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General Q & A: First-Time Landlord

5,924 Views | 46 Replies | Last: 4 yr ago by el_scorcho
Aggiemike96
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AG
I've posted a few threads on the RE board over the past several months. And, rather than starting a new thread for every question that I have, I figured I'd just post them all on one. If others in the landlord business have questions, hopefully this thread can benefit you too.

- When do you list your property as available for rent? I have a 3/2/1 in SA that is currently under lease through 5/31/2017, but may become available sooner. I'd like to have a tenant in hand, if possible, by June 1 or shortly thereafter. When is too soon to list? (Yes, I have access to the property and can show it in the interim.)

- What is your general position on pets, both cats and dogs? I'm against them as I know they can cause significant damage. However, given the right tenant/situation, I could see allowing one or two small or moderate sized animals. What pet deposit do you require? Do you keep 100% of the deposit generally? What breeds/sizes do you specifically exclude?

- Regarding leases, do you provide your own or use a boiler-plate lease? The San Antonio property is likely to be rented directly through us rather than through a property management company.

- Do you use a realtor to identify/locate tenants? We have a 4/3/2 in Houston that we are interested in renting beginning in May or June. We have worked with a realtor in buying a new property for us to live in, and she also handles rentals. What is the general fee? The house is on a busy street and a sign in the yard (as noted as a successful method to identify tenants) will be seen by hundreds of cars per day.

Ok, that's all I have for today. As mentioned above, this can be a living thread if others have questions and can help shed light on how to get into and manage rental properties.
jt2hunt
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- When do you list your property as available for rent? I have a 3/2/1 in SA that is currently under lease through 5/31/2017, but may become available sooner. I'd like to have a tenant in hand, if possible, by June 1 or shortly thereafter. When is too soon to list? (Yes, I have access to the property and can show it in the interim.)

Start leasing that one in May.

- What is your general position on pets, both cats and dogs? I'm against them as I know they can cause significant damage. However, given the right tenant/situation, I could see allowing one or two small or moderate sized animals. What pet deposit do you require? Do you keep 100% of the deposit generally? What breeds/sizes do you specifically exclude?

Non-refundable pet fee and if you want a monthly pet rent. I would do 250 or more for each pet.

- Regarding leases, do you provide your own or use a boiler-plate lease? The San Antonio property is likely to be rented directly through us rather than through a property management company.

I cannot remember what lease we used for single family. I use the Texas Apartment Association Leases for my apartments. Blue moon forms probably has a single family lease form.


- Do you use a realtor to identify/locate tenants? We have a 4/3/2 in Houston that we are interested in renting beginning in May or June. We have worked with a realtor in buying a new property for us to live in, and she also handles rentals. What is the general fee? The house is on a busy street and a sign in the yard (as noted as a successful method to identify tenants) will be seen by hundreds of cars per day.

Sometimes. Mostly a sign and craigslist ad. I think they usually get one months rent to list it.

Ok, that's all I have for today. As mentioned above, this can be a living thread if others have questions and can help shed light on how to get into and manage rental properties.
Aggiemike96
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AG
jt2hunt said:

Non-refundable pet fee and if you want a monthly pet rent. I would do 250 or more for each pet.
I received a message from a potential tenant as follows: "I have a friendly, senior Pit Bull. Would I be able to rent from you?" Of course no one is going to flat-out say that they're pet is aggressive, however this is an aggressive breed. I will run this by my insurance company to see my potential exposure.

From a financial standpoint, is an additional $250/month in rent achievable and reasonable? Seems like $3,000/year more in rent is significant. I don't recall ever paying more for pets when I rented apartments back in the day.
Vernada
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AG
Aggiemike96 said:

jt2hunt said:

Non-refundable pet fee and if you want a monthly pet rent. I would do 250 or more for each pet.
I received a message from a potential tenant as follows: "I have a friendly, senior Pit Bull. Would I be able to rent from you?" Of course no one is going to flat-out say that they're pet is aggressive, however this is an aggressive breed. I will run this by my insurance company to see my potential exposure.

