All Forum Posts by: Janne Zaccagnino

I am new to investing and am building new rental houses. The new units are about 1700 sq ft with one and two garages and have 3-4 bedrooms, 2 baths and will rent for about $1300 - $1400 per month. 

 I'd like to know everyone's top 3 screening questions (especially any that you consider unusual) that you ask potential tenants as they inquire about your properties and how you may respond to a potential tenant's replies. 

Ex. 1)  How long have you been in your current unit? (If 1 year or less, say, 'I'm not interested in a short term tenant' and cut that tenant from your list of potential tenants)

Ex. 2) Do you make $ amount of verifiable income per month (3x the proposed rent of your available unit)? If not, say, "I'm sorry, I can't rent to you." 

I know these sound a little harsh on paper but I was trying to be brief but I know a guy who weeds out people by being this harsh. 

I am trying to formulate a list of real, usable screening questions and would like to avoid potential bad/professional tenants who are only out to get into your property and never pay another dime after the initial deposits. 

If they are not paying rent on time, in what universe will they have enough credit on their credit card to pay rent?  I am very doubtful that you will be able to pull this off one time. I see them applying for a different card, closing this card, but more likely this card will consistently decline for lack of credit. 

BTW thanks for the comments so far!

Dean, that has also crossed my mind. I know at least 2 builders who build new rental houses and they would buy the lots from me and I could make some great money there. I could also sell the homes and have thought about selling one and using the profit to find the other 3 Builds (my 20% needed). I'll know better when all my numbers come in. 

After talking to my builder as well as a non competitor builder (simply for advice) the cost per sq ft should be under $55 PDF. Hopefully because of the fab price I paid for the lots the cost will stay under $90k if I'm really lucky, under $80k. We will do a very through materials list before we do the first and then adjust from there. 

I have recently bought 4 subdivision lots in a good area of Memphis Tn. Good schools, desirable area and not a war zone. New houses in the area have recently sold for about $$130,000. (1708 heated sf. With a 1 car garage. 3 br 2  1/2 bath.  All bedrooms are on the second floor). Two of 3 houses sold before the house was finished and the third house isn't finished yet. 

I bought 4 lots around the corner from these 3 new houses.   About 40% of the houses in this phase of the subdivision are owned by investors and they are rented out. I want to build and hold. I have a reputable builder who will charge me basically cost plus 10%. 

The rents in the area are about $.80-$.83 per foot ($1295 -$1300  per month). At this rate based on what I expect construction, constr. Loan interest, and all closing costs, I expect to make about a positive $500 per month cash flow. (I got the lots for a steal.)  however this all looks too good to be true. I'd like advise on what I'm missing. 

I will be out of pocket about $15k for the lots, not each, all 4. They are not in a flood plain. They do have some nasty easements running through them and a typical builder would be required to have a custom house designed for two of the lots and the other two while small I already have designs that would work. My advantage is that I can design the houses start to finish. So having cheap lots and free plans is my best advantage but it stops there. 

So, anyone with building experience who can advise me on things to NOT do or things TO DO would be most helpful. No advise will be refused. 

Thanks in advance. 

Janne

He "can't" or "won't" give you details. Those are two entirely two different things. If he won't give you any explanation as to what the charges are, chances are he is not truthful in other areas as well. They could have been DUIs, does this make him a bad tenant, not necessarily but he could get fired tomorrow for wrecking his company car and refusing a breathalyzer on the scene. Then, you have an unemployed tenant, no rent ... have fun with that. They could have been domestic disputes and the wife is now gone, but what if a girlfriend moves in (with or without your permission). What if he's arrested again? Who is going to pay rent. I would press him for details. If he will not offer them, then get the records from the sheriff's office. If they are in Sheriff Short-hand, I'm sure they will read the report for you. Ask the sheriff if you should rent to the guy. I, personally would pass on this one unless your property has been vacant for a long time and he is your only option. Still, would probably pass. Janne Z