Renting our house out, any last minute advice?

[SlinkySam]

We are going to be renting our house out for the first time. It's our baby due to all the work we put into it thus far. Anyone have experience in this area that can lend a helpful hint or two for a smooth rental?

I have only rented once a Loooooooong time ago so I don't remember much at all.
I have all the rental paperwork and will be reviewing it.
Credit checks will be run through a friend.

I think I have a good idea what to do and how to handle it, but I am always one to listen to good and relevant advice.

Thanks
-Sam

[BlueMonster]

Renters are the worst, go into it knowing that at least. They don't respect the property like you did, they have no investment. Make sure you make them pick the place apart and record all damage at move-in, and inform them that they will be liable for costs involved in returning the house to the same status when they leave. The carpets will be trashed, blinds broken, general non-maintainance.

I spent 9 years first working, then running apartment communities on the Maintainance side (60 buildings on 30 acres, 0ver 1000 units, I have seen it ALL). Just cover your ass, it's pretty much all you can do.

[gregrocks90046]

i would seriously consider having a property management company take care of it for you. yes, you will have to pay them, but it could save you a ton of headaches.

[Stormin2u]

Get a damage deposit and a lease. Renters usually don't take care of things so maintenance is up to you or you'll have your investment run into the ground.

[A.R.C.]

These have always been my own personal rules for when I`ve been a Landlord:
-Shoot Video of the entire house before they move in, document it on paper and get the Tenant and a Witness to sign it, it could save your ass.

-Be picky about who you rent to. It may be better to lose a months rental income than be stuck with knobs

-Make sure you know your States tenancy act inside and out and stick to it. No exceptions.

-Never become friends with your tenants and never rent to friends. Remember, its a business.

-Put it in the rental agreement that you will be inspecting the premises every 4-6 weeks. If a prospective tenant cant agree to it dont rent to them. Grow-ops in rental homes are HUGE where I live and can do a lot of damage. The news is constantly showing some place that has been trashed by Tenants that use the place for nothing more than a greenhouse or Lab.

-MAKE SURE YOUR INSURED PROPERLY!!!

[SlinkySam]

Sweet, thanks for the positive experience comments :-(. Sounds like I am in for a fun ride for a while. (ugg what have I got myself into)

Due to what you guys are saying, do people who rent have a house review at a certain interval? Just something where I can make a quick walk through and make sure damages are at a minimal on a scheduled basis? Sort of like giving an employee a review every once in a while.

Unfortunately with the cost around here, I can't afford to have a rental manager. Not at 10% anyway. Would be nice though.

Thanks for the comments.
-Sam

[SlinkySam]

Thanks A.R.C. for the suggestions. Many new things I haven't considered doing. We did have a friend that wanted to rent, but I definitly didn't want to do it that way because of previous friendship business deals going bad. Like you said, it's business not friendship here. Can't mix the two.

-Sam

[bondt]

x2 on the property management company. i use one and i am suprised by how much they actually do. not only did they take care of listing and showing the property for me, then pre-screened any applicants. they also coordinate any repairs that need to be done. and if i need advice about the property, they have been there. also, when it comes time to collect the money they are better prepared to handle deadbeats. it is good to have someone to be a pr!ck for you, so you don't have to be!!!

i have been really lucky in the renters that i have. they call anytime anything needs attention and they are happy to do some of the upkeep on the place.

one more thing, try to come up with reasons to visit the property on a regular basis. that way you can see what needs to be done pretty quickly.

[bondt]

i guess i type too slowly.:-( A.R.C. , great advice!

[braceysdad]

We have 4 rental houses and have been lucky over the last 6 years owning them...

We always make the renters pay a $500 deposit and go over what is expected in the rental agreement before they move in.

We also make them sign a contract stating they understand the terms.

I have only had one major problem before, lucky for sure.

The biggest thing we deal with is the renters moving out at the first of the month but not wanting to pay that months rent.

