I am in need of some major advice. I am starting out with my first rental in Maryland and decided to hire a real estate agent. My realtor has made a couple of errors with the listing and showing process, so I am not sure I can rely on her work.
My realtor is pushing for this one applicant. They are a young couple, 28 and 29, one is a graduate student and one is starting his business, but both have no real income or job. They also have a big dog. They got his parents as the guarantor with a lot of funds in the bank, but my realtor won't show me the credit report.
We renovated our whole house and put a lot of money into it, our house is considered a luxury rental, so I am a little nervous renting to renters with such a large dog (Mastif). My question are:
1. Am I allowed to request a credit report of tenant and guarantor from my realtor?
2. With no real job or prior rental, what other ways can I check the actual tenants besides interviewing with them?
3. Any questions I should ask during the interview?
4. My realtor told me I can ask for 2 months rent as a deposit, but that's the most I can do to protect myself. What if the dog and tenant damages more than that?
5. Besides having the guarantor signed an agreement also, what else can I do to protect myself from the tenant leaving and the guarantor refusing to pay?
I would greatly appreciate any advice or suggestions.
Thanks a million!
Dogs are not a protected class, so if you are not comfortable with them having such a large dog, just pass. Your manager is supposed to be there to assist you, so if you don't want them, just say so.
I do not believe they are allowed to show you the credit report, but I believe they can let you know if there are issues like late payments, judgments, evictions, etc. If they have no problems, my PM will say so. If not, they will say, There is a late payment on a student loan, etc.
You might just want to consider a no pets policy if you just refurbished a luxury rental. Small dogs and cats can do heavy damage, too. Either way, get a list of pets that are not covered by your insurance policy. Mastiff may be on it, solving the issue for you.
Since you are asking these questions your gut is already telling you what to do.
You are in business. This rental is an investment.
Fire the realtor and rent it your self. If you only have this one rental it's simple.
You have proven your instincts are fine. Listen to them.
Fire the realtor. Mastiffs are on some insurance company prohibited breeds list.
You already know this agent made mistakes, and it doesn't seem like this agent is a fast learner ...
Oh, when an agent pushes one candidate over another - lots of times that is to avoid commission splits with another agent who also had a candidate ...
If that's the case, then you quickly know this agent is really only looking out for their own good, and not what's good for you.
One thing about deposits: Of course you keep a deposit to guard against the tenant leaving the place dirty or damaged. You collect more than usual for pets, including a large dog. But you never can collect enough of a deposit to compensate for really bad tenants. The market doesn't allow it, and some areas laws don't allow it.
One area in which bad tenants will cost you is that the property can be a mess near the end of their tenancy, when you would like to show it to prospects to minimize vacancy. If it's bad enough to turn off prospects, you have to wait until it's vacant to show it, and then you lose a lot because of extra vacancy.
Write up your criteria that the agent must follow.
Including that the tenants must earn their own income, unless they are all students in good standing. No unemployed live-in boyfriends (which is what he really is). No co-signers.
Something I learned the hard way.
I know there are documents on BP where people have shared their criteria. I haven't looked at them, but you might want to check them out.
Anyway, make up your list of criteria that must be met and hand it to your (new) realtor, and make them sign a copy of it.
If you have good criteria, and you stick to it, you should have minimal problems.
You don't even have to accept students without their own income, if you just want to say across the board, that they must have their own income. If you aren't in a student housing area, I suggest you just say your tenants must qualify without a co-signer/guarantor. It would just be easier.
And, by the way, even with my student tenants, I did not put a co-signer on their rental agreement, because I only wanted to deal with tenants, not their mommies. I told them I don't care who pays your rent, but my contract is with you.
Another thing you might want to consider is month-to-month contracts, unless your deal with the realtor is based on a year lease. With a MTM it's easier to kick them out if there's a problem, and you can raise the rent, change the rules, etc., with just a 30 day notice.
Survey Says "fire the realtor" get a referral from someone here and remember that you are the owner and set the rules.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing