Advice for New Landlord?

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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 truth.
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.

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Reward your tenants?
I give $100 discount if rent is paid before the first.
I get the rent two wks early every month.
DK wrote:

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Deano wrote: ...

....[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) :)
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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 the stress.
Real estate rentals are usually a break even proposition. If you're lucky, that is.
Steve
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You are basically "loaning" your property worth $80,000.00 to total strangers.
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 rental association.
Apartment, Landlord and Rental Owner Associations... http://www.rentalprop.com/apt-assns.htm
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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 safe?
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 afterwards.
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 night's sleep.
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 they?
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.
Steve
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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.
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Stormin Mormon wrote:

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.
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Deano wrote:

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?
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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.
-- Oren
"Well, it doesn't happen all the time, but when it happens, it happens constantly."
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Not realy. In some places that complaint makes it damn near impossible for you to evict them.
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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!
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Your first problem is you rented to friends. It sounds like they're no longer friends anymore. Stay away from renting to friends or family.
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.

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Deano wrote:

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.
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Charge TOP buck? have more churn people move more looking for better deal
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 out
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Deano wrote:

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 around.
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snipped-for-privacy@yahoo.com wrote:

One other thing:
I only rent to people with pets.
They stay because no one else will have them.
Plus, they are grateful.
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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, dear.
Dean in Cincy

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I've had 6 units for 10 years now. I tell all my prospectives that these are my kids' college fund and I take it serious. 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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