ANSWERS: 6
  • A lot! This is by no means a complete checklist, but it should point you in the right direction: 1. Research local laws regarding Tenant and Landlord rights. 2. Screen prospective tenants carefully and thoroughly. 3. Prepare a thorough lease agreement and make sure all tenants to be included on the lease sign it. 4. Take pictures or video of the property before tenant moves in to document the condition of the home. Do the same when they exit to document any damage. 5. If you will not be able to spot inspect or make or arrange for repairs to the property while it is leased, I advise using a professional Property Manager to handle this on your behalf. 6. Consult an attorney. They will be invaluable in helping with items 1-3. Also see http://www.nolo.com for Tenant/Landlord legal forms and information. This was from my answer about screening prospective renters: Ask for several references and take the time to contact each one. Do a background check using an online service (http://www.knowx.com for example). Ask for 2 forms of ID with at least 1 being a photo ID (copy and keep on record). Having said that, I recommend that you initially consult an attorney to find out what the local laws are for Renters and Landlord's rights, what forms of screening are legal, and what is legal in terms of rejecting prospective tenants. Additionally, have an attorney prepare a lease agreement. Renting is tricky depending on where you live. For example, I knew a woman who was a Realtor and she rented out a house. The tenant made the first 2 rent payments on time. The third month he could not pay on time, so she let him slide a few days which turned into months. She could not evict him for 6 months because the local law said that since she set the premise that he could "slide", she could not start eviction procedings until rent had not been paid for 6 continuous months. Turns out, he stole identities and had been taking advantage of this little known law for several years. Ouch. And the house was trashed to boot. This is why an attorney is highly recommended. Hope this helps-good luck!
  • First - you need to be clear about WHY you are choosing to rent it out rather than sell it, so that you will know whether or not it is fulfilling that need. Not everyone is cut out to be a landlord, and there is no shame in determining that either a) the home doesn't work as a rental or b) you don't work as a landlord. Don't rent to friends or family. Family isn't tax deductible and friends don't stay friends when money comes between you. Rent is YOUR money, not theirs. If someone broke into your home and stole a thousand dollars worth of your things, you'd call the police and have them arrested for theft. Well, if someone comes into your home (as a tenant) and takes the use of your home without paying for it, they are stealing money from you. Not paying you rent is no different than going into your purse or wallet and taking cash. When someone comes to you with a hard luck story about why they cannot pay you (and they will), advise them that a place to live should be their first priority. It is NOT your responsibility to feed, support or care for their family; it is theirs. You have charities/church that you donate to, and if they need assistance, they can approach one of them. YOU, however, are not a charity. (Nobody likes to be a hardass, so THIS is where a property manager is priceless - a tenant who will try to take advantage of a small landlord wouldn't dream of doing it to a property manager.) What are your costs for owning the home? This is NOT just your mortgage. Everything has a life cycle, and when YOU are the landlord, YOU are the one who gets to pay for repair/replacing the item. Include these costs in your estimates. How long until you need a new roof? A new water heater? New carpet? If a roof is $10,000 and you have ten years left on it, then you need to collect AT LEAST $100/mo *just* for the roof, and put that into a long-term savings account for home repairs. This way, when the roof *does* need repairs, you will have cash on hand to do so, and will not need to gut your cash cow with a Home Equity Loan to pay for it. There is actually a study you can have done to evaluate how much life is left in your home. For our $15 million dollar Condo property, the study was $10k. I'm sure it would be decidedly less for a standard home. Our annual budget/HOA collection is about $350k, and we put $50k a year into long-term savings. That's about 15% of our income that goes directly into a savings account. Be prepared to treat this like a business. Understand up front that you will have issues to deal with, and accept those - build your business with safeguards in mind. Don't scrimp on insurance or legal advice. Keep a contingency fund to cover things like: late rent, no tenant, legal costs of evictions, repairs, and management fees I have rental property that has gone through both a major hurricane AND a flood (two separate incidents) in the last six months. Having the appropriate insurance has saved my butt completely. I live in Florida, and have THREE policies on my home - standard rental property insurance, hurricane and flood. Keep it legal. File it on your taxes. Keep appropriate forms and information about laws in mind. The city & state people have been VERY helpful in providing me appropriate information that I needed. There are a bunch of wonderful tax deductions associated with being a landlord, so don't even think about stiffing Uncle Sam on his part. If possible, live in the home for two years before you rent it out. This will allow you two breaks - one, you can qualify for a better mortgage because it is owner occupied, and two, when you *do* sell it, you won't have to pay capital gains on it, since you *did* live in it for 2 years. Hire a good property manager. In general I have found they charge half a month's rent for each six months of a lease, for screening applicants, plus 6-8% per month for managing fees. They are allowed to do credit checks & background checks whereas a private owner is not. THESE FEES ARE TAX DEDUCTIBLE so don't fret about paying them. If you are getting $800 a month in rent, you're paying them about sixty bucks a month to deal with the headaches AND the legalities. You get your rent direct deposited, and hassle-free. Is peace of mind worth $2 a day for you? It is for me. If you really want to do it on your own, get a book like ">"The Landlord Kit" http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?userid=Yf7Uzls9r3&isbn=0793158737&itm=4 And don't be overwhelmed by it - if you really want to go it alone, maybe start with a property manager for a year or so until you really get your feet wet, then slowly take over more of the responsibility until you've reached your comfort level. Good luck! Being a landlord is a fantastic opportunity for building wealth, as long as you treat both yourself and your clients with respect.
