Fort Collins - Getting good tenants/renters, following prop laws

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Fort Collins - Getting good tenants/renters, following prop laws

Logan McConnell
Fort Collins, CO · Member since 2015 · 39 posts · 6 votes

Hi,

1st

I just realized that July is coming fast.  I am planning on renting out my 4bd 1.75 bath home located 1 mile west from old town and CSU campus.  I am also looking for a new home to bye so I will be getting very busy in the next few months.  I know the home is in a great location and it is in good condition so I don't think that getting renters will be a problem.  I figure the next step is to get a add out on Craig's list and use other rentals on that site for appropriate pricing.  Then weed through the applicants for hopefully a non college older couple who wont trash the place and who will pay the rent.  Then get a lease template from a lease providing website which applies the appropriate Colorado laws?  

From reading the forums and listening to the BP podcasts, it seems that a background check and credit check are important.  Can anyone recommend a simple way to accomplish this (aren't there websites out there that the tenant to pay for the background check/credit score and then that info will be sent to me?).  Mainly, I am new to all of this so a few tips on the whole renting process would be greatly appreciated.

2nd

Do I need to put my home under a llc or any other protections before renting it?  I added an umbrella insurance plan to the home to cover most types of suing but I'm not sure how it works if the house is a rental.

Much Thanks!

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  • Dan MackinBusiness Member
    Real Estate Agent · Erie, CO · Member since 2014 · 1k+ posts · 512 votes
    10y

    My few tips would be:

    Getting a base lease is fine off one of the sites, but I would highly recommend modifying it to fit your property and management style more. Due to Colorado being green friendly you'll want some provisions in there. Same goes for pets, guests, outdoor equipment, etc. The base leases do a decent job of covering the common things, but you just really want to make sure you're covered. 

    For background checks there are quite a few different sites to use. Do a quick search on here and you'll find some good options.

    Dependent on which neighborhood you are talking about when you say 1 mile west of CSU and Old Town you may have a hard time avoiding students. I'll be curious to see what comes through. Call property management companies that work the area to see what their rents are sitting at. Those numbers can be a little more helpful than craigslist sometimes. 

    For the LLC argument. That's another thing you'll need to search for a bit on here and come to your own conclusion. There are people on both sides of the coin and each has their own valid points. Just know that an LLC doesn't do much for you if you don't manage it correctly. Just having the filing with the state doesn't help you much.

    Good luck!

    720-466-3378
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  • Earl McFarland
    Investor · Berthoud, CO · Member since 2013 · 42 posts · 19 votes
    10y

    @Dan Mackin

    I would strongly agree with your comments. FTC is also more 'regulated' than other Northern Colorado communities, i.e., max. number of occupants, certain properties may also have rent control. You will need consider purchasing a 'Landlord Policy' when you no longer occupy the property. Add additional insured for the LLC on both the property policy and request from original title insurance company. Recommend speaking with your accountant, insurance agent, and consider a good RE attorney for lease and rental app.

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  • Logan McConnell
    OP
    Fort Collins, CO · Member since 2015 · 39 posts · 6 votes
    10y

    Dan,

    Great tips on adding those stipulations to the lease, searching the forums for the background check websites, and for calling a property management company to get accurate rent price.  I am close to Kevco whose sign says they to property management so maybe I will give them a try first.  

    Earl,

    Thanks for the input.  Sounds like it is probably time for me to fort over some money and meet with a RE attorney.  Does anyone know a RE attorney that wont cost me a arm and a leg in Fort Collins?

    Thanks!

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  • Logan McConnell
    OP
    Fort Collins, CO · Member since 2015 · 39 posts · 6 votes
    10y

    Earl,

    I follow up to you comments.  Fort Collins has a 3 person non related max rule.  So, I guess I can only rent the house to 3 people (or have 3 people on the lease).  Are they any ways to get exceptions to this rule?  Does anyone know how this is regulated.  When I went to CSU 10 years ago, I lived in houses with six non related students lol.

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  • Patrick Soukup
    Rental Property Investor · Fort Collins, CO · Member since 2015 · 273 posts · 127 votes
    10y

    Hey Logan,

    Fort Collins has been very kind to me over the years and one of my companies just finished their books for 2015 and realized a 20% annual return.  The company is comprised of 2 4-plexes and one duplex.  Our properties are on the West side of town, close to Hughes Stadium.  

    You should have relative ease getting that 4/2 leased out, although my 1/1 downtown has been giving me a little bit of a fit this month (I am being pretty aggressive with the pricing though.) and the winter months are much slower.

    I do have a good local RE attorney we have used for a few years.  If you would like, I can ask if he is taking on new clients and give you some contact info. 

    The 3 unrelated rule can be overcome, but with an extra occupancy designation, see article in Coloradoan for a start point http://www.coloradoan.com/story/money/business/201...

