All Forum Posts by: Jennifer T.

Yes, bingo.  I can't speak specifically about the Midwest.  My rentals are in New Orleans and that is exactly the situation I knew I was walking into.  Marginal appreciation, at least for the neighborhoods I buy in.  Though I "force" appreciation by buying distressed multi-families and fixing them up.  I also sometimes look for months to find the best deals.  And then my "all in" price ends up being a double bonus of built-in equity and a good net monthly cash flow.  

My rentals are a monthly net of about $400+/door, which includes the debt service and putting aside 18% for repairs/Capex/vacancy. And the insanely high property insurance for being in Hurricane Alley. But not PM fees, because I self-manage. Just to make things easy, a 10% PM fee would bring the net down by about 100 bucks, to $300+/unit.

Maybe it's different in the Toronto area, but asking for a landlord reference letter is super bizarre and something I've never heard of.  I see you are no longer requiring that, but I strongly suspect that was a major problem.  Are you also requiring a letter from their employer or is that another option instead of paycheck stubs/bank statements?  If so, I wouldn't require that letter from every applicant either.  There are a lot of companies that would not provide something like that.  I work for a medium sized business and I'm almost positive they wouldn't.  Though they will release income/title information, if called and whomever calling has a signed authorization.

It's just not something people would have laying around.  They would have to get in touch with their previous landlord.  Request that person WRITE them a letter.  HOPE their previous landlord has time to do that and does it promptly.  That's a big hassle and not something I would have done as a tenant.  TBH, I personally would never write a reference letter for a tenant.  I'm too busy for that.  At best, I would tell them to write it.  Send it to me as a Word document, so I could edit it, if I felt the need.  And then I'd just sign the letter they wrote themselves, assuming it was truthful.

It's also a much better idea for you all to make the landlord and income verification calls yourselves.  It's easy to fake paycheck stubs and it is even easier to fake letters.

FWIW, for every actual application I get, I have 2-3 other people who gushed about the place.  Requested an application.  Then I never hear from them again.

Have you all done a solid rental analysis to verify the rent you're charging is market?  It sounds like you have but, at the same time, it's unusual that a few people called you back and offered less.  I rarely have potential tenants do that.  Though I'm also in a very different market (New Orleans), so maybe "bargaining for rentals" is more common in other places.

To me, a tenant paying the security deposit and first month's rent is...in a way...part of the screening process.  Because if they don't have the wherewithal to save some money over a period of time, in order to come up with the security deposit, than they are probably also only one "short" paycheck or "car repair" away from not having all of the rent for a particular month.

In my early, naive days I let two different tenants pay me only half the security deposit, with the rest of it promised within one month.  Didn't collect another dime from either one.  One of them did a "midnight move-out" only 4 months into their lease.  The day after rent was due and still owing me $300 from the month before (again, young and naive! lol).  One of them is still my tenant four years later so I'm not "quite" sorry I rented to her.  But she has ALWAYS been a problematic payer.

I've also occasionally had to evict people, so I've seen what happens when people know they aren't getting their security deposit back.  Which, "I guess" these SD insurance programs would take care of the cleaning cost and damages.  At least in a perfect world.  But all other types of insurances are usually a nightmare to deal with and have reams of fine print to get out of paying.   

Another problem with money orders, at least with mailing them, is if they get lost in the mail.  MOs often have a 6-month window before they can be stopped and reissued.  Which would be the tenant's problem.  Except that people who don't usually have bank accounts also don't usually have an e-fund or nest egg, to pay for their rent a second time within a short period of time.

In addition, the "powers that be" are purposely slowing down USPS mail service right now, which would make me even more nervous about accepting rent through mail.

I have an attorney friend (primarily a defense attorney) who is also heavily involved in REI. This concept isn't something he's done yet, but it is something he's talked about. Unfortunately, I don't know any specific details. But he is a master at leveraging government programs and grants for his real estate ventures. I would swear he's mentioned something like that, but I think it was more related to halfway houses.

FWIW, he's smart, well educated, and very accomplished.  And he doesn't think it's a crazy idea.

I know it's rough out there for people with a criminal past.  It's harder to find jobs and harder to find housing.  And that's not necessarily fair to people who have served their time.  And, while I might be sympathetic with that, I don't rent to felons either.  At least not those where their felony is related to a violent crime.  Of course not always, but they are generally going to be people with problems and having tenants with problems makes my life a lot harder.  So why would I do that?  I wouldn't, so I don't.  Some of the problems there can be is income stability.  Or just the fact that people who have spent an extensive time in prison, especially if it was recent, have a higher chance of not knowing even the basics of how to take care of a house or their finances.  I occasionally have enough trouble with that for tenants who have never gone to prison.

