I'm about to take the plunge and rent out my house, any landlords have any advice?

Question

I'm just trying to cover all my bases before having someone sign a lease.

Someone suggested a six month lease. Would you recommend a six month or twelve month? Why?

Answer 1

I'm not a landlord. I rent an apartment...lol. My parents rent out apartments though. Big thing you absolutely HAVE to do. On the lease, put a clause that the tenant will NOT get the keys until ALL utilities are put into their name and they have PROOF. MY mom and dad got screwed over really bad because of this. They tried to evict and had to go through the courts. Because it didn't say anything about the utilities in the lease, my step dad had to keep paying the utilities and couldn't turn them off. Good luck.

Answer 2

Read 'Landlording, a scrupulous guide for landlords and landladys', by Lee Creighton. It is the best landlord book I have ever read. It has many forms and good advice. It is a big, yellow soft-cover book. But my advice...1. A tenant should make 4 times the monthly rent each month. If not, they will be continual late payers and eventually get evicted. 2. A tenant should be holding the same job for 1 year. If not, they might get fired. 3. A tenant should have an excellent reference from a former landlord where they lived for 2 years. If not, they are 'movers' and you will lose money due to vacancy loss, cleaning expenses, and advertising expenses when they move in 6-9 months. If they have no reference, they might be lying because they have a habit of getting evicted. Don't fall for the 'we moved from out of state' ploy, or 'our first place' ploy. This is especially unbelievable when they are 25 years old or older! 4. Make them fill out an application and them check up on them. Drive by their supposed current residence. Is it in good shape? Do you want your house in a similar shape? Knock on the door to see the inside. Claim you have a question about the application. Look around. Do you want your house like this one? Or is it a filthy mess? 5. Get the full security deposit (1.5 x monthly rent in my state) and the first month's rent up front. If they don't have that, THEY NEVER WILL. If possible get the last month's rent, also. 6. If they are late with the rent, send them a non-payment (eviction) notice. Don't be a nice guy. They will think that you are a gullible fool. I know this sounds harsh and I have had many wonderful tenants, but you must guard against the bad ones to avoid financial disaster. And the good tenants will understand.

Get a 12 month lease or NO lease. If no lease the common laws of the state will apply. They could move out very soon without a lease, but if you have done your homework, they won't. You will have more power with no lease. You can evict them with a 30 day notice at any time without any reason. With a lease, you must abide by it and if they are bad tenants they will ignore it anyway and you will be stuck with abiding by it for 12 months.

Answer 3

Firstly, I am a landlord so I can tell you that you need a really good property manager. Mine costs me $100 per unit which I write off in my taxes. Also, becareful of allowing them to do minor repairs that are less than x amount without your approval. You might see a nasty monthly statement of a ton of charges below what you allow.

All of the advise here is good but I would suggest if you are going to do it yourself, here is some more things to consider....

1.ALWAYS GET A CREDIT SCORE! You need to see if they pay their bills.
2.Get 2-3 months worth of current pay stubs. Make sure they have a job!
3.The formula in NYC is monthly rent x 48. That is their minimum yearly income to afford your home. You are not trying to rent a 1500 a month home to the cashier at a fast food place.
4.Another idea is to charge them something if they call you to fix nonsense, like 5 or 10 dollars per service call. You don't want to be woken up at 3am because their door knob is broken when something like that can be taken care of themselves for a few dollars and elbow grease. This will force your tenants to call you only for serious things, not nonsense. If you have no lease, there is no contract for you to stand on in a court of law.... it would be like kicking out your mother. In NYC, any person residing at a location for 30 days is considered a permanent resident of the location, so they won't be able to be kicked out of their home.
I don't know what states some of these people are writing from, but in NYC, everything has to be documented. Your lease is your protection.

Hope this all helps you. Like I said, all of the advise here is good so take heed and good luck.

Answer 4

My best advice is to get a professional property manager! They will handle all of the scut work, such as applications, credit and background checks, repairs, maintenance, etc. They know the local laws and will ensure that you don't inadvertantly break any of them. For example, in TX there are strict rules on door locks and annual inspections of heating systems that must be met. A PM is familiar with this and will ensure that the requirements are met in a timely manner. In CA, there are rules on how damage deposits are handled and what is considered advance rent and what is considered a depoist regardless of what the lease says. Landlords who don't abide by the law can find themselves in deep kimchee financially!

One or two 3:00 AM calls for a busted water heater or broken furnace in the dead of winter is all you'll need to convince you of their value!

I owned a number of properties when I was on active duty. Bought a home at most assignments and rented them out when I moved on to a new duty station. When I retired, I had an nice portfolio of rental properties, a small positive cash flow, and a fat tax write-off.

If you're going to be an absentee landlord, a PM is the ONLY way to go. In some jurisdictions it's effectively mandatory as you need to have a local representative for your tenant(s) to contact in case of emergencies, etc.

Even if you're next door, who needs the hassle of late-night emergencies? Let a pro handle it for you! Any good PM will have contracts with local licensed tradesmen and usually pass on the savings to you. They also can get quicker response than you can due to the volume of work that they pass on to the tradesmen.

It'll generally cost you 10% of rents received but that's a deductible expense on Schedule E.

Hint: Avoid PMs that charge you for placing tenants or extra fees for simple maintenance performed by their in-house staff. Their handyman can replace a light switch or a ceiling fan without additional charge except for parts.

Answer 5

Get first and last months rent, plus a security deposit. Sign a six month lease. Have fire insurance.