*****An oldie but goodie, I’ve republished this blast from the past since I’m doing a home ownership series. For any of you planning to rent out your current home so that you can move to a new home, here are some quick tips!****
In my post last week, I bared my soul and told you all about all the issues I have been having with my rental property. This post is from our #MoneyChat Twitter Talk Show as promised -my tips so that the those of you considering jumping into rental property don’t get burned!
1. Background/Credit Check. Run your credit /background check, collect the fee from candidates when they apply. Be fair, if someone comes in and you know after a conversation that they are a no go, don’t take their money for the fee. I’d take the application only and let them know later that it isn’t a good fit.
@LexusNexusRisk offers background cks for $25 http://bit.ly/TiypbU #moneychat #landlord
2. Lease Agreement. Have a solid lease agreement, one friend says that he includes a clause that states that any repair $75 or under is the responsibility of the tenant. I’d also include a clause about the use of drugs of any kind.
3. Pictures. Take plenty of pictures of the house – inside and out. Have the tenant initial each picture as proof of what the house looked like when they moved in.
4. No Time For Sympathy. Don’t indulge in small talk that leads to you listening to your tenants money problems. This amounts to you not getting your rent money. Keep everything very professional and in writing.
5. Be Patient! As I’ve said before – I was very impatient, I didn’t really want to be a landlord, but couldn’t sell my house and definitely wanted to move – so I rushed. Plan to either stay in your house or be able to cover at least 2 mos. Pmts to wait for a good candidate.
6. Lawn Care. I put a clause in the lease stating they had to care for the lawn, if they didn’t and I had to, they’d be charged. Well, this isn’t really enforceable, especially when they aren’t paying the rent AT ALL! You are better off including the cost of lawn care in the rent and just handling it yourself… Unless you want your pretty lawn to look like the desert… yes, I’m bitter! LOL!
7. Avoid Carpet. If you do have carpet – purchase large area rugs yourself. Unless you are renting a high end property ( and sometimes event then) your tenants will ruin the carpet.
8. Property Managers? When I began having trouble I called a couple of property managers. I believe if you have a lot of properties and great income from them, you might want to hire one. But if you are only breaking even or barely even doing that, you can handle yourself. Property managers can be expensive to hire at the outset, though they generally only take 10% of rent each month.
For example I received this quote from one property manager:
$299 to get started
$200 for Attorney to file paperwork
$200 add’l if attorney had to go back to file more (and they would)
For a total of $699 on a house where the tenant isn’t paying the rent. If you have another property that will cover that expense you are in good shape – otherwise … diy!
I know you guys have even more insight – share your tips for new landlords!