Is Vermont a bad state to be a landlord?

Question

Recently I have been considering investing in SFH or small multi-family properties in Vermont with the intent to generate a rental income stream.  During my research, I have repeatedly had people spontaneously say things along the lines of "Being a landlord in Vermont is precarious.  The regulations are many and the fines are expensive."

However, when I ask why they say that, they can offer no specifics.  So I put it to the forums.  Is Vermont a bad state to be a landlord?  Do they have stricter regulations than the average state?  And do the regulators regularly assess large fines for non-life threatening non-compliance issues?

Josh Dillingham · Answer

Evictions in Vermont can take longer than in other states and Vermont has an additional 5 protected classes on top of those protected by the fair housing act. Property taxes are high which means you have to find a property with a high ratio of rent/purchase price. I am a landlord in Vermont and I'm doing fine. Choose your tenants wisely and know the laws and you can be successful landlord anywhere. That being said, if I didn't live in Vermont and was not familiar with the area I would not choose to be a landlord here.

Tom S. · Answer

@John Wright Josh summarized it nicely.  I've been a landlord in VT for over 15 years now.  I'm from the area, know it well, and have people I can trust (contractors, property managers) to help me run the business.  The vacancy rates are extremely low in VT as there aren't huge apartment complexes all over the place.  Most rentals are SF or small multi families.  I generally will do one showing for a vacancy, and easily have 20-30 people calling they are interested, and 2-5 top quality applications I can select from.

I haven't had too many issues with the eviction process, only 2 I had to do in 15 years, and although slow, it was successful and the tenants were out.  I've had a few people still owe me after move out - I've taken them to small claims court and won every time.

So my 2 cents...

- Tom

Heidi Henkel · Answer

Also, a reason not to accept a security deposit from a nonprofit or social service agency is because if you get into a conflict with the tenant, the organization will "advocate" for them, including legally, and may be quite absurd (and incorrect) about the level of "rights" they claim for the tenant, and this is super stressful, and also, now you have a very entitled tenant who thinks you're obligated to put up with all sorts of awful behavior- because they've been erroneously led to believe that they have excessive "rights."   Steer clear of social services and nonprofits that "help" "poor" people.  If the person is a functional person but poor, they will look for housing on their own two feet and they will save up their own security deposit.  If they are not able to save up a security deposit, they will not be able to do a number of other basic independent living and financial things, either.

Also, don't make the rent too low or you will attract addicts.  I used to rent a room  for $300/month.  I started getting more  functional people when I raised the rent above $450.  I don't want to price gouge people;  I want to rent out affordable housing; if the price is too low, you get people who aren't functional adults.

Also, I strongly recommend NOT buying property in Vermont just to rent it out. I have been saved a number of times, by being a landlord who resides in the place that I rent out.  The laws are completely different, especially on evictions, if the landlord lives in the same home as the rental.  I can kick people out much more easily because I live here.  In a standalone rental property that isn't inhabited by the landlord, it's much much harder to kick people out.  I have heard nightmare stories from friends of taking 6 months or longer to evict bad tenants while they utterly and completely destroyed the property.   I would NOT get involved in that. Vermont is a terrible state to be a landlord of that kind.  Especially if you don't even live in Vermont and you'd be an absentee landlord.  Even worse. Don't do it.  The law really is not on your side at all if you're an absentee landlord. Tenants can sue absentee landlords for huge amounts for technical violations of statute.  steer clear

Mark H. Porter · Answer

Heidi, I have quite a few doors in downtown Burlington and have never had an issue with removing bad tenants.  If they’re late, two week notice, if they still don’t pay, I file with the court.  I haven’t had to evict many tenants over my 20+ years (<5) but when I have I’ve always won the judgment as I have all my ducks in a row.  I receive biweekly checks today from tenants from 5 years ago from their employers payroll company (e.g ADP).All my tenants are screened up front.  I take down payments from COTS and CVOEO and have never had an issue using part or all of e security deposit to clear up past rent or damages.

Burlington is a great place to be a landlord so long as you’re good at it.  Our properties are inspected by code enforcement at least every 5 years (Usually every 3) so it keeps us inline as well as gives us a level playing field.

Heidi Henkel · Answer

I have been renting out rooms in Vermont and I find it to be a mixed bag.  I use Free Legal Answers sometimes because all the public advocacy agencies tend to portray statute as heavily slanted toward tenants. It's not as slanted as they make you think it is.

Screening tenants should include a current or most recent landlord reference and a confidentiality release for the state police social worker.  The state police social worker confidentiality release is essential because if the state police have had to deal with the person a lot via the social worker, you need to know that. Christine Bullard is the one for southeast VT.

Also, I have learned the hard way that you always need to collect a significant security deposit and it has to be the tenant's own money. It's tempting to try to be a do gooder and accept a security deposit provided by a social services agency or nonprofit.   Don't do it.  Part of the function of a security deposit is to motivate the tenant not to wreck the place, and if they do, the security deposit won't adequately pay for it.

If they're on disability and don't have a job or a large volunteer commitment and they're not obviously physically disabled, get a full confidentiality release of their mental health history so you can determine if you can cope with having them as a tenant.  That last one, I don't know the legality of if your property is not owner-occupied. I rent out rooms in my home that I live in.

Also make sure that extras are in the tenant's name, not yours. Internet and phone and cable should be in their name so if they don't pay for it, it's not on your credit history.  If they ask for it to be in your name, don't rent to them.

Do a credit check and a criminal record check.

Tom S. · Answer

@Samantha Hiscock About 50/50 success in collecting.  Some of them are college students and their parents will step in and pay it.  I haven't done the wage garnishment process yet, but if you win, the court will send you instructions on how to collect (assuming you know where they currently work, and make enough for it to be collectible).

A tip I recently learned, if you win in court, ask right then in front of the judge for the tenant to set up a payment plan, $100 per month or something.  That seems to carry more weight when the tenant agrees in court and the judge writes it on the judgment.

Good luck!

- Tom

Samantha Hiscock · Answer

Tom, how much success have you had collecting the judgements? I've only ever had 1 eviction in 8 years and only 2 tenants that have ever owed me money, but I am getting ready to file an eviction on Monday. What process do you use to enforce the judgements? A collection agency or wage garnishment or something? I dont want to let this tenant get away with not paying me.

Is Vermont a bad state to be a landlord?

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