From a financial standpoint, is an additional $250/month in rent achievable and reasonable? Seems like $3,000/year more in rent is significant. I don't recall ever paying more for pets when I rented apartments back in the day.
Yeah I don't think he meant $250/mo for a pet. I think he meant a $250 deposit.
Aggiemike96
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AG
Ahhh, that makes sense!
schwack schwack
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AG
I'm pretty new to this, too - bought our first rental in 2015 - now have 6 properties with the potential (once we finish with them all) to have 12 units (4-plex, 3 duplexes & 2 single family). I'll be happy to tell you what I know.

I don't post them or put a sign in the yard until about a month out. You'll need a firm move in date before you can really show it. Right now I have a tenant leaving "sometime in June" so I'll wait until they give me a date when they will be out, add some time to make any repairs & then pick my "available to lease" day. Probably July 1.

We do not allow pets. I know we lose some good renters, but when we started buying, some of our properties came with tenants & pets. You'd be shocked at the damage a Chihuahua or cat can do. Everybody says their pet is great & I love pets and am fine with my own pets messing up my own home. In my market we are at the top of the rental range already, so no one is going to pay us an extra fee or monthly pet rent to move in. But, really I just don't want to have to deal with the damage. We just had to put laminate floor in an entire apartment over the original wood floors that were stained & ruined from pet urine that soaked thru the carpet from a tiny dog of a tenant we inherited. We spent a fortune in stuff to clean/deodorize it, too. Their deposit didn't cover a fraction of that cost. Not to mention complaints from the tenants without pets re: barking day & night, etc.

We use a standard lease.

I use zillow to post & put a sign in the yard. Zillow also posts it on trulia & hotpads. I get most hits from trulia. No craigslist - I get too many flakes, but it works for others.
jt2hunt
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Non refundable pet fee of 250 or more per pet. In addition, charge a monthly pet rent of 10 to 25 per month. I don't do pet deposits because I assume the pet is going to damage the place. Therefore, I do a non refundable fee. Some people I know charge 500 per pet.
Aggiemike96
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AG
Thank you for your clarification. The house has tile throughout the entire downstairs, and 4-year old carpet upstairs in the bedrooms. The carpet is in great condition though, I'd say "A-" shape and should have many years to go. I'd hate to replace it because a dog/cat destroyed it. At least not yet. The tile should be fine.
jt2hunt
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AG
You also have the normal deposit of one months rent or more depending on their qualifications.
dreyOO
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schwack which market are you in? and how do you locate the properties you're interested in for purchase?
schwack schwack
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AG
I am in rural East TX. I have bought thru mls listings, fsbo signs in the yard, door knocking & sometimes via personal references. I'm glad we started in 2015 - I should have done it back in 2008 when everything went in the tank - but my resources took a hit then, too. Almost everything we buy needs pretty extensive work - sometimes way more than the cost of the property. We scrounge for deals on materials & do lots of the work ourselves to make our units unique so that we can get on the higher end for rents here.

Prices are edging up here - as everywhere - so I would not have bought all of these in the current market. I haven't bought anything in over 8 months because the rents here don't (& won't) go up any time soon, and the price + renovation + upkeep (some utilities, lawn care,etc.) + taxes + insurance = you have to get a REALLY good deal on the front end to make it work. The other issue out in the country is: no big employers. There are some decent jobs but there is a definite ceiling on rents & good tenants.

I know some house flippers & they are losing their ass out here. Bought cheap, but put in upgrades that this market does not support - the old "best house in a not best neighborhood" scenario. I just lost a tenant to one of them - they took a loss, but wanted to dump it. Their last 2 have gone this way, so they, too have hit pause.



AggietiliDIE
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AG
I'm looking to purchase my first rental home within the next couple of months. How do you collect rent? Online ideally, are there fees with each transaction?
AgCPA95
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AggietiliDIE said:

I'm looking to purchase my first rental home within the next couple of months. How do you collect rent? Online ideally, are there fees with each transaction?

