All I can say that as bad as the crash was here, I am sure glad I don't live
in Florida. If global climate change theorists are right, Florida is due
for death by hurricane any season now. The Feds will eventually have to
insure Floridians because no insurer will want to take the risk if there are
lots of Katrina and Andrew size storms in your future. I also can't see
Fla. government surviving without changing the tax structure drastically.
IIRC, Florida ranked high on unfunded pension liabilities for state and
local gov't employees. Not that I am knocking your state, mind you, it just
bore the brunt of the recent meltdown because it used to be a place everyone
wanted to live. (-: In a spec bubble, the mightiest fall along with the
weakest. Times they are a changin'.
Ask the percentage, before they start filling out the forms. Sometimes,
market-dictated rent minus their cut, doesn't leave enough to pay the
mortgage and insurance. All depends on how nice the house is, and how
short the local rental property supply is for people who don't want to
(or can't) buy their own place.
I've known a couple people that did it anyway, out of desperation, and
ended up selling the house cheaply a year later, because the place was
still costing them money. IMHO, if you can't rent it out for at least,
oh, 130% of your fixed expenses, you are better off selling and getting
the loss over with (assuming you are not so upside down it would wipe
you out, of course.)
Yep, it's certainly an interesting business proposition, full of so many
"what if's" that in the end, you just got to go with your gut. We're pretty
much at the point of deciding not to rent out the place and just to carry it
while we "live around" to see where we'll eventually land. I used to have
my heart set on California, but they're falling off a financial cliff into
an earthquake and a slo-mo replay of the Spanish-American war. Real estate
there seems to have actually bottomed out, at least according to the LA
Times, which is bottoming out itself.
You can hire a property management company to handle the rental for
you, including dealing with evictions. They will tell you what
processes they use to screen renters and show you sample rental
agreements. If you'd rather not go that route, you should find some of
the online forums for people who invest in and rent out rent
properties, such as the SDCIA http://sdcia.websitetoolbox.com You can
join these forums and get advice from experienced landlords.
You will, of course, have to make background checks prospective
renters, including credit, criminal histories, rental histories,
references. Verify their current employment and income, and confirm
their prior rental histories - call the landlord, don't just take the
applicant's word for it. It's common for crooked types to give you a
fake landlord, usually a friend of theirs - so check the property and
confirm with the owner of record that the applicant really had rented
from them. If you can, inspect their current home. If it's a dump, you
know they'll treat your home the same way.
Do a face-to-face interview and look for anything that raises flags,
such as dilated or red eyes, track marks, lying about small things,
changing their story, repeated protestations of honesty, failing to
answer certain questions. Use your gut instincts. You won't catch them
all, but you'll spot some of them.
Put a clause in the agreement outlining who, and only who, is allowed
to reside in the home. You don't want a situation where you discover
too late that the couple who signed the lease turned it over to their
spoiled kid and all his frat buddies, nor do you want lowlifes renting
out every square yard in the house to their friends.
If you do have to evict, a strategy suggested by several landlords is
to bribe the tenant to leave asap. You and they know they can drag
things out, and you don't want them to do any (additional) damage in
the meantime. So you phrase it as a service to them: you gotta evict
them, but you know it won't be easy for them to find a new place right
away. You are willing to "help out" by paying them a relocation fee
(usually two-three hundred bucks) to get their stuff out within 24
hours. You will meet them and pay them cash as they vacate. Lowlifes
find it hard to resist cash. Don't get worked up about having to pay
them to leave when the law's on your side; you have to view the bribe
as a cost of business. You're protecting your property from (further)
It turns out I don't want to rent to anyone who was like me when I first
started out! (-:
Sounds like a good idea. Glad I've been watching "Lie to Me" to get a
handle on micro facial expressions.
This a college town. They pack 'em in like clown cars despite the local
zoning laws limiting the number of occupants. That's why inspection (or a
webcam mounted in a neighbor's window pointing to the house) is a very, very
I came across this "technique" when listening to Carleton Sheets CDs I had
borrowed. Apparently three Ben Franklins translates into an irresistible
lure for skeevy dirtballs. Good to know. My neighbor only rents to fellow
churchmembers. Now I know why.
I agree. Nothing dictates it be anything but cordial and mutually
beneficial. I assume you live someplace where chivalry means something to
be able to operate without paper. I assure you, that's not here!
We've been thinking about that and the only thing that scares me is that I
was a housesitter once upon a time and I wasn't particularly a responsible
young man although I could fake it enough to get the gig. I am afraid I
would be turning my house over to a younger version of me. (-:
Yes - we're near enough to DC to make it attractive to tourists but that
kind of rental is usually best done by someone who's living near the area to
coordinate things. We wouldn't be.
Thanks for your input - it's something to consider if we ever decide to
become professional landlords.
A friend inherited a bunch of rental properties in a tourist area. She
had to hire a management company because she doesn't live in that area.
So when a lighbulb burns out the renter calls the management company who
dispatches an electrician to change the bulb and she gets a bill for
You've noticed. (-: The tax system in America is part of the problem. We
pay people not to grow food, we pay oil companies incentives to do what they
would be doing anyway, the personal income tax forms get more complex each
year . . . you get the picture. And now we have a health bill that
essentially feeds more victims into the badly broken health insurance system
under threat of fines. It makes me wonder just "Who runs Bartertown?"
Naw, field mice won't hurt anything. Used to have them every year at the
first cold spell - they were just trying to get warm. Believe me, they'd
rather live in the field anyway - especially after we got a cat.
How about a "rental with option to buy"?
A young couple may want to buy a home, but first they want to see if
they can make a living. So rent the home to them, and give the couple
the option to buy it out from you at some future point.
That type of couple is liable to be more motivated in preserving the
property for future purchase than a renter who plans to just pack and
leave in a year or two.
-- Steven L.
I can only speak for the laws here in AZ but if you are worried about
being able to get rid of them just rent on month to month leases. If
you start to see problems, either in them paying the rent on time, or
in keeping up the place, just give them their "30-day" notice. If
they stay past that you'll have to take them to court for eviction,
not much you can do about that part, no matter what you do you can't
physically throw people out, only the court can authorize it and then
you have to have the sheriff or constable do it.
Note - 30 day notices can take as long as 60 days, you have to give
them the notice BEFORE the start of the "next rental period". So if
you wait till the 2nd of Jan you have to give them notice to be out by
the end of Feb., not Jan, which will be almost 60 days.
That's risky. If they had stuff stolen he could wind up on the hook.
Most tenants have no idea of their rights. But every once in a while
you run into one who knows every part of the law AND is malicious in
applying it. We had a guy like that in our town for a while making
life miserable for the apt complex he was living in. He'd go around
looking for problems and if he couldn't find any he'd create some.
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