All Forum Posts by: Penny Clark

@Christy Holt, if there is no lease in place, I would hire a lawyer experienced in evictions. Ask some members here  in your area for a referral. Also educate yourself on the landlord tenant law and your rights as a landlord. You don't know the circumstances of the original tenancy and any newbie landlord mistakes you make can potentially cost you thousands. Get advice now.

@james Nix A lot of good answers here! Do the repair and inspect the property while you're there. Bill the tenant for the materials. I don't trust tenants to do any repairs other than the following:

- change batteries smoke detectors

- change out air filters (show them how to do this and provide one so they know what size to buy)

- change out simple light bulbs (if the job requires an extended ladder such as bulbs for vaulted ceilings bill them for the bulbs but do it yourself)

State these repairs as tenant responsibility in your lease. If your tenants are on a month to month, get them to sign a new lease or check with laws of your state if you can issue notice of change in terms of tenancy.

Good communication with your tenants also includes educating them on what is an necessary repair ( leak under the sink) and what isn't (new knobs for cabinet drawers).

Good luck to you and congrats on your first investment!

@Justin Yurong, Doing a lease break in California is expensive. Tenants who do it can be charged for lease up commission fee, re-keying, cleaning, repairs, and rents still owed. It is in the tenant's best interest to do everything possible to find a replacement if they break the lease. This includes allowing manager/owner to conduct multiple showings, providing referrals, keeping the property neat and tidy for showings, etc.  It sounds like you have reasonable tenants who are working with you.  In the future, make it a point to go over the consequences of a lease break with your new tenants. Doing so may discourage them from breaking a lease in the first place. 

Best of luck!

@Jack Halldin, It sounds like they are charging you a month's rent for tenant placement and 10 percent (of the gross rent) management fee. This is not unusual. Although in my town (Sacramento, CA) our management fees are typically flat fee of $85-$95 or percentage fee of 7-8 percent of gross rent because it is more competitive here for management companies. The lease up fee is a one time charge. When your tenant's lease is up for renewal many management companies will charge a small fee to extend the lease with new terms (rent increase, for example). Charging another full month's rent to do a renewal seems excessive, however.

Always look at the financial terms before signing a management agreement:

- management fee ( Is it a flat fee or based on a percentage of rent) and what services does this include?

- lease up or tenant placement fee (full month's gross rent/35-50 % of full month's gross rent) and what services does this include?

- additional charges ( for example, some management companies charge an additional fee to bill tenant for utilities and/or pay utilities, mortgage, homeowner's insurance on your behalf) or annual safety inspections

- maintenance fees (some management companies will do a surcharge (5-10 percent) on any repairs done in house and by outside vendors

-cancellation fees (If the contract is for a year you may get charged a "kill fee" if you end the contract early)

Management fees take a good chunk out of your monthly profit so make sure you are getting your money's worth.

I hope this information was helpful to you and good luck!

Unfortunately, unpaid rent equals unearned income which means you can't write off the loss of income you did not receive. This is a hard lesson to learn for any landlord who has been through an eviction. However, you SHOULD be able to write off the legal fees it cost to get the tenant out, hence the silver lining.

Landlords who seek to avoid the cost of paying for an eviction end up paying more for their inaction. 

Good luck!

@Richard Prater, if you have the option and discipline to make your payments on insurance and taxes on time, then I would opt to pay it yourself. You will have more control that way and if your insurance rates or taxes increase, you won't face an automatic increase in your mortgage payment. I've found even when I contributed more to the impound account to compensate for increases, the bank projects a shortfall and raises it anyway and then issues a refund which I find ridiculous. Even when you calculate the amount needed to cover the reserve they require, they may still do the increase.

Good luck!

Hi There!

For cosigners, always have them apply, run credit and background check, verify income, and mortgage/rental history using your rental criteria. The purpose of a cosigner is to be able to collect rent from a responsible party if the primary on the lease fails to pay.

I would also charge a higher deposit to compensate for the additional risk and consider a month to month agreement in case both the primary and cosigner default on the agreement.

Renting to college students with parents as cosigners works well for many landlords but exercise caution here. If the parents who cosign also have lousy credit, it may be unwise to rent to THESE college students.

Best of luck to you!

I would still budget for the capital improvements, and other aforementioned items just like you would any other rental local or long distance. In Sacramento, many landlords can improve the bottom line by having tenants reimburse them for certain utility (garbage, sewage and water) charges traditionally covered by landlords. I would check with a property management company if this is customary to the area.

@Remi Oguntoye, I would strongly reconsider using this as a rental property and self managing it from a distance for a couple reasons:

1) Inexperience as a landlord. Even if you put systems in place for online rent collection and find a vendor to handle regular maintenance and emergency repairs, it will be stressful simply because you are so far away and you have a personal attachment to the home. 

2) You admit your profit from renting it out is "razor thin". Did you account for expenses other than mortgage and utilities, such as capital improvements, vacancy, and regular maintenance? Even IF you have new appliances along with a home/builder warranty, THINGS WILL GO WRONG. Ask yourself if you can absorb 2 months of vacancy or foot the bill on replacing/renovating the home if you install a tenant that trashes the place. 

I would not self-manage long distance unless you had trusted team members in place (agent, maintenance crew, attorney service). If you still decide to rent out your home, seek out a reputable property manager in your area and budget for the expense. 

Best of luck to you!

@Nicole Obregon, I almost always recommend you pass on someone with a recent eviction - especially if their credit is dicey and income doesn't exceed 4-5 times the rent. However, there are some circumstances when an eviction is not the applicant's doing. For example, I had a situation where the applicant had co-signed on a grandchild's lease who had defaulted - something not known to the grandmother until we ran her credit report and eviction check. Because she had a credit score over 625 and made four times the rent, the owner decided to accept the risk after I recommended he charge a higher security deposit and put her on a month to month agreement. 

If you decide to take on a tenant who has an eviction, have a cash reserve in place in case the tenancy goes south.

Good luck!