On a different note, I generally wouldn't recommend doing extensive business with family members or good friends.  Or, if you do, just realize it could potentially lead to the end of the relationship and bad feelings if things don't work out for both parties.

I also wouldn't recommend that you start out your real estate journey in the niche of renting to felons.  Being a landlord can be hard enough.  Don't jump into the deep end on your first go-round.  Experience and enjoy some of the shock and horror first of what typical tenants do.  Until you make an exclamation of, "OH.MY.GOD!  Who DOES that!  How can people live this way?", you're not ready yet, lol.  Like destroying your countertop and acrylic sink because they didn't realize or care that they should have used a cutting board.  Or make holes in the kitchen wall so they have a place to put their incense sticks.  That's just a recent sample for you from a vacancy I had last month.

Speaking of pests and dead bodies (thankfully not a person's dead body).  But a raccoon got stuck in my tenant's wall a few months ago.  And died.  The horrendous smell and mess was not for the faint-hearted!

But all in a day's work for the intrepid landlord, lol.

Flood insurance usually is cheap if the property is in an X zone (no flood zone).  Typically less than $800/year and that's including the stupid $250 surcharge for a non-owner occupied property.  My personal home has $250K in coverage, plus $100K for property, and is something like $400/year...$650 if it wasn't owner-occupied.

I have a rental property...that actually flooded in Katrina, though I didn't own it then...but is now considered in an X-flood zone.  It's $150K in coverage, $50K property, for $740/year (including the $250 surcharge).

Floods are not likely to happen in an X zone but, when they do, it can cause tens of thousands of dollars in damage. FEMA stats are that 20% of flooded homes are in no-flood zones. A series of bad rainstorms or too much rain in too short a period of time could potentially cause any area to flood. I know that happened in Baton Rouge about 5 years ago. Major devastation with hundreds of homes/businesses destroyed. But most people didn't have flood insurance because they weren't in a flood zone.

On the same token, a property in a non-flood zone could go 100+ years and never flood.

The conundrum of insurance!

I personally keep flood insurance on all my properties, even though all of them are now in no-flood zones after the flood maps changed a few years ago.  Ironically, I didn't for some of them before the flood map change, because they were previously in flood zones and the insurance was too astronomical.  But when the rates got reasonable, I jumped on it.

I only have rentals in Orleans Parish, but eviction courts opened here sometime in mid-June for tenants/properties that don't fall under that federal eviction moratorium.  But every city/parish in Louisiana can be different and you should contact the appropriate city hall.

I think Gov. Edwards had a state eviction moratorium until June 5th.  But I'm 95% sure he didn't extend it past that. 

I've spent most of my career working in industries where my hours are billed back to a client.  Although all of them were supposed to be long-term jobs, only my current one has lasted more than 2 years.  I've been laid off a few times when projects ended with other companies I worked for and there isn't another one to replace it.  Or work slows down and the client no longer needs positions X, Y, and Z.  Even at my current job, I've felt like I've barely avoided the chopping block a few times during work slowdowns.

It's a lot of insecurity! I decided I needed to create my own destiny and REI is what I was drawn to.

I'm not quite at a FIRE point yet, but I'm closing in!  When I refi two duplexes I've been rehabbing in another few months, I will technically be in a place where I could support myself from just my net rental income.  But I don't plan to leave the W-2 world, at least not yet.  At that point, I plan to focus on debt pay down to solidify my financial security better.  But 1-2 more years from now?  I will reassess.

I have to admit, if I get laid off before I reach the point of debt paydown I want to be at, I might just take the plunge early and not look for another W-2 job!

This is where I know I sound a little spoiled.  I'm fortunate that I work for a good company.  I have good coworkers.  I'm thankful for all of those things.  But I feel like a caged animal and I'm resentful.  I hate having to sell away so much of my time for someone else to dictate how/when I spend it.

Yes on all of this, but especially the bolded.  Where I live, eviction court opened back up in mid-June and the federal eviction moratorium on some properties/tenants ends in a couple weeks (thought it will probably be extended).  So evictions or tenants moving out because they know it's coming are flying fast and furious right now.

I recently had some vacancies and caught two different applicants giving me false current landlord info. I look up the property info before I call, so I know who or what business owns the property. After I've asked the typical landlord reference questions that people have mentioned above, I ask 1-2 "verification" questions. Things that only the owner is likely to know. Like, "For verification purposes, can you please tell me the name of the LLC you own this property under?" Or, if an individual owns the property but it's a different name, "Since it looks like you don't own this property. Can you tell me the name of the person who does and your relationship to them?"