Advice on becoming a landlord

[88GT]

Anymore I've come to love google street view. I can look at the previous rental properties a potential tenant has listed, to get an idea of what shape they were in. It's not 100% accurate, but just another tool in the toolbox (especially if the drive is too far to see for myself)

I have a similar MO. I look up tax records to see if the owner of record is the name of the landlord.

 

[ArmedProgrammer]

Good points - and it makes sure that it's a real place too...

 

[edporch]

Due diligence is over-rated inasmuch as there is no fool-proof way to guarantee that the paper dossier on the applicant will mean diddly squat. I have had gainfully employed active MPs (as in military police) screw up. You do what you can, but there is no magic panacea for preventing a tenant from becoming a douche-nozzle.

If due diligence were as successful it is being made out to be, month-to-month tenancy wouldn't be necessary.

I'm not saying that "due diligence" is any kind of panacea that will protect a landlord from problems.

I AM saying that a written lease that tries to cover every situation, with a set term of time isn't a panacea either.
I've always had the relative best luck just doing verbal month to month leases with 30 day notice for either party.

A few years ago I went to my longtime attorney and asked him to draw me up a good "boilerplate" lease.
He told me that with a bad tenant, there's no written lease that will protect me.

He told me to save my money and his bill by beginning with due diligence in choosing my tenants.

Then in addition, have the tenant give me first and last months rent plus a damage deposit.

He said this would work in my month to month lease situation as well as any written lease with a fixed term.

I'll also add that when I say to a tenant that I'll give them notice if they become a "pain in the ass" to me, DOESN'T include fixing things as a reason.

I'm talking more like for example, having to go to them in person and squeeze the rent out of them every month, or having rent checks that bounce, or having an excuse every month about why they don't have the rent, etc.

 

[Rocketscientist]

My girlfriend rents her house since she's living with me now. Been two years now and its been wonderful to have the extra income, not to mention the fact that someone else is paying the mortgage!

We went with Bart Vickrey real estate for all the technicalities. They have a property management program that is not too shabby.

In a nutshell, here's how it works: You give them a one time per contract payment of whatever your security deposit is, then they find the renters, they do background checks, they collect rent and forward directly to you, they take phone calls in the middle of the night, they fix whatever breaks below a certain dollar amount, and they deal with court and eviction if it ever comes to that. In the mean time, you sit back, relax, and get a rent check every month! It don't get much prettier than that for a first time landlord.

The only caveat to all this is that you have to check up on the tenant and your property every so often just to make sure there are no unreported issues or shenanigans going on.

So far we only had a few unreported issues to take care of which were no big deal. There's a learning process here to be sure, but its valuable experience I intend to use when I am ready to go it alone and buy a couple more income properties.

 

[trailrider]

Charge by the week...13 months in a year that way if you divide monthly rent by four and charge it weekly .

 

[88GT]

Charge by the week...13 months in a year that way if you divide monthly rent by four and charge it weekly .

That's also four times the work. Any advantage said payment plan may have is inversely proportional to the number of units one has.

 

[trailrider]

That's also four times the work. Any advantage said payment plan may have is inversely proportional to the number of units one has.

Inversely proportional? Seems like more profitable as to the number of units one has. I agree with the PITA factor but if you're working for yourself then your "hourly" rate isn't what it's about is it?. OP is only talking about 1 unit.

 

[88GT]

Inversely proportional? Seems like more profitable as to the number of units one has. I agree with the PITA factor but if you're working for yourself then your "hourly" rate isn't what it's about is it?. OP is only talking about 1 unit.

I question the likelihood of getting tenants to send rent weekly, which would require a pick-up procedure by the landlord. The more units that a landlord has, the more time and resources he will expend in collecting the rent.

And the hourly rate is still a consideration for someone who is in business for himself. It's why we actually pay someone to do the plumbing for us. It's cheaper and our time can be spent on other endeavors that are more profitable. There is never a time when the time investment is not something to consider.

 

[Yup!]

We owned 2 homes prior to moving to Indy. When we got here we rented so we could learn the area. I didn't want a month to month property. I wanted a 12month lease so we could be assured we had a place and time to look around. We paid on time every time and did some significant improvements to the place. The point here is you might be missing out on some good people if you only allow a month to month.

 

[RobbyMaQ]

I question the likelihood of getting tenants to send rent weekly, which would require a pick-up procedure by the landlord. The more units that a landlord has, the more time and resources he will expend in collecting the rent.

