I am about to rent out my first investment property which closes in a week. I have been reading as much as possible on the forum about landlording. Does anyone have any advice they can give me of the do’s and dont’s for 1st time landlords? The house was built in 2004 that closes in a week so there should not be any maintenance problems. I am also getting to rent out my primary residence at the same time which was built in 1978. I know I need to advise possible tenants of lead issue’s for that house. Any advice, experiences, do’s and dont’s would be greatly appreciated. Thank you in advance.
Office supply stores usually sell very basic rental agreements. Realtors use lengthy, cover-every-eventuality forms. For safety’s sake, I suggest you use a form close to the realtors’. A lot of folks ask for first and last month rent and a security deposit. I like the idea of first month rent and a bigger security deposit (which can be used for damage repair and/or unpaid rent). Ask applicants to provide current and previous landlords’ identity and 'phone number. If there is a deadbeat applicant, his current landlord may want to get rid of him enough to bend the truth. A former landlord has no reason to do so, in my opinion. Perform a thorough inspection with your new tenant to document property condition at rental time. Write down all defects & both of you sign it. Keep the original & give the tenant a copy. The property should be in about the same condition at the end of the lease. Normal wear and tear is to be expected, but torn and broken is not.
I like to set the rent at the low end of average and hold at that price until the tenant moves out. That encourages tenants to stay put several years, which means less cleaning, painting and vacancy expenses. When a tenant moves out, raise the rent to the low end of the new average and rent quickly. Tenants still pay your mortgage and appreciation still happens.
I’ve been in the business 15 years and 17 properties. The only problem with accepting a security deposit higher than the rent is that, at least in Ohio, you have to pay interest on the amount of security deposit over the rent, i.e., if the rent is $500 and the security deposit is $800, you need to pay interest on the other $300. You may want to check your city/state law on security deposits.
I heard a successful guy once say to treat your tenants like employees. Train them on paying rent, late fees etc., moving in/out procedures, etc. You could put it all in writing like an employee handbook and give it to them (of course its all on the lease too). He also included a price list of things that they would have to replace if they break them. Pretty extreme but apparently effective.
be very firm but fair, but remeber it is a business. avoid the tempation to cut deals…this is road to ruin. IN other words if the rent is due the 1st and the late fee is due if not paid by the 5th then if the tenant shows up at 8:01am on the 6th, the ren tis late and they owe the late fee. No excuses, break, or side deals. Otherwise , the next month you will get the rent on the 10th.
know the laws in your state; the web is a great resource. being what appears to be reasonable and fair will not always keep you n the right side of law. this is not make your worry but something to think about. I agree to use a very comprehensive lease; you never know what will happen or strange things arise
My parents have rented out a home for 20 years, so I learned alot by the time my wife and I started renting out a few years ago. Here are some definite things to do or remember;
– BEFORE the tenants move in… do a video walk through of the home, yard and garage with a date-stamp in the video to establish the pre-existing state of the home prior to the tenants moving in.
– Use a Property Manager. Let them make their small percentage to be the “bad guy” who collects the rent, takes care of repair calls and does the late charges. Tenants always assume they’ll get some sort of break with the rent being late when dealing with the owner… but seem to respect the fact that the Property Manager will toss them out legally without a blink if they don’t hold to the Renter’s Agreement.
– Get Landlord’s Insurance! If the Tenants are from Hell and decide to smear feces/urine all over the walls or leave the sprinkler running in the living room before they leave… you won’t have to pay out of your pocket to replace all the drywall and treat the place for mold removal. This happens, don’t think it can’t. Insurance was the only thing that saved a friend of ours from losing the house to remaining condemned by the County after some Tenants did this to their house upon being evicted.
– Include Tenant yard maintenance in the Contract. The grass has to be kept cut and green, bushes trimmed as part of the Agreement or Notice to Evict is agreed upon. If they claim they are too busy or elderly to do it themselves tell them they can hire a gardener out of their own pocket… but the yard has to be kept mainained. Otherwise, you may have to replace the lawn when they move out.
– Get to know the neighbors of the Rental House. Drop by every three months or so just to ask how things are going with your tenants. Is there a lot of screaming/arguiing going on their? Do the police show up there alot? Is there alot of traffic in and out? These can clue you in that things are either going smoothly or trouble is brewing. People will tell you alot about what they see in the nieghborhood if you just ask.
I like to just drive-by my properties and not even if stop and talk to the tenants. Also, I have property managers and sometimes I will go and make the repairs myself. I do NOT introduce myself as the owner; just “Hi, I’m here to fix your whatever”.
I have had about 20 properties and the greatest advice I received was to hire a property manager and dont rent to friends and family. If you dont hire a property manager inspect your house about once a month or every other.