Experience being a landlord?
Moms View Message Board: General Discussion: Archive October 2007:
Experience being a landlord?
We have decided that eventually, once we clean it out and fix it up, that dh and I will be renting my in-law's house out. This is going to be all very new to us, so I am looking for tips, hints, for screening potential tenants. We will be renting a one bedroom, 1.5 bath house, with a good size, private yard.
DH and I were talking about getting into the rental business, then decided to have Natalie and thought it best to wait until we were back on 2 incomes again in a few years. I was more interested than DH, primarily because I wasn't the one who would be the "repair man"! LOL My uncle rents out several properties, and the main things I learned from him at the time were about buying them and loans for them, etc. Since it's already yours, that's not your issue.
The things I learned in our brief research period were: to do credit checks on every potential rental application; get references of tenants previous rental home on the type of renter they were, any problems, payments on time, etc.; require renter's insurance and show proof of once it's obtained; be very specific about pets/cost/deposits for pet repairs after they move out; lease should have an outline of what steps tenants will take when a repair is needed (for instance, you give them free reign to go ahead and call Roto-rooter or they must see you first); lease should be clear on rental period, such as after 1 year you will allow tenant to rent month-to-month or not, etc.; address in the lease if you will allow a sub-lease; if you're providing a mower/shed/outbuilding that will remain on the porperty, the care those things should be in when renter leaves AND if there's a problem with any of those items during the lease how that should be addressed (example, mower stops working). (In our rental lease 10 years ago, a riding lawn mower came with the house. It was on 2 acres and much needed. BUT the lease stated that when the mower quits working or becomes faulty, it was OUR expense to fix it or stop using it and get our own replacement. That kind of thing.); also to think about - if the home has an attic, can the tenant use it or is it only for your personal storage?; if new cable outlets, phone jacks, are to be run in the home, do you want to be notified first?; can the tenants paint, or are there paint regulations you want to stick to (for example, only neutral or get color cleared with you before painting).
That's all I can think of right now. Don't know if that helps you or not, or if you already thought of those things. Good luck!! I would love to buy up rentals, fix them up in neutrals and rent, rent, rent! (Again, *I'M* not the repair man, so it's easy to dream about, LOL)
We were landlords once. It was a nightmare for us. But, the neighborhood that our rental was in, wasn't that great. Therefore, the tenants we attracted were not that great. The home was about 20 years old, so it didn't appeal to people wanting all the new stuff in homes. We rented it out for about a year and then sold it.
On the other hand, we just rented a duplex ourselves for 3 years. Our landlors were great, and they have about 15 rentals here in our small town. Most of them are duplexes, but a few are houses. They are all newer. Probably all less than 10 years old. The people that rent from them are people that can afford to rent a newer home/duplex, which are usually people that take good care of things and leave them as they found them. They are an older couple, and they make quite a bit a month off of their rentals. They were also landords up in the city, before they moved here to our rural town.
Reds had some great points! Credit checks was the first thing I was going to recommend!
While I don't have a lot of experience being a landlord I do work with them on a regular basis.
I highly recommend you check to see if where you live has a residential tenancy act.
Where we live does and it talks about landlord and tenant responsibilities for the premises, what terms are required in a lease agreement and what's optional. It also covers things like how much you can request for deposits, pet deposits, additional occupants, subletting and assignment (if the tenant tries to bring in either a different tenant for a short time or to assign the property completely to someone else and cease being your tenant).
Will you include cable? water? electricity? heat? laundry? or is the tenant to take care of all that themselves. I know here if it's included and then you try to terminate or restrict those types of facilities you must reduce the rent by what it would cost them to get those services from a different source.
Read up on things like what you must do if they abandon the property, what steps to take if for some reason they don't pay the deposit or the rent or get insurance as they're supposed too etc.
If you're going to sign for fixed terms are you able to do something called liquidated damages there? Here it's a part of the agreement that says "If they break their lease they are required to pay you a certain sum of money" that is meant to cover such things as advertising, administrative costs etc. That amount must be on the agreement and must accurately reflect those costs.
Is there an office where you live that handles disputes between tenants and landlords? What are the procedures they have? How is the timing? Do you have a home owners/property managers association there that provides information to owners and managers if they are having problems with tenants and don't know what to do? That's the sort of place I work for.
I'm hoping this helps and doesn't make you feel too overwhelmed but on the volume of calls we get regarding these types of things I think it's rather important to know.
I know in Canada where I live the rules change from province to province and they're all made by our government.
If I think of anything else I can post here or feel free to contact me hedgehog 774 @ hotmail . com please be sure to put momsview in the subject line so I know that it's not spam if it goes into my junk mail folder.
I truly hope I didn't scare you or overwhelm you it's a lot of information but this is what I deal with on a daily basis.
Wow! I can see I have a lot to read up on before we start! Thank you everyone!!
You have a whole lot to think about. And do go to a stationary store or legal stationary store and buy a "form" residential lease, which will give you more to think about. Also check your state's website for laws governing landlord/tenant relations and go to your county or city government office (or check their website if they have one) and see what information you can get.
A couple of things to think about: The tenant should carry tenant's insurance and the lease should say that you carry liability insurance only (in case the tenant or tenant's guest is injured and it turns out to be a "defect" in the property) and the tenant has to have their own fire and theft insurance.
I'd also ask Missbookworn to send you a link to the residential tenancy act she wrote about - it may give you some very good pointers.
Have you thought about having a real estate agency manage the whole rental business for you. They'd get a commission, but you might save a lot of headaches - especially calls about repairs.
Definitely you want a credit check and referances from any tenants and especially references from former landlords. And proof of employment (i.e., ability to pay).
You need to limit, through the lease, the number of people who can live in the house, and given that it is one bedroom, I'd say one couple and maybe one child, but absolutely no more (and there may be laws on that in your community - number of residents vs. number of bedrooms). No running a business from the house. Who mows the lawn, who does snow removal. (I know that in New Jersey, even if the lease says the tenant is responsible for snow removal, ultimately the landlord is legally responsible and if someone falls on an unshoveled sidewalk you could be in trouble - check your local laws.)
Also, some areas (especially large cities) require landlords to register and pay an annual licensing fee.
If and when you do rent, you want to go through the house with a videocam the day before the tenants move in (including the front page of the local newspaper as the first and last part of the video to prove the date), filming every wall, floor, appliance (including the inside of the stove and frig), doors, locks, outside, etc. Then, when the tenant leaves, you videocam again, so that if there is any damage you have proof of the condition before and after.
Are you sure you want to do this?
Some of this we already have worked out. We already have the proper insurance, because although my inlaws lived there, we owned it so had to pay a separate insurance as if they rented it (they did not). Also, we will take care of the mowing and the snow removal because this is an ajoining property to ours. We live in a really small town, and this is just a quiet little house on a dead end street, I am hoping that by renting it, it will cease to be "Grammy and Pepe's house" for dh and I, and the kids, and then that will bring some kind of closure and then eventually we sell both properties and go somewhere else (but staying in New England of course!). Right now, when I walk in the house, it looks like my in-laws just ran out to the store, which is very sad for us all.