I've been a landlord for many years and I don't have all the answers
but here is a couple.
1. Don't ever let tenants do any work on your property. They value
the work at $500,00 while you value it at $5.00. This is a universal
2. Be firm but fair on late rent payments in the lease and then
follow through when the event occurs. You should start eviction
proceedings quickly, following the exact letter of the law. There is
a ton of help online for this. But understand that your initial lease
must be in order for you to win the eviction proceedings. Things like
bold face type and notices are extremely important.
3. Don't give up on all tenants just because you run into a couple of
bad ones. I've had tenants for years that were never late on a
payment - but I had to go through several to get them.
4. Reward your good tenants with improvements and pay close attention
to their complaints. You should actually budget improvements to all
your rental properties annually at least. These improvements may make
your tenants happy and increase your tax base, too.
....[snip saga of slow/no payment from renters who happened to be
friends/acquaintances from church as well]...
It's too late, of course, and gather your intention originally wasn't
to rent but to flip (albeit in perhaps somewhat longer time frame than
many), but rental houses rarely pay a decent investment return as the
rental obtainable just isn't sufficient to make for an overall _net_
ROI that is approaching what one could get elsewhere.
You mention these renters were having a hard time -- if they are
employed but in hock to their ears, that's one kind of problem, but if
they're either un- or under-employed, that's something else. If the
former, there's perhaps a way you could manage to help get them back on
their feet through the auspices of the church. If the latter, then you
really have a difficult situation to solve other than probably
eventually move them out or susbsidize them as if they don't have the
wherewithal to begin with, the situation isn't going to improve (unless
they can somehow improve their earned income). On the former, our
church has offered financial counseling and other related services
through a faith-based organization that has actually (somewhat to my
surprise) been reasonably successful at helping some struggling
families contend with such problems (and no, not one of the advertised
"non-profits", this is something quite different). You might want to
investigate whether your congregation might consider doing something
similar. If there are these two, there are bound to be others with
similar problems who just may not know where to turn or won't look for
advice but just might with a little persuasion.
That's an approach far different than the pure business end of it, of
course. You have to judge how deeply you've dug a hole for yourself
and how far you can go before you risk your own home and credit, of
course. Unfortunately, as others have noted, with renters, sometimes
the devil known is better than the next alternative.
Good luck...(but invest the next inheritance in a selection of good
mutual funds or similar) :)
We do two things with our money. We have our two rental properties as
vacation rentals, and one week's rent pays two months mortgage. You may or
not be able to do this depending on your houses' locations, and your market.
The other thing we do is get first deeds of trust through our financial
planner. They run from 12 to 25%, and are short term, usually one year max.
If you had put your money in them, you would be farther ahead right now.
If you liquidate and find a good CFP that is trustworthy and reputable, you
can do this, too.
Or, you can remain landlords and go through this drama EVERY month for the
rest of your life, unless you drop dead from a heart attack first from all
Real estate rentals are usually a break even proposition. If you're lucky,
You are basically "loaning" your property worth $80,000.00 to total
A bank loaning this amount of money would be darn sure they were going to
get their "payments" before making such a loan.
You should do the same. Be sure they will pay! Do a credit check and a
renters check. Find a local rental association (links below) and they should
be able to tell you of local services which provide these services and how
to make potential renters pay for these background checks.
Poor credit is a clue that they may not pay their bills. However if someone
has just been divorced or whatever and the credit was good prior to the
divorce, then use your judgment as to the renter's current situation,
finances, employment, etc.
Tenants can easily cause $5,000.00 damage or more to your property! One dog
can ruin doors, carpeting, and chew everything in sight. Drug houses can
have you facing a "toxic waste" cleanup or having to tear down the house!
So do a drivers license check. Driving under influence history not good for
example. Do a criminal background check. Past drug charges not good for
example. Nobody is an angel, some people make "mistakes" when younger, so
use your judgment.
Depending on how bad the area is, may want to run criminal checks on
*everyone* living in the house and require all persons residing there to be
on the rental agreement/lease.
In general if they have good records which show they are a responsible
driver, good credit, etc. Then they will most likely be a responsible renter
and pay their rent on time - not damage your property.
You can get legal forms for everything as well as good advice from a local
Apartment, Landlord and Rental Owner Associations...
And then you hang there, naked, slowly twisting in the wind, exposing
yourself to lawsuits claiming profiling, discrimination, and who knows what
other frivolous pretext. If any of the applicants are gay, then can claim
that discrimination, although you may not have a clue as to their
proclivities. If they have religious beliefs not common to this country,
they can claim discrimination on those grounds. Any way you go, you can be
sued, and there goes 100 years of profit.
Yes. You can do background checks, and charge the applicant to do them.
But they do have their limits, and by all means are not an airtight vessel.
Background checks are around $50 per person for a good one. Are you going
to require that *everyone* have one of these, which will run into the
equivalent of nearly a month's rent to some folks? Are you going to insist
that the children, ages, 2,4, and 7 have background checks, too, just to be
Yes, you may get better tenants, but people who will spend that kind of
money are usually shopping to buy, not to rent. And all they do is have the
best person apply to pass a background check, then they all move in
I see the word "judgement" being used a lot. Most good judgement comes from
experience. And most experience comes from bad "judgement."
Liquidate and put it in interest earning investments and don't miss one
The OP may get lucky, and have great tenants, and everything goes well. On
the other hand, their first few months aren't going particularly well, are
Let's wait a couple of months for the saga of the thread on how long it
takes to evict someone from a rental. And what it costs. And how much
damage the tenants can wreak in the interim.
I don't want to be a negative wet noodle, here. But we've all been through
this drama before.
