Self management questions

[Wendy Carbone]

Hello all, I hope someone can help answer a few questions for me.  I have had 2 rental properties for 10+ years and have used a property manager for the entire time since I live several hours away from them.  In May, I purchased another SF home and I have a 4th SF home scheduled to close next month.  These last two houses are within 2 miles of my home so I want to self manage them.  My questions are:

Should I create a separate LLC management company and do I need to be licensed to do so?

All properties are owned in my name and husbands name but have an umbrella policy to reduce risk-no LLC.........thoughts?

What is a good resource for a lease agreement, tenant screening and rent collection?

Other than a minimum credit score what other specific stipulations can I legally make to help get the best tenant possible?

Thanks in advance for all your help!!

[Corby Goade]

Obviously, you'll want to visit with your lawyer to get advice on those questions, but here is how we do it:

We have an LLC that is a property management company. That management company has an operating agreement with our other LLC, which owns our property, we are simply employees of the management company and that is how we present ourselves to our tenants.

Beyond the legal protections that this structure offers, it makes interactions with tenants so much simpler. It's much easier to get rent increases, collect late payments, etc, when you are just representing the owner and not putting yourself in a position where a tenant thinks they can negotiate with you. You're just an employee doing your job.

As for a lease, I'd find a local real estate investors club and ask others to share theirs. Your lawyer might have a good one too- that is a good route to go, since your lawyer will likely be handling any issues, they will be familiar with the lease and comfortable enforcing it.

We also have an umbrella policy- they're cheap and offer a little more peace of mind.

As for tenant screening, depends on your neighborhood. We have a minimum credit score, no felons, 3X rent for income, etc. BUT- the most telling screening for us is checking people out on social media. That will tell you much more than any application will. And of course, we call every landlord they've listed on their application.

For rent collection, we use cozy.co, it's free for landlords (and tenants if they use a checking account) and is direct deposit. You don't have to wait for rent in the mail, and you know immediately if rent is late and can add that on to their required payment. You have to wait a few days for your deposit, but you're notified that it's on the way immediately, and it's well worth it to avoid fighting for on time payments, waiting for the mail and arguing about late payments. I'll never accept a personal check for rent again.

Finally, make sure your application includes banking info and SS#. If you ever have to find them and collect on a judgment, that info will be infinitely helpful.

Best of luck to you!