  • By far and away THE most important factor when renting a home, is to know WHO you are putting in it. All other considerations, problems, costs and headaches PALE INTO INSIGNIFICANCE next to having to deal with nightmare, difficult and non-paying tenants, because there is nothing like trying to get a human or several humans out of a home when they don't want to leave. I now have over 18 years experiencing letting homes (just mine) and in the beginning I knew nothing about this business. After a few years, I begun to realise that the biggest problems I had (although nothing serious) were to do with the actual people and they way they were. Slowly, without realising it at first, I began letting my "gut instinct" tell me if someone was going to be OK or trouble. After some years, I had developed this feeling to such a level that I could sometimes deduce essential information about someone while speaking to them on the telephone before meeting them for the first time. This tool has proved to be immensely valuable and for the past 12 years, I have experienced as good as zero trouble as one can expect to get in this business. Of course, I would backup my feelings with documents, credits checks and verifying references, etc., but essentially they usually stack up with my opinion that I formed during the first 5 minutes of meeting someone. On the few occassions where I didn't listen to my instinct, I got my fingers burnt. Since not everyone has such instincts (and unfortunately, it is not really teachable), I would recommend all future landlords to use a letting agency/realtor, as many of them have staff who have honed the exact same skill as I have mentioned. In addition, find yourself a lawyer who is well skilled in this area BEFORE you let your home. I would concur with some of the other advice given and would also warn you not to be swayed by any "technique" that the prospective tenant may try to use to choose him/her, such as; 1. Paying cash quickly and upfront. 2. Their declared level of wealth, especially when you have not aksed them about it. 3. Who they are (good public standing, their reputation, famous person, etc) 4. Reasons why they can't give you this or that information. 5. "Excuses" as to why the man or woman in a couple or family is not present for viewings. 6. Any offer/gesture to bypass the normal checks that should be made about someone. 7. People who don't spend long enough looking at the property. 8. People who don't ask many or relevant questions. Similar to the answer given above by Andersen777, in my experience the 2nd month's rent is the pivotal month that will tell you if there is going to be a problem with a tenant, because it is the first payment that is within their power to make after they have moved into the property. Renting homes can be a very profitable and worthwhile investment and the longer you do it, the better you should get. Just beware of human nature and think about the things that could go wrong WAY WAY before that moment arrives. Best wishes to you.
  • You NEED TO KNOW what the laws are in your state, county and/or country! YOU NEED TO KNOW HOW to properly qualify a prospective tenant! YOU NEED TO KNOW HOW to properly prepare the Lease! YOU NEED TO KNOW HOW to properly manage your property! For the first tenant or two, YOU SHOULD hire and allow a professional to find and properly qualify the tenant, rent and manage your property. When you're looking for REAL trouble, go ahead and do everything on your own - without any assistance, help or guidance. You'll have PLENTY of aggravation! Thanks for asking your Q! I enjoyed answering it! VTY, Ron Berue Yes, that is my real last name! Sources: My wonderful family! In the real estate business over 34 years in Pennsylvania. THE ABSOLUTE BEST, MOST WONDERFUL real estate investment group in the world, which I was very proud to be a member of! "THE University of Hard Knocks" also known as ("a/k/a") "life's valuable lessons"
  • Screen Tenants Carefully. Start looking for a tenant as soon as your property is ready to be shown. Then, choose your tenant very, very carefully. You need to be able to depend on this person not only to pay the rent on time, but also to keep your home in good condition. Flats
  • First of all you need to check the agreements in details, what are the terms mention in the agreements you should know before signing. Check atmosphere and check home is good or not according to your expectations. Once you will satisfied these things then you can checkin in the renting home.

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