@Mindy Jensen My biggest mistake so far: Not saying no to letting my first floor tenants have their relative live with them...after about a month I woke up at 2 AM with shouting and fighting downstairs. Long story short...the cops were called and the man was arrested. He hasn't been back since :)
@Mindy Jensen I just purchased my first duplex in October (house-hacking), I can say my first newbie mistake was not vacating existing tenants on closing date. They've been difficult to say the least.
Beginning of last year, in my first rental, my first tenants were my first mistake. Like your first reason, I didn't properly screen and just went off the reference of someone with whom I had worked. I was just "so excited" to get my first tenant, like many other noobs who aren't properly prepared for what this business has to "offer". Just 3 months in (after complaining about everything those first 3 months, which I always promptly handled), I got the first phone call about the rent going to be late and it was all downhill from there. My next mistake was not evicting them fast enough. My second tenants, who also weren't properly screened, are great so far and still in the house, although it's only been 5 months so far.
I have another SFR coming up for rent next month, so I've been studying screening to help make my chances better this time. It's a mistake I won't make again. Now I'm wondering what my next one will be....
8 years ago we rented our home. Since we were planning on moving back into it, we did not raise the rent. Year after year we said 'we will moving back soon so let's just let the tenants be. The neighbors like them and they pay on time.' Ultimately this cost us a ton of money. Now we have raised the rent a little but we have to figure out whether to raise it a lot to reach the new market rate or gradually and leave more on the table each month. If we raise it too fast they might move out and we would have to invest quite a bit right now into making it up to date.
With our other tenant our only mistake was treating him like a child. He paid on time and took care of our stuff. But he called us for every little thing - clogged drains, stuck sliding door, minor electrical stuff like a blown fuse. We were living abroad without a property manager and would try to get a handyman or electrician or whatever for him. He moved out when we returned to the states and it all worked out but he sure was needy.
1. Not enforcing the lease with our very first tenant. We should have evicted him after we discovered the extra pets, or the new roommate he never told us about, or the lock changes he made to keep out this roommate when things went south. Plus, he was a giant slob.
2. Renting to friends. They took advantage, forcing us to enforce the lease and messing up what used to be a good relationship.
Renting a house to my Mom. It has been a long ride LOL. Long story short, I was able to get my Mom out of a really ****** apartment complex. For the same amount of rent she was able to upgrade to much nicer HOUSE in a much safer neighborhood. This home was my first rental investment. I was thinking it was a win win situation because not only do I have a tenant I could trust and rely on, I also have "Grandma" close to her grand daughter. =))
Are there many benefits behind this? Sure.... but there are also many negative sides to renting to my family as well. I'm going to list some of the bad things in hopes to enlighten any new investors.
1. I'm only getting 680 instead of the 900-1000 range I could be asking.
2. Whenever my Mother is late on rent she tells me things like "Danny, I really wasn't expecting this car repair I had this month so can you please wait another few days?" etc etc etc.... And I'm supposed to just kick my Mom out when shes late right? LOL not......
3. I bought the house for about 50k it has recently been appraised for 95k. If I ever decided to sell it.... I have a FAMILY member in the house... I can't just kick them out so simply...
sob stories from tenants and working with them for too long (and still counting as of this writing). I'm becoming more of a prick and enforcing the lease yet still willing to work with someone if they have an issue.
I struggle with proper screening. I have a nice building just in a C to maybe B minus area. I'm not going to get great credit scores or income so I feel I have to take a risk in general with these peeps.
accepting the verbal or email excuses, such as: "the check is coming", "I'll send it tomorrow", "my car was broken into." The worst of it all, I allowed her stories to delay our eviction process. In the end it took us at least 5 months to get her out.
That reminds me of another mistake; not using legal representation for the eviction process.
Renting to tenants without screening. Rented a second floor apartment while my fiancé (now my wife) and I lived on the third floor. The tenant had deposit and first month rent in cash so I took it. He poured gas on his bed and torched the place while we were home. Big fire, live report on local news. This was 6 days before our wedding. I was homeless on my wedding day.
Was not a newbie landlord in general, but a newbie OOS landlord:
Trusting a supposedly-vetted PM/turnkey provider to follow the minimum tenant-acceptance standards they claimed to their buyers/owners they follow was my mistake.
Result: two defaulted tenants in less than a 12-month period (one eviction, the other painfully made it to the end of their lease - with personal guarantee of payment to me by the PM, after a dispute.)
There was a 3-4 month’s vacancy between the two tenants. Now there is just over a month’s vacancy after the second one - still looking, but with a new PM that I found on my own.
The new PM recently advised that, despite deep cleaning of carpets and painting, there is a strong (bad) smell after a few days of no open doors/windows - the new PM advised that when they first saw the property at the last tenant’s move-out, walls were filthy with grease and grime, and the carpet had food pieces in it and looked like it had not been vacuumed the whole duration of the lease (11 months.) I could expect this with some other (not turnkey) properties that I have bought in C class areas. This property is just over 10 years old, and in a class A suburban community, renting for over $1,200/mo.
Moral: You must manage the manager. And don’t take it as a fact that someone has been “vetted.”
Not hiring a handyman to do the necessary repairs @Mindy Jensen .
We closed on our first rental property when our son was 3 weeks old - our 1st kid & our 1st rental. The property was a foreclosure but just needed some cosmetic items that we planned on doing ourselves. Getting used to the new addition, going into the holiday season and working a full time job limited our nights and weekends to do the necessary repairs. Took us 4 months to finish. Four Months!! Because the unit rented right away, we missed out on $2400 in Rent. Handyman labor and materials to do everything was $1500. Lesson learned.