In the agreement it states they will give us a minimum of 15 days notice before moving and they will pay the next months rent regardless!

Just make sure your contract is very easy to read and understand

[hvydty1]

My personal experience, never rent to distant family. They think missing or late payments in blood are taken care of at family reunions. Never allow pets unless they pay a pet deposit of some kind (for clean up of accidents, which ARE gonna happen). Second thought, NEVER allow pets. Any deposit is too small to take care of new carpet and sub floors plus labor and time. Are you a smoker? Has the house been smoked in? Do you want to walk in after they leave to smell like an ashtray? Just food for thought.

[THnCS]

If you can, make them get renters insurance! I have been an Ins agent for over 10 years, I have seen many a tenant burn a house down and the owner left holding the bill!! With the renters Insurance, the liability that comes with it can cover what they are responsible for. Being the owner of the property, you can always be drug into something that the tenant is liable for that happens on your property. Just food for thought!

[JamboreeTJ]

I have a buddy who rents property. He goes to pick up the rent check every month in-person so he can do an inspection at the same time. The tennants know he is coming and that he is getting his $$$. No "it is in the mail."

One of his tennants flipped because he didn't remove his shoes when walking around on the carpet during the first inspection. He gave her $50 cash back and thanked her for keeping it clean.

[roktoy]

I think A.R.C. alluded to this when he mentioned checking the tenancy laws, but I would
check and understand what is involved (and timeline) to evict a tenant should it ever come
to that. Some states make it very difficult to kick someone out.

Jay

[gregrocks90046]

Originally Posted by SlinkySam

Unfortunately with the cost around here, I can't afford to have a rental manager. Not at 10% anyway. Would be nice though.

you might want to consider what your time is worth. it might be more than 10% of rent. and that's thinking of a best case scenario. what if you have to take a tenant to court?

[HndsWthtShdws]

Make sure you do an inspection the day before they leave while they are still there. You don't want to go in the day after they move to Alberta and discover that someone kept a rabbit in the closet, straw and manure and all.

The good tenants are usually the ones that owned a home before and are renting because their company went bankrupt or something. Its good when you can sense a potential tenant seems embarassed to be renting. They work hard to get out of their situation, meaning they won't stick around long, but they will take care of your property.

EDIT: You also need to get fire insurance and pray it burns down every night. Thats very important.

[little Loopie]

IMO, I would check work references as well as previously mentioned credit checks. I think, overall, it would help to weed out the flunkies. Regular inspections too.

[Cloak]

From a tax perspective, make sure you deduct all expenses you can for it. Understand that just because you are or aren't collecting enough to cover the mortgage doesn't mean you're not making a profit on paper.

I also strongly suggest not running depreciation on the house, tempting as though it may be. Depreciation recapture catches a lot of would-be landlords when they sell 3-5 years later. Suddenly all those big refunds you received get paid back at the time of sale. I've seen people pay back more in taxes than their cash out from the sale of the home. It really sucks.

Agreed on knowing in and out the tenant laws in your area. Also understand that it can take a long while and you may not get paid if you have to evict them. Again, YMMV based on local laws.

[ColquittCustom405]

Originally Posted by Cloak

From a tax perspective, make sure you deduct all expenses you can for it. Understand that just because you are or aren't collecting enough to cover the mortgage doesn't mean you're not making a profit on paper.

I also strongly suggest not running depreciation on the house, tempting as though it may be. Depreciation recapture catches a lot of would-be landlords when they sell 3-5 years later. Suddenly all those big refunds you received get paid back at the time of sale. I've seen people pay back more in taxes than their cash out from the sale of the home. It really sucks.

Agreed on knowing in and out the tenant laws in your area. Also understand that it can take a long while and you may not get paid if you have to evict them. Again, YMMV based on local laws.

I was gonna say the same thing.....Good Pete.

[rckjeep]

one tip for ya, drop the rent down to $1200 a month and let my wife, son and I move in.