    Let me know if you want to grab coffee, I would love to network and talk shop with a local Fort Collins Investor!!

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  • Logan McConnell
    OP
    Fort Collins, CO · Member since 2015 · 39 posts · 6 votes
    10y

    Patrick,

    I didn't know about the extra occupancy designation, very interesting.  I wonder what their minimum is for parking spots?  I live off of Laporte, have a single car driveway and street parking which usually isn't that busy.  

    I am interested in your RE attorney.  I still need to research more so that I know exactly what I need but it sure would be nice for a professional with experience to lay it all out for me.  

    I'm glad you were able to rent your 4/2 easily, good luck with renting the 1/1! If it's downtown you wouldn't think that it would be a problem.

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  • Dana Dunford
    San Francisco, CA · Member since 2016 · 238 posts · 204 votes
    10y

    Hi Logan,

    Here are some of my thoughts:

    • Listing
      • Post to Craigslist and repost each day to get your listing back to the top (landlords typically only post once a week and then it doesn't get as much advertising as folks who advertise daily)
      • Post to Postlets and it will post to Zillow, Trulia, HotPads, Padmapper, etc --> that way, you don't have to go to each one to post
    • Tenant Screening
      • Do not skip this step, as it's literally the most crucial. You can perform a background check / credit report through BP's tools (Tenant Screening) or use other tools -- I use CIC Apply Connect.
    • Lease
      • You want it to be state specific, but if you're worried about legal fees, then a state specific one (without the personalization) can work well. I use RocketLawyer. You may want to check with a lawyer just on any high level terms that can get someone out of trouble in CO and confirm it against your RocketLawyer lease.
    • LLC Question
      • It is good if you want an easy way to manage your investment expenses/income versus your personal income/expenses. You can very easily track whether or not you're making money by keeping the accounts separate. However, I agree with @Dan Mackin that is may be more burden to open and manage if you're just starting out with rentals.

    I also put together this checklist of items, which may be helpful! Feel free to print and check off as you go through the steps.

    Welcome to the real estate investing world,

    Dana

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  • Sarnen Steinbarth
    Commercial Real Estate Broker · Fort Collins, CO · Member since 2015 · 308 posts · 151 votes
    10y

    @Logan McConnell  I have  some great Fort Collins resources and will reach out directly.  I also own a handful of rental property in Fort Collins.

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  • Logan McConnell
    OP
    Fort Collins, CO · Member since 2015 · 39 posts · 6 votes
    10y

    Dana,

    Thanks for the breakdown, very clean and precise.  Much appreciated!  Does your company have a branch in N CO or are you strictly a Cali company?  

    Sarnen,

    Please do, thanks.

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  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    10y

    @Logan McConnell if you go the PM route they can save a lot of work with tenant screening but you will in to spend 3-4x screening them. 

    Tenant selection is the most important aspect of residential real estate IMO. Do that more thoroughly and carefully than you do anything else.

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  • Logan McConnell
    OP
    Fort Collins, CO · Member since 2015 · 39 posts · 6 votes
    10y

    Thanks for the heads up Bill.  I would really prefer doing the tenant screening myself since I have heard so many nightmare stories about PM companies not doing a good job with all aspects of the business.  Ideally, there would be a good PM company around that would have a fair rate and do a good job, but I don't know any and I don't want to spend the typical 10% of rent fee.  I have gotten a few good leads to screening websites so I am thinking: have the background check done (criminal and credit score), if they are young (college), get the parents to cosign the lease, and meet them in person and feel them out.  And if they have a pet, meet it first to to make sure its well behaved and friendly - I don't want a mean dog peeing all over but it seems like if you can find a responsible pet owner, an extra $50 dollar a month pet fee along with a pet deposit would help expand my tenant option and cash flow!

    But this will be my first time renting, so we will see what happens

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  • Jeremiah Stephen
    Background Screener, Real Estate Investor/Agent · Camas, WA. · Member since 2015 · 21 posts · 9 votes
    10y

    @Logan Being in the background check industry I need to help you understand something, some of the information you are getting from service provider(s) could be out of date; as it relates to data like criminal information etc. Some providers of this info only report this info on a quarterly basis to the large repositories, so if your new potential applicants have started the eviction process e.g. notice to quite as been served (the start of an eviction) then some repositories will miss this info....something to consider regarding services you sign up to use.

    My mission is to create a network of landlords/property managers who all work together around a common mission which is to keep tenants accountable. Find an all in one or one stop shop service whose mission aligns with your goals and who can provide you with services to assist you versus just products to sell you and who ultimately empowers you by coming along side of you as you begin this great journey of real estate investing. You will need varying levels of help early on in this venture and as you gain experience you need your partner to be able to grow with you. Arm your self with knowledgeable partners.

    Background checks are vital to creating a great community for you and your tenants as well as for the neighborhoods, so consider the bigger picture of how you will impact those in your neighborhood.

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