The best advice I've heard, is to check references. You need to go
back three or four. If folks are a problem, the current landlord will
say ANYTHING to get rid of them
Second, it's aparently not good to rent to friends.
Third, the way the laws are written where I am (Peoples Republic of NY
State) I would never own rental property.
Christopher A. Young
You can\'t shout down a troll.
Sounds like San Francisco. While technically you can raise the rent to
the market rate when tenants change, as a landlord you often are never
notified that different people are living in your property.
When rents are falling, shouldn't the same rent control laws prevent
tenants from leaving for lower rent apartments?
OTOH, the rent always came on time, no one wanted to risk eviction from
an $800 two bedroom apartment in San Francisco.
Why? Do that only if you are wealthy enough to support them. Renting
property is business, and I don't do business with family/friends.
A credit check and background check would be a good idea, more so if the
property is higher value or you get a lot of transient renters.
Re: the "nasty voice mail": call the caller and get specifics of repairs
they referred to.
I haven't been a landlord, but have been a tenant to some real jerks.
If you are acquainted with the renters, you might consider a friendly
chat about the finances. Depends ... are they in bad health, laid off,
or ? Folks who owe rent aren't likely to welcome the landlord with open
arms. If they just went for something they cannot afford, try to reach
a reasonable agreement about finding other housing and perhaps forgiving
the lease. Are they newlyweds, old, got kids?
I've had two rentals; both rented to the original tenants for about
18-24 months and then promptly sold.
Tenant 1, Legal Secretary, employment verified. She smiled up a storm.
She loved the house, school, yada, yawn. Gets in the house: as if
it's automatic, starts late on rent payments. We gave her grace
period to pay the deposit. She was so happy. Our Lease included and
was acknowledged by the tenants initials, of a daily fee - $25.00 -
everyday late. $X amount for a bounced check....
She cleaned the act for awhile, because she had another motive. Get
the Law Enforcement boyfriend on the Lease. Documents were amended to
allow him to live in the house, copies, etc. The same basic Lease
spelled out no changes to the house (just call me and it gets fixed).
Rent starts to be late, same pattern as with *smiley*. We call his
Internal Affairs Department, they dummy-up calling it landlord/tenant
dispute. I called it financial responsibility of law enforcement
officer. I asked why he replaced a master bed room door. "I fell
through it", right. The eviction date went very well for us.
Tenant 2, Section 8, Single Mother, three girls. Always paid by the
County Housing Authority. This was a very nice neighborhood. Other
than reasonable wear and tear, no serious problems.
By 24 months passing, both homes were sold.
"Well, it doesn't happen all the time, but when it happens, it happens
You tried to be a nice guy by helping people out and now you're
getting the shaft. Since you knew their financial situation when you
rented to them you have no right to whine. Demand all monies owed be
paid immediately and then initiate eviction precedings immediately if
they don't pay up. If you continue to try and be a nice guy you are
going to continue to get screwed.
http://www.thehvacmedic.com - All the free heating and air answers you want!
Your first problem is you rented to friends. It sounds like they're
no longer friends anymore. Stay away from renting to friends or
And screen screen screen. If you don't check their eviction history
or their credit history you can blame only yourself.
Try to avoid evicting them until the heating season is over as long as
they are paying some rent.
I think your numbers are off. Your profit numbers aren't adding up
with the lower interest rates. They sound low. Also, you should be
making some headway on the mortgage. If nothing else, rent it for a
year to have a small emergency fund for the property and then
everything from there out you should apply to principle.
renters about how little the "rich" landlord actually made. They
thought I got to put all that money they paid right in my pocket to spend.
Two things come to mind,
Pets, they almost always wound up costing me money,
Single moms, they had by far the most problems, lifestyle problems,
which lead to financial problems, which wound up costing me money.
Collecting the rent is one of the biggest problems I had. Seems the
landlord was the last to be paid, even late fees didn't seem to
register with some of them.
There is a reason they are renting instead of buying, be sure to
find out that reason before renting to them.
Charge TOP buck? have more churn people move more looking for better
charge a little lower renter appreciates good deal and tries to be
accomodating like paying on time.
even a bad tennant can be better than none at all
churn costs a lot....... paintaing and fixing after each person moves
I have been in the business 30 years.
First, get rid of your tenants.
The fact that they aren't destroying your property is no selling point.
I expect tenants not to destroy the place. If they do, they're out and
I ruin them for future tenancy.
Second, get a property manager. You don't need oakballs screwing you
Hey thanks for the great advice guys...
Here's an update, well, it is important to me that a tenant keeps up
the place and both our tenants seem to be doing so. If I had a dozen
rentals, I might not feel so strongly about it.
They're both still late with the rent usually but that doesn't bother
me a whole lot as long as it gets paid.
I did sent a certified letter to both reminding them of the terms of
the lease. One responded that his live-in brother hasn't contributed
to the rent. I reminded him that HE is named on the lease, his brother
isn't and his brother is not my problem. DUH. The other tenants
responded with a note that some promised repairs haven't been
done...which I have since performed. They were under the wrong idea
that they could withold rent ...which they cannot legally in Ohio as we
only own two units. Just after that, their two dogs were run over by
a train. I just feel like I can't win. :-(
My wife promised that we would put a gate on their driveway. Thanks,
Dean in Cincy
I've had 6 units for 10 years now.
I tell all my prospectives that these are my kids' college fund and I take
If my tenants are late, they pay late fees, past the grace period I'm down
at the court house filing.
Its a business, you can be nice, but don't be a sucker. I'm nice to my
tenants, they'll even tell you so, but they know they pay or they're out.
Wish you the best with your rentals.
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