We started using Cozy this past year - has worked great. No fees and just 3 or 4 days float.

Cozy
schwack schwack
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All of our rentals are in the same general neighborhood (small town!) so in the 4-plex we installed a secure lock box with a mail slot. All of our tenants have their own code to get into the lobby & they pay via money order/cash/cashiers check in the box. I go on the 2nd or 3rd & pick them all up and drive to the bank. No one has an excuse to be late.... no "I dropped it in the mail", etc.

Online would be great, but it's just one more thing for me to have problems with & keep track of. If my stuff was more spread out or I was not in the same town, I would do it. The tenant screening site I use mysmartmove.com (thru TransUnion credit bureau) offers this service. I've never looked into it to know what they charge.
WoMD
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Aggiemike96 said:

jt2hunt said:

Non-refundable pet fee and if you want a monthly pet rent. I would do 250 or more for each pet.
I received a message from a potential tenant as follows: "I have a friendly, senior Pit Bull. Would I be able to rent from you?" Of course no one is going to flat-out say that they're pet is aggressive, however this is an aggressive breed. I will run this by my insurance company to see my potential exposure.

From a financial standpoint, is an additional $250/month in rent achievable and reasonable? Seems like $3,000/year more in rent is significant. I don't recall ever paying more for pets when I rented apartments back in the day.

Pit bulls aren't an aggressive breed. They are actually nicer than most. They struggle with a bad reputation due to bad behavior created by people.


That aside, kids are often more destructive to property than pets. Can you have a kid deposit and added monthly per-child rent?
CS78
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Quote:

Pit bulls aren't an aggressive breed. They are actually nicer than most. They struggle with a bad reputation due to bad behavior created by people.


And that's why I don't rent to pit bulls or the types of people that own them. Two birds, one stone.
dreyOO
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Thanks. Interesting market.
schwack schwack
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Yeah, dreyOO, it is - we've learned a lot.

There are lots of what I'd consider "sub-standard" rentals here for cheap & that's what people here are used to. We go in, put in new central hvac, kitchens, bathrooms, paint with nice colors, etc. and we constantly hear "well, I can get another place for $200-300-400 less". Yes, yes they can - there are actually rentals here for under $300. We point out the differences & ask why they think our nice, clean renovated units should be the same cost as one that shows absolutely no sign of improvements or maintenance and we get the deer in headlights look.

We inherited one tenant in a place that was only paying $275 & had been there for 9 years. Luckily she was only on a month-to-month and although she was a very nice lady, we gave her plenty of notice and told her she could have all of the appliances & window units so she could find a place easier. (that's another thing we provide in our units that the cheap places don't - all appliances) Honestly, $275 was high for the condition of that place when we bought it. I could NEVER have charged anyone to live in there.

We aren't ever in a hurry to lease & always seem to get a good one eventually. In this market we've decided not to not raise rents (until we have to but I don't see taxes or insurance going up any time soon) if they sign another year lease & are good tenants. We've only had 2 leave so far - one got married & just bought a house (the flip I mentioned above) and the other is a teacher that took a job teaching English in Dubai for 2 years. Both have said they will honor their leases if we can't rent them before their term is up. Great people - sorry to see them go & hoping we get that lucky this time around.

We are on pause now that the prices are going up. It will be pretty impossible to do what we want to the property & make a decent amount in return. Some great deal will have to fall in our lap again to make us pull the trigger here again.



Aggiemike96
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AG
What level of deposit do you require? 3 bed, 2.5 bath, 1900 sq feet single family house. $1400 rent.
AggieGunslinger
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My deposit is whatever my rent is. Also since I bank at a local bank with lots of branches I have an account set up where my tenants can drop into any local branch and tell them they are making a rent payment to my property management company and the bank deposit it for me they never see the account number or any of the information. I have been doing it about 18 months and all of my tenants love it.
26.2
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- When do you list your property as available for rent? My recommendation is 60 days in advance

- What is your general position on pets, both cats and dogs? What pet deposit do you require? Do you keep 100% of the deposit generally? What breeds/sizes do you specifically exclude? Most tenants today have pets. I see it as an opportunity to increase profits. I charge $25 extra per month per pet, and a fully refundable pet deposit of a few hundred dollars per pet. I expect pets to cause some amount of damage, but I also believe that by making the deposit refundable, I am incentivizing the tenants to keep that to a minimum.