This wass sort of a "training experience". I am currently am the tenant of my aunt's home which technically a two family home. There, for the life of the house or at least my 33 years of life, has always been a little "Studio" of an apartment in the back of the house.
Anyway a FRIEND needed a place to live and my aunt needed a tenant. Everything was good for the first 6 months because I sort of mediated for them. My friend gave me rent money of 800 for he and his girl and I would give that to my aunt. The deal was 400 for each person and utilities are included.
But that apparently wasn't good enough for my FRIEND. He kept trying to talk her down in price, she finally was sick of him and told him to leave.
In retaliation, he called the f'ing city's building inspector and reported an illegal apartment, when technically it was not because it was part of the first floor. Its been that way since the 60's when my family bought the house. It was only separated by a door. So it was more of a sublet.
So needless to say this caused a rift in my FRIEND and our relationship. But my aunt and I worked fast to get him out legally (bite the bullet and get a lawyer)
No bad blood but lesson(s) learned. It was a learning experience for both parties.
Also, LEASE LEASE LEASE becasyse month to month is really hard to prove especially if you have been given cash.
Currently I am working on my first deal with my wife as possibly a vacation rental outside of the state (PA) in which I live known is (Northern) New Jersey.
Don't let tenants bulldoze you that they are the very first to see the place and so have to rent to them.
The biggest mistake was I signed a lease with a tenant, my very first, which I shouldn't have, that I got out of it before she moved in. Fortunately my dad was a landlord for many years, and I learned that hard to please tenants can cause years of heartburn.
I always thought the first tenant who came and qualified should be selected. Initially I didn't rent via open houses, but by appointment. I advertised for a week, made several appointments, based on my understanding of nondiscrimination laws, selected the very vert first one based on qualifications, and signed the lease. She paid the deposit, and the apartment would be ready in 2 weeks.
I thought the very first qualified should get preference. The tenant was a law student, asked if she was the first one looking at the place, I was dumb enough to say yes, and she then said since she was first, she should be given first consideration. Since this is what I understood to be the law, I figured I had to rent to her to avoid problems.
It was my luck the apartment wasn't ready. It was a first floor apartment, she called everyday for a week about something else she needed, like window bars, newer locks, an alarm system, new carpets etc. Finally I had it with her, told her the apartment won't be ready for another month, and returned the deposit.
So some years later when I advertised an apartment for rent in the papers, some guy called 7:00AM Saturday morning and declared he's the first one who called about the apartment and ask me if this was so. He was, but I lied and told him he wasn't. He then said "how could that be, I checked the papers going back three weeks and your ad wasn't in there". He had a Spanish accent and I said "oh you mean the English papers, but I advertised in the Chinese papers a week ago, did you see that"? Then he sound dejected and said "looks like I lost another one". I replied, "why did you say that, everyone is welcomed". He asked about seeing it at 10:00am, but I told him I already had a number of people coming, and it's better after 1:00PM as I didn't make any appointments for the time slot. He never showed up.
I since learned that for 2 and 3 families, if the owner lives in one of the units, unless you say you don't rent to minorities and gays, you have a free hand in choosing the tenants. But these days, demand for apartments in NYC is so great, I usually hold two open houses, get 15 to 20 tenants looking each day, take at least 6 applications, often more, the place is crowded. no one can credibly claim they are the first. And for good measure, I bring applications that people filled out from prior apartments I showed, so for the first few people who came to look and asks, do you have any other people interested, I pull out the folder, show them the applications, and say, I got 4 here already, but looks like you have a good chance.
So I get a good number of applicants, vet them, screen out the liars, and try to select the ones whose personalities are a good match to us. So, no trouble makers, especially those who claim they were first.
This is what I commonly see from inexperienced landlords:
Overscreening - if you have a class C property, you aren't going to get an 820 credit score with 3x the rent, and if you do you'll have chewed up 3+ months vacancy to find them. Folks need to realize the types of properties they purchase and the tenant base that go along with that. Which leads me to my next one...
Overbuilding - If the status-quo in the neighborhood is a basic kitchen w/ particle board cabinets, your all granite and stainless super-huge kitchen with induction stovetop on the middle island and solid maple cabinets isn't going to double your rent to levels you see in better neighborhoods. Folks who want that will simply move to those better neighborhoods. Tenants pay for the neighborhood, then the best amenities money can get where they can afford to be. "Build it and they will come" doesn't apply unless you are a major developer.
Overthinking - When you get a good applicant that meets your criteria, ACCEPT THE APPLICATION. Often new landlords are uncertain and question themselves when a great tenant comes along, and by the time they decide the tenant has moved on. Set your criteria and stick to it.
Overburdening - Your tenants don't want to be friends or build a relationship with you. You collect the rent and provide what you have to per the lease, your tenants pay the rent and do what they have to per the lease. That's it. Let them live. If you've screened properly you don't need to swing by every couple weeks or call to check on things. This isn't a hotel, a tenant has taken over your property for the lease term, you need to give them room (within reason) to live.
Over-responding - Tenants call at 3am about a light bulb being out. Stop taking those calls. You want to be the "awesome" landlord who always takes care of complaints within hours. But you'll soon learn that there are many a tenant that abuses your concern and kindness. Set boundaries - you decide WHEN work gets done, you decide WHAT work gets done. There are professional ways to say that but certainly don't let your tenants decide for you.
This is an incredible thread @Mindy Jensen.. I am taking notes from everyone here as I plan to house hack by the fall. Thanks to all for contributing with your experiences.
My first eviction attempt was a failure. The tenants didn't even show up to court and I still lost! I served the initial paperwork myself and missed a small detail when serving. Judge threw it out and made me start over. Lesson: use a lawyer for evictions!
