so being extremely picky is just going to result in your unit sitting vacant for longer than necessary. If this was a situation in which you had tons of eligible renters I’d say be very picky and select the candidate most likely to not stiff you (keep in mind it’s a pleasant fiction that the perfect person with the perfect record isn’t going to stiff you–they do it to.)
As for:
I don’t know anything about Ohio. I know that eviction law is very cut and dry here, I cannot just change the locks on someone who is 30 days late no matter what I put in a lease. If I want someone out I have to go through the courts, no other way is legal here and any other way can result in serious penalties for my business. Keep in mind that just because someone agrees to something doesn’t mean it is valid, you can put all kinds of stuff in a lease that will not stand up in a court. [I’m not a lawyer but I’m speaking from experience and from what my lawyers have told me point blank, cut and dry.]
What we generally do is begin eviction proceedings very early, it’s cheap and it gives us something to show the tenant we are very serious. Often times they get rent together and don’t make the mistake of being egregiously late again, when they don’t–it means we’re already well on the way to getting them out of there.
Not to go too far into Virginia law which isn’t applicable to your case, but here we have to give a 5 day notice demanding payment or move out. After that five day notice we can file for eviction, the court gives the tenants a 10 day appeal window and THEN they issue the writ of eviction. The sheriff will then evict when they get around to it, I have no right to remove the tenant myself or any of their property until the sheriff does his end. Generally it will happen about 20-30 calendar days after the writ is issued.
There is little I can do to recoup losses from a deadbeat tenant but there’s a surprisingly serious number of consequences for my company as property owner if we don’t go through the eviction proceedings by the book.
My final gut reaction on this is you’re talking about a middle aged couple with a family. These are probably people who like to live in a nicely kept home, they aren’t going to live like pigs and attract vermin and damage the unit. They will probably keep up to date on rent unless something bad happens to them financially. I’d probably rent to them in this situation, but I also wouldn’t be surprised at all if my gut was wrong and they ended up tearing the place up and refusing to pay rent–after awhile you learn to trust absolutely no one in this regard. (But hey, I’ve made a lot more money than I’ve lost so I just look at it as a cost of doing business.)
They are actually living with family, apparently. They were honest and did say that they have no rental references when we asked because they’d lived in their house for so many years. However, we asked if they could provide us with the names and numbers of a couple of prior neighbors so that we could verify that they maintained their house well. Honestly, that will satisfy us in addition to the other items that we’re asking them for.
I think the other thing is that we are used to being screwed . (I know that sounds weird, but things have been so up and down for us for years that to have something going more right than wrong is strange.) We have a large emergency fund set aside in case we get screwed. And you’re right, we could be totally wrong and our instincts could be completely backwards, but something about this feels like it has the potential to be really good. (And now that we know what the father-in-law’s business is, we feel much more comfortable with him co-signing.)
Thanks for the property management view, though. That’s good to read.
The fact that these people have been so upfront, honest, and forthright is all in their favor. I say check them out, then make a decision based on what you find out.
Yep - the paperwork all has to check out, so after I get the verbal info from their companies and the father-in-law, and they see the house, that’s the next step.
We really do like how honest they’ve been. That’s been a big point in their favor.
I’m really surprised at the lengths this has gone to in a rental. I’ve rented all my life and never have I gone through all of this. Have my employment and references verified? Yes. Paid security, first and last months rent? Yes. Co-signer? For a rental? Seriously?
The property I’m renting now is in a very nice neighborhood, excellent school districts, and in an area that rarely has available rentals. When I saw this place was for rent, I called on a Sunday morning, went to look at it Sunday evening, they called Monday evening to offer it to me (over 20 people had looked at it between Sunday morning and Monday evening) and I signed the lease on Tuesday. Although I gave references (employment and personal), I don’t think they actually called them (which I would NOT recommend–I could have put anyone down). They SHOULD have done a credit check (which I would recommend), but co-signer?
Just wow.
I should probably say though that in my employment position, I have to pass three levels of clearances (FBI, State Police and Child abuse), but I didn’t have this job when I moved in…
FTR, they offered the co-signer. We didn’t ask (and I was willing to give them a chance before I knew about the co-signer - my husband is the one who was unsure, and I suspect a lot of that had to do with his dad.) Since they do want to stay long-term, after a year, if they decide to sign another lease and things have gone well, we’ll voluntarily remove the co-signer. But as long as he’s willing, it’s an extra layer of protection for us as the homeowners. Not sure what’s wrong with that. This is the most expensive investment we’ve ever owned, and we’d like to protect it.
The only references I’ll be calling to check are the employment and to verify that the FIL is willing to co-sign (and he’ll have to fill out the credit check anyway, so I’m pretty sure he’s going to consent). They offered former neighbors’ numbers, but honestly - I’m comfortable not calling them at this point. It’s not that we don’t believe or trust the possible renters - but we still need to cover our asses.
I’m not sure where you live, but all of this is fairly standard there, and even here in Virginia. We’re still expecting to have to pass a credit check, and employment verification, when we go to rent a house in a couple of months.
We rented to a very nice, charming couple with three kids. We ended up evicting them about five months later.
I can tell you long-distance landlording is VERY difficult. We rented out our house in SC while we lived in Florida, and while we had a property manager, they never drove by the house to check on the condition of it. When we finally decided to sell, we had to have the exterminators over THREE TIMES to get rid of all the roaches. Let’s not even talk about the fact that the woman didn’t own a vacuum or a lawnmower.
If I were you (and I am, we have a rental property) I would pay $35-40 and get a background check done. You can add that to the application fee. It could save you some major headaches later.
ivylass, thanks. I’d forgotten about the background check (but it’s on our list, and they agreed to it). The long-distance landlording isn’t going to be fun, but if we decide it doesn’t work, we will go with a property management company. We will be requiring a regular deposit, and agreed upon a set pet deposit last night.
I’ve gotten the references back, except one employment verification, and all is well - the father-in-law was very nice, and is fine with being the co-signer. Hopefully, we can get them in to view the house within the next day or so (although she’s already been in it years ago, so she knows the structure and layout).
It’ll be good to have the stress of finding someone off of our plates if this works out.
Just wanted to post an update - they have signed the lease and will be our renters as of June 1 :). They have been wonderful - and very grateful that we’re not using their past history against them - and we are very, very comfortable with them, and pleased that they will be moving in. My father-in-law has handled all of the application/lease stuff, and I will be heading out in a week and a half to pack up most of the house and have our stuff moved to storage out here.
It’s actually rather good timing, as I was laid off yesterday (massive company layoff, unfortunately), but I am in a much better position to find a new job here than I would be there, so we’re going to stay here anyway - but we will have the rental income to pay the mortgage and equity. It’s a relief to know that our house will be in loving hands, and they have expressed an interest to look at buying it in a few years - right now, we’re just going to do a 1 year lease, and we will go from there.
I’m very much looking forward to meeting them next week as well. My gut feeling is that this is going to work out really well.
. (I know that sounds weird, but things have been so up and down for us for years that to have something going more right than wrong is strange.) We have a large emergency fund set aside in case we get screwed. And you’re right, we could be totally wrong and our instincts could be completely backwards, but something about this feels like it has the potential to be really good. (And now that we know what the father-in-law’s business is, we feel much more comfortable with him co-signing.)