- Regarding leases, do you provide your own or use a boiler-plate lease? The San Antonio property is likely to be rented directly through us rather than through a property management company. I can send you a lease template to use if you post an email, or you can pay a lawyer to draft a template, or you could google around and find something you think is good. This is something I wouldn't skimp on. Spending now might save you a lot later on.

- Do you use a realtor to identify/locate tenants? We have a 4/3/2 in Houston that we are interested in renting beginning in May or June. We have worked with a realtor in buying a new property for us to live in, and she also handles rentals. What is the general fee? The house is on a busy street and a sign in the yard (as noted as a successful method to identify tenants) will be seen by hundreds of cars per day. The fee is negotiable but typically equal to 1 month's rent. My recommendation is to put a sign out front and post it on Zillow. If you want me to add it to HAR for you, shoot me an email/PM.

- What level of deposit do you require? 3 bed, 2.5 bath, 1900 sq feet single family house. $1400 rent. One month's rent.

Question you didn't ask:
- How should I screen applicants? Get potential tenants to give you as much information as possible from their current/previous landlords, and have tenants pay for credit/criminal/background checks using:

https://www.mysmartmove.com/SmartMove/landlord-credit-check.page
Aggiemike96
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Does this sound reasonable to sign a new lease?

- $1,400 first month rent
- $1,400 security deposit
- $700 pet deposit
- $3,500 initial payment

Seems like a huge obstacle for a typical renter.
AggieGunslinger
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I usually tell them the deposit is necessary for me to stop showing the property. So it is due as soon as they are sure they want it. Pet deposit and rent are due before I turn over the keys. That breaks it up a little bit.
Aggiemike96
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What does this mean (copied from my HOA documents/covenants):

"No residence may be occupied by more than one (1) family which may consist of no more than two (2) unmarried adults or a married couple and their natural or adopted offspring and no more than one (1) other adult and one (1) other minor."

Can three unrelated adults work under this HOA restriction?
AgCPA95
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Aggiemike96 said:

What does this mean (copied from my HOA documents/covenants):

"No residence may be occupied by more than one (1) family which may consist of no more than two (2) unmarried adults or a married couple and their natural or adopted offspring and no more than one (1) other adult and one (1) other minor."

Can three unrelated adults work under this HOA restriction?
As I read it, no as you have 3 unmarried adults. If 2 of the 3 were married the 3rd adult would be OK. ,
schwack schwack
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Yep - I think a lot of neighborhoods have these restrictions to keep the number of student houses down. In my Mom's neighborhood in Bryan they had to do it - not because the students were that bad - she actually enjoyed "the kids" - but the parking was horrible. Her street is a small cul-de-sac with all 4 bedroom houses & mostly single driveways, so each house would have 4-5 cars & residents would park on both sides of the street to not block each other in. Nightmare for the older residents, trash trucks, mail man, emergency vehicles, etc.
Aggiemike96
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I appreciate both of your comments. I certainly can appreciate a "family" style neighborhood not wanting a bunch of 25 year old "friends" living in a house. I have young children (elementary age) and certainly don't want a frat-house-like environment for my next door neighbors. And most definitely, parking can be a NIGHTMARE.

I still don't fully understand if it's 2 (married or unmarried) adults AND one additional adult...or it's just two unrelated adults. In any fashion, I had a potential tenant come by Saturday and there would be three unrelated adults on the lease. I mentioned I needed to check with the HOA in a follow-up email, but never heard back. Guess they moved on, plus I don't have to worry about it now.

