I am about to close on my first property on October 30th!! (Thanks BP for the inspiration!)
This is a duplex that I plan to house hack. I have to do some remodeling that will take about a month but I will be ready to rent out the other side by the end of November. I want to make sure I am going about this in the right direction, so here are a few of my questions;
A) I plan to use BP's smartmove for screening and charging applicants the fee. So I think that part is pretty self guided.
B) Do you require rental insurance? And if so, how do you make your tenants prove that they have and will maintain this throughout their lease?
C) I think I read a forum on here a while back that said never let your tenant pay the water bill because if they don't pay, the city can file a lien on your property. Is this true? If so, how do you go about handling utilities? (The property is sub-metered off, so I was hoping to make my tenants pay all of their own utilities.)
D) How do you figure a proper amount to charge for a security deposit? What do you charge up front, first months rent AND security deposit? Am I missing something here?
Final Question) I will go BP podcast style questioning here; if you had one piece of advice for someone like myself about to be a landlord, what would it be?
Thanks for everyone's help in advance!
I require liability insurance of a minimum 1M. Tenants are required to show me proof of insurance payment and policy annually.
Put all utilities in tenants name and deal with non payment if the issue arises. Unless you get a bad tenant it will not be a issue. Otherwise simply increase rent plus some to cover your water costs.
Your state landlord tenant regulations, which you should have already learned, will include what you can charge up front. It is advisable to charge the full amount allowed as a screen tool.
Never use term leases, M2M only. Set high standards in screening and never compromise. It is easier to reject a applicant than evict a tenant. NO pets, NO S8.
Originally posted by @Thomas S. :
Never use term leases, M2M only. Set high standards in screening and never compromise. It is easier to reject a applicant than evict a tenant.
Thanks for the feedback, why do you say month to month only? I was thinking 6 month to a year lease only. I would think month to month would be super unstable. This is a nice property in a good location so I know I can find a well qualified stable tenant. I figured the more stability from a tenant the better...
Thomas always recommends a M2M lease, because it's much easier to get rid of bad tenants when you are only obligated to them for 30 days.
Sometimes you go through all the screening in the world, then your tenant seemingly has a head trauma the day after they move in and turn completely nuts.
Also, while it seems like a great idea to lock the tenant in for an entire year, they can actually move anytime they would like, with little to no repercussions. It costs you so much to go after them for unpaid rent that it doesn't seem worth it in most cases.
To answer your questions:
B) Yes. Make it a stipulation of the lease, and make sure your name is on the policy as additional insured.
C) You can ask for a water deposit, so long as your state landlord tenant laws allow this. When I last looked, SC did not have a maximum security deposit limit.
D) Most people charge first and security deposit or first, last and security deposit. I'd recommend charging first, last and security if that's common in your area. That way, if you have to evict, you have at least the security and last month's rent to go on.
Piece of landlording advice? It is FAR better to have an empty unit for an extra month or two (that's what reserves are for!) than to rush a less than stellar tenant into the property. Evictions are costly.
Hi @Ryan Davis ,
You have some good advice above. My 2 cents below.
Depending on the property would depend on the length of lease. I'd say the nice ones get a longer lease, because filling it again could be a pain. Lower end ones, go M2M. Please hire a professional to take pictures, they can be used over the years, and pictures sell the property.
If you do what Mindy says above, you're notified if the rental policy lapses. A big thing in Real Estate is liability. You definitely want them to have renter's insurance.
As far as my requirements: 600+ credit, they must make 3 times the rent in monthly income, no evictions, no felonies, NO EXCEPTIONS. The minute you make an exception, it will be quick to bite you back later on. Collect 1st month's and security deposit (equal to 1 month rent) at lease signing. Charge a lot for an application, $75-$100. You'd rather someone who doesn't complain about $100 in applications per person.
I don't mind pets, but my properties are pretty indestructible. But if you do, supply the AC filters, and make sure there's no carpet. Collect a pet fee, not a deposit. (We collect $400 for the year, per pet)
Advice for a new landlord:
Become friends with an attorney.
Become friends with a Realtor, they have all the connections. (HVAC, plumber etc)
Make no exceptions.
You're the one in charge, so act like it.
Quarterly or bi-annual inspections. Walk through a couple times a year with your tenant. You don't live there, so let them tell you about the small issues so you can fix them. You'd also find out that something is taking more of a beating than it's supposed to so you can budget for it when they move out.