Beginner Landlord Questions

15 Replies

Hi all,

I just went into contract to purchase my first rental property. I'm getting everything set up in the 30 days I have prior to closing. I had a few questions:

1. Florida requires that tenant deposits are kept in separate bank accounts not co-mingled. What do you Florida landlords do? Do you just open savings accounts for each tenant and stick their deposits in those accounts? Or do banks have specific accounts for landlords?

2. What company do you use to do tenant background checks? Are you happy with the company?

3. Do you use specific income guidelines for your units? For example, when I was renting in a large building (owned by Gables or one of the other big guys) they required that I had verifiable proof of income that was a certain multiple of the yearly rent. 

4. I'd like to streamline my life and collect rent online, if possible. Does anyone use an online portal, and if so, which one? How has it worked out for you?

5. Any other general advice?

Thanks for the help! Here's to hoping this is the first of several properties. 

First, download FL Chapter 83 Part II.
I do not use a savings account because if it earns interest, that interest must be transferred to the owner at some point.
I use 3x income to quality for a rental.
Make sure you comply with the required notice as to how/where deposits are held. Name of bank, address, interest-bearing or non-interest bearing. You have 30 days to notify the tenant.

@Jay S. here is a good resource to get you started: click here

If you want to be a successful investor, you have to study the law.

I'm not from FL, but I was a new investor 6 months ago with many of these same questions.  Here are answers to the ones I've dealt with:

1. I opened a separate savings account at my bank to deposit their security deposit.  The fact that it gains interest makes no difference to me.  In 6 months, their $2,000 deposit has earned $0.15 in interest... 

2. I used a realtor for this, so I can't answer this one.

3. I've heard of many landlords using the 3X rule:  Monthly income must be three times the rent.  For me, I review their monthly income and do my best to estimate the other bills they have posted on their credit report to make an informed decision.  Someone with 2X the rent as income with no other major obligations may have an easier time paying the rent than someone with 3X the rent as income with 4 credit cards, a new car, medical bills, etc.  Using a hard and fast rule will help you weed out some of the lower-income applicants, but I've chosen to review them on a case-by-case basis.

4.  I use erentpayment.com.  However, be advised that many investors are having horrible issues with them right now and have not received their money.  I have not had any issues, but I'm thinking about moving to Venmo in the future.  It's a little easier to use and most younger people already use it to transfer money around, myself included.  Plus, Venmo has no fees and you can do everything right from the app on your phone.

5. General advice: screen, screen, screen.  Make sure you screen your applicants thoroughly before making a decision and if you're not comfortable with an application, toss it.  It took until the third complete application for me to approve someone and I'm so glad I waited because they've been great.  It's easy to rush into an agreement to start building your passive income, but waiting for the best application and tenant will make your life a lot easier (in theory of course).

Good Luck!!

Screening someone is essential, find a good company and have the tenant pay them,,what does it mean if they won't can't pay?

Venmo is a great way to receive money, I have a lot of college students who rent from me.

By the way you can't screen college students as there is nothing to screen however money is the least of their problems, staying sober and making grades so they can stay in school.

I really enjoy using Cozy.com. Collects rent online (takes 3-5 business days for it to deposit in my account), easy to do a tenant background and credit check (they purchase it and give me permission to view it, so they don't have to give me their SS#), and it has both a landlord and tenant portal, so you can communicate through that. It also syndicates the listing to a few sites when you put it up for rent. 

Congrats on the property! 

I use separate accounts for the deposits.   I have used Venmo for payment in the past. Same 3 x rule for income.  Be sure you stick to the restrictions you set up first, no pets/smoking for example when screening tenants.

Great job so far. Keep going! I use Rentec Direct and love them. I only collect rent electronically and it auto bills tenants, records their payments, and assigns late fees. My tenants love it as well.



Originally posted by @John Thedford :

First, download FL Chapter 83 Part II.
I do not use a savings account because if it earns interest, that interest must be transferred to the owner at some point.
I use 3x income to quality for a rental.
Make sure you comply with the required notice as to how/where deposits are held. Name of bank, address, interest-bearing or non-interest bearing. You have 30 days to notify the tenant.

Thanks for the replies, everyone. Really appreciate the help.

Thank you, John. I reviewed the Florida statute but it still left me with more questions than answers.

The options are (1) keeping the money in an interest-bearing savings account (interest paid to tenant at the end of the lease) but then I'd need to get a 1099 for the tenant and it complicates things, or (2) keep it in a non-interest bearing account. 

So for the Florida folks here: does your bank offer a separate non-interest bearing account for tenant deposits? I know most checking accounts require a minimum balance or otherwise charge a monthly fee.

@Jay S. ,

Cozy.co is what we use for tenant screening, marketing and collecting rent.    If you do low income like we do, they allow tenants to use credit cards (3%) so it's a nice flexible option for them, and it's free for the landlord.    We require at least 3x rent/income, verify their pay stubs and call the managers directly.   Also, if there's any question, check your local district court page to see a full picture of the person.. not to mention social media can quickly give you an idea!

Regarding the security deposit, call me lazy, but we often give $1-$2 extra or so, just to be on the safe side.    When you have 1 unit it's not a big deal, but when you start to scale,I don't think it's worth the headaches.  

Some great advice my mentor told me regarding the security deposit is "return it ASAP, removing $$ for rent is no issue,  but only take out what you have actual proof of and can prove to a judge what you did was reasonable and needed."    Whenever you are thinking of taking $$ from a deposit.. ask yourself "can I prove this is above normal wear and tear with pictures, videos, or emails?"      If you stick to these rules, you'll be fine.   If you ever want people's court (I love that show) the majority of landlord/tenant fights are over the security deposit!    

Lastly, the other great advice I got was "Be a great landlord, and people won't leave.  Fix things quickly,  have good communication, listen to your tenants, give them everything they need appliance wise, and they'll have no reason to go elsewhere!" 

Good luck!

Many small community banks are friendlier and less fee intensive. You could take the original deposit check to open the acct. 

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if you have legal questions, google Harry Heist, the attorney in Fl. He has devoted his entire practice to landlord tenant law and his office will answer a lot of questions over the phone. And their online FAQs are very informative. 

@Jay S. congrats and great name!

1 Yes, just open a separate savings account. Some banks require a minimum balance for savings account. Be cautious of this to ensure the deposit is above the minimum so you’re not charged a monthly fee. 

2. Bigger Pockets link MySmartMove

3. Income = 3x monthly rent 

4. Avoid TrueRent 

5. Skip all this and just hire a good property manager so you can focus on finding your next rental!!

1. Tenant deposits are to be kept in a separate account. Open up a free checking account (not savings) and you can keep all of your deposits in that one account. Just make sure that you keep good records so that you know exactly what money belongs to whom.

2.  I use Lease Runner to take care of tenant background checks, credit checks and eviction records. All you have to do is enter in the prospective tenant's email address and what reports you want them to run, and they will take care of collecting the application fee. Lease Runner will then email you when they have the reports completed. All in all, it only takes 1 day at the most. You do, of course, still need to call on all of their references. Lease Runner will also build your lease for you, if you do not have your own lease, and send it off to the new tenant for electronic signatures. They will also accept electronic rent payments from the tenant if they choose to use the service. They really are perfect for a newbie landlord.

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