On the bright side, I showed the property yesterday afternoon and received the lease application back this morning! This tenant looks VERY promising!
Aggiemike96
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Related to my comment above, we received a lease application. Here are the two parents (husband and wife, early/mid 30s with two young daughters):

Husband - self-employed, claims poor credit because never used credit (i.e. lack of established history)
Wife - self-employed, claims poor credit because of irresponsible credit card use in younger days
Current House - renting the same place for four years, claims never missed/late with a rent payment
Reason to Move - more space (current is a townhome of 1400 sq.ft. and we're offering 1900 sq.ft. single family home)
Rent - current: $1,150/mth; our house: $1,400/mth
Salary - combined approximately $7,500/mth

Any red flags here, besides the concern on sub-600 credit rating? We are acting as our own agent and plan to use MySmartMove to run credit/background check (thanks for the comment above for that). Their vehicles are fairly new (2013 and 2014) so I hope I can see established car payments on their credit reports. Of course, I plan to have a discussion with their current landlord to verify lease payment history. I'm also planning to asking for the past 6 months of electrical bills just so I can see they pay on time. Since they're both self-employed, would you want 2016 tax return too to substantiate income?

I don't want to go overboard here, but like the couple and think they would be good tenants. Most important, I just want to cash my rent check every month!
schwack schwack
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Hmmmm. See what mysmartmove has to say about them.

Out here in rural-ville, we get lots of interest on our places but have stuck firm to our over 600 credit score requirement (not that high normally, but out here it excludes tons), checking references and proof of income - we require 3x the month rent. We look at each case because some people have legitimate problems - mostly medical expenses left unpaid or large student loans. I know we lose some good potential renters but we've also been burned by some of the people that we inherited from the previous owners of our properties who had no standards & just wanted a check each month. Most of them would not have qualified for us & it didn't surprise me for them to skip out, leave bills unpaid, etc.

I'd be worried about their credit scores, for sure, but I'd definitely check with their current landlord, drive by where they are now to see if it's junky & ask for some income proof. What are they self employed as?
AggieGunslinger
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My best tenant had a sub 600 score when she started renting, she hasn't been a day late in 2 years. MySmartMove will be a full credit history report, you will know if they are lying as to why their credit is bad. Call the old land lord.
Aggiemike96
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AG
schwack schwack said:

What are they self employed as?
Can you email me at username @ yahoo? I'd rather not list too much private/personal information on TexAgs out of respect for the potential tenant.
schwack schwack
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AG
It's Ok - I don't need to know specifics, I was just curious how they are making $7500/month and still have bad credit.

AggieGunslinger is right - you just have to do the checks & then decide if you want to relax your requirements. I'm pretty new to this, too, so I've got a lot to learn. I will say that I was warned that if I do lower my requirements for one, I'd have to for everyone else or face a possible charge of discrimination should someone else be turned away for the same thing later. So, I guess its tricky. So far, all of ours have checked out fine. We hand everybody a list of our requirements when they view the apartments & most know whether or not they'll pass the credit/background check and don't waste their $35 or our time if they know they won't pass.

Also I try to listen closely to them as they talk/ramble. Just had a guy asking for a month to month & we only do 1 year leases. Then he came back & said he'd do a 1 year but wants an out in the lease to leave early. We said no & suddenly he says he'll stay for a year. I think we all know what would happen with him. Oh and he wants the year lease for $100/ month less. Easy no there.

Good luck - I'd say that if you are questioning red flags, they are probably red flags.
AggieGunslinger
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AG
A lot of people don't know how to live within their means. 90k per year gross with crap credit is probably more the standard than the exception these days.
Aggiemike96
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AG
And the red flags continue. Their current landlord indicated 3 late payments in the past 12 months and 1 NSF check. Not sure, as owner/manager, we are ready for this level of risk.

Time to start the process over I guess!
schwack schwack
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AG
Yep. We normally go thru a bunch of apples to get to a good one. I'd just keep your standards high & keep looking.
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