And the hourly rate is still a consideration for someone who is in business for himself. It's why we actually pay someone to do the plumbing for us. It's cheaper and our time can be spent on other endeavors that are more profitable. There is never a time when the time investment is not something to consider.

I'd have to agree here. I've had little success in getting a tenant to mail me a rent check on time.
Having to collect it weekly would get cumbersome.

 

[88GT]

I'd have to agree here. I've had little success in getting a tenant to mail me a rent check on time.
Having to collect it weekly would get cumbersome.

Not to mention the paperwork. I hate doing receipts and notices for once a month rent. I can't imagine getting it done and then turning around and having to do it all over again. No, thanks.

 

[Indy317]

I think it also depends on what you can get for your home and where it is. College students usually can pay, mostly because the federal government is financing their education with a % of help from mom/dad, etc.. They usually pay, but most owners know that damages are going to happen if your dealing with college kids who party. Such locations allow for a constant customer base, but usually have to deal with damages when they leave. Another thing to think about, if you plan on renting to a family with a kid or two, and rent is going to be in the neighborhood of $700+, with housing prices in some additions, plus interest rates being cheap, if such a couple/family has any sort of average or decent income, you need to ask yourself why are they renting? If it has to do with their credit score, that could be an indication of people who are horrible with money. Watch The People's Court for a few weeks and see what you are likely in for. I think one or two bedroom homes, small, big enough for a single mom with a decent enough job and one kid would be a little easier to rent than a single mom with many kids, or a couple with two or three kids, etc..

Do a cost-benefit analysis. Include the filing fees for small claims courts, serving eviction notices, etc.. May as well just assume it will happen at least one a year. Then ask yourself if you can do repair work, paint, etc. or will you be getting someone to fix damage that tenants cause? You would have to make sure to document the condition of the home before each renter, taking numerous pictures and having them sign a list of what issues are already present. Plus you would want to make sure they provide not only a security deposit, but I would also want first and last months rent as well. That will tell you who has at least some savings and is likely decent enough with their finances. Also, you don't want to do Section 8? Guess what, many municipalities are passing laws mandating renters now take Section 8 vouchers.

I couldn't do rental properties. Too much headache, too many people having more say and control than you as the owner.

 

[NHT3]

Don't do it. That's my experienced advice. Others of coarse will have had their own experiences. Indiana laws are set up to **** the landlord

As Trigger Time said, DON'T.. Save yourself a lot of aggravation and thoughts of shooting people.. Just did it once and will never do it again.
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[trailrider]

Not to mention the paperwork. I hate doing receipts and notices for once a month rent. I can't imagine getting it done and then turning around and having to do it all over again. No, thanks.

Yah you're probably right. The weekly rent thing was advice given to me by an old penny pincher years ago who turned his old house into a duplex. He didnt mind the extra work but it would be a pita.

 

[88GT]

Yah you're probably right. The weekly rent thing was advice given to me by an old penny pincher years ago who turned his old house into a duplex. He didnt mind the extra work but it would be a pita.

It's true, you do get an extra month of rent in the 12-month calendar year. But the logistics of enforcing it get more cumbersome with each unit added. and it could easily become a charlie foxtrot of record-keeping having to keep track of 4x the payment transactions. It's almost perfect for a multi-family where the owner lives in on-site in one of the units though.

 

[dudley0]

Yah you're probably right. The weekly rent thing was advice given to me by an old penny pincher years ago who turned his old house into a duplex. He didnt mind the extra work but it would be a pita.

I think we have three weekly payers and two bi-weekly payers. I let them know up front that it will cost them more in the long run. I do not give a discount because of the extra work running the numbers and such.

My situation is a little unique as these tenants deposit directly into the bank. All I do is check online and make sure the deposits made it in. The bank has a receipt book that I supply just for the renters. It is fabulous. I tell everyone that if I have to chase the money I will just evict.

I also have quite a few monthly payers that deposit the rents at the bank. In the years that we have been doing this we have only had a problem from the bank two times. Once they deposited into my personal account and once they put the money into the savings account for the business instead of the checking.

Every once in a while you will get a tenant who claims to have made the deposit. When I tell them to go to the bank and have them run through the video footage to get a time stamp they have always come clean. Well, maybe not completely... sometimes they change the story to they had a friend or family member do the deposit for them. But I always get the money put in.

That being said I prefer the monthly payers because I don't have to keep checking to be sure all is good.