Thinking about becoming a landlord (apartments, lease, tenant, eviction)

[allie478]

Hi all,

We're thinking about purchasing a multi-family rental property around a large university within the next year (yes, we realize we'll be renting to students), and would appreciate any insight current landlords could provide and have a few questions for experienced landlords.

We would live within 5 miles of the rental area, so we would manage/maintain it ourselves.

We're not sure about financing, but are only considering properties for which we could make a decent down payment, or even perhaps finance 50 percent (so we have cash to make necessary repairs).

We are (really, DH is) very handy, and in renovating our own 100-year old home have dealt with many issues (structural, plumbing, electical, floors, plaster/drywall, etc). We know when to hire professionals, but hopefully will be able to do many fixes ourselves.

I provide this as a disclaimer so we don't get a bunch of responses that we shouldn't be landlords! Again, let me reiterate we're looking for insight from current landlords on things we should consider.

In the meantime, we're doing our research on the local housing market and housing law, and how to protect ourselves with the lease. We'll obviously consult an attorney before jumping in, but this is just preliminary stuff for my own peace of mind.

Here are some things we've decided:
We won't accept Section 8. We'll set income requirements (which student or co-signer would have to meet), do credit and criminal background/ reference checks, and require security deposit. Limit of two persons per bedroom. (This is not an exhaustive list of limitations.) Weed out undesirables in a fair way, applying the same standards to all.

I am familiar with fair housing requirements, and if persons wanting to rent can meet income/credit/background requirements, I don't care if they're blue scientologists.

However, I do have two concerns. One is regarding the property being handicap accessible. Due to the age of housing in the area, anything we'd buy would not be handicap accessible and converting it would not be in our budget. What are potential issues that could arise?

Finally, I am concerned about SCRA Eviction Protection. I don't mean to seem unappreciative, as I respect those who serve our country, but I also have bills to pay. So a huge concern is an active duty military spouse/dependents being able to stay rent-free for six months or more. Does anyone have experience dealing with this?

We realize we'll need to have a nice place and be good landlords to attract and retain desirable tenants. Do any of you offer "personalization options," such as painting one wall an accent color (many complexes offer this), or anything like that? (Hey, sometimes gimmicks work!) Hopefully we'll find hardwood floors, but if not, we would likely replace carpet with tile (easy to clean and more durable, plus our friend can get us a great discount and we can install it). I would also allow dogs on a case by case basis, with vet references/proof of vaccinations and registration and liability insurance, plus extra deposit.

Final question:
Can we require tenants to maintain renter's insurance? Obviously we will carry insurance, but think it is a good idea for tenants to maintain coverage for their belongings.

I hope I'm not being presumptuous in assuming anyone will take the time to read this long posting, let alone answer, but if anyone can impart their wisdom upon me, it's appreciated!

Thanks in advance!

Allie

[nativeDallasite]

Originally Posted by allie478

Here are some things we've decided:
We won't accept Section 8. We'll set income requirements (which student or co-signer would have to meet), do credit and criminal background/ reference checks, and require security deposit. Limit of two persons per bedroom. (This is not an exhaustive list of limitations.) Weed out undesirables in a fair way, applying the same standards to all.

Good luck with that one.

I am familiar with fair housing requirements, and if persons wanting to rent can meet income/credit/background requirements, I don't care if they're blue scientologists.

So you'd be following the law, then.

We realize we'll need to have a nice place and be good landlords to attract and retain desirable tenants. Do any of you offer "personalization options," such as painting one wall an accent color (many complexes offer this), or anything like that? (Hey, sometimes gimmicks work!) Hopefully we'll find hardwood floors, but if not, we would likely replace carpet with tile (easy to clean and more durable, plus our friend can get us a great discount and we can install it). I would also allow dogs on a case by case basis, with vet references/proof of vaccinations and registration and liability insurance, plus extra deposit.

Again, good luck with that one. You need to think about what kind of penalties you'll impose for unauthorized animals, and what you'll do with them if you have to remove them. I think I was the only student at UT-Austin in the 1990s who actually paid their pet deposit.

Final question:
Can we require tenants to maintain renter's insurance? Obviously we will carry insurance, but think it is a good idea for tenants to maintain coverage for their belongings.

I don't think you can in this state. What do you care anyway?

[ESFP]

Pretty much sums it up. Don't worry about tenants' insurance. You will get major damages from animals and students, so prepare for that. Students cannot afford their damages, so even if you win in court, you probably won't see a penny from them. Now, do yourself a favor and get a good lawyer. You will experience lawsuits from inadaquate parking, on-sight injuries, fires, underage drinking, providing a place for them to do drugs, neighbors, nuisance laws, eviction appeals, sexual harassment, vagrants and squatters, nuisance lawsuits, and last but not least... dealing with the parents! Find an organization of landlords. I was in one called Associated Landlords of Cumberland (ALOC). Talk to other student rental owners. In an ideal world, this should be a great opportunity. Just remember, renters are not your friends, they're business associates. You provide a service, they pay for it. That's it! Don't go to parties or be their buddy. You will have to be the bad guy sometimes.

[Mt-7]

1. would recomend a no pet policy, often this is a deciding factor on a tenent who might not be your first choice.
2.Establish a rental criteria following your current ideas, everyone gets a copy before they apply and possibly waste their app fee, make sure there is a provision that allows an out for a bad credit case, extra deposit ect. This is this best way to follow the fair housing guidelines. Everyone you rent to is a possible lawsuite, so cya!
3.Include your recommendation for renters insurance in the rental agreement.
4. I spent my 40th birthday at a property as the water main gushed while it was being repaired. You will no longer have a life, the property will take all your time.
5. You will have first time renters so be prepared to ask for cosigners, include this in your criteria.
6. Insure that you are understanding of all notices given in your state, they are the first line defense in correction behaviors.
7. Enjoy it, be the best landlord possible because you wil have a majority of tenants who appreciate someone who is level headed and wants to have them have a plesant home. I have walked out of FED court and shook hands with my tenant. The ultimate goal is to have your tenants paying you your rent, responding to request promply and being professional in your dealings. It is alot of work but at the end of the day if you are self motivated you will be successful. Good Luck.
Also a call service goes a long way, your tenant gets a live voice instead of a message. Helps them feel better cared for and allows you to return the call when you are at full attention, remember you will have to back up anything you say to a tenant at anytime. No calls while you are doing laundry or cleaning out the cat box!

[okaydorothy]

I wouldnt get carpet in a rental. The reason being ; our tenant who wasnt supposed to have pets, attracted all the cats in teh neighbourhood and when she left, she also left us with fleas, fleas and more fleas. The carpets were trashed and had to be replaced once by her only to be thrown out by us.

It will open your eyes a lot.

Good luck. When it is going well, its a wonderful opportunity.
dorothy

[Paula Lynn]

I manage property, but I would never own, let alone self-manage.

Laws are different in all states, so I highly recommend joining a local Apartment Association.

I would consider pets. Most pet owners are very responsible. I've seen the younger crowd thrash a unit.

Renters insurance is recommended, as the owner is not responsible for the resident's personal things, but you can't enforce it.

Don't be in the refrigerator business!!! I don't supply refrigerators, only stoves and dishwashers.

Like another poster mentioned, do not become friends with your tenants. This is a business and service.

These are a few of my tips.

[Ultrarunner]

Appliance maintenance calls accounted for 50% of my maintenance issues and a disproportionate amount of time was spent cleaning and making repairs when units turned over... I'm happy to say that I'm no longer in the "Appliance Rental" business.

Last I checked, my Local Housing Authority allows $2 additional rent per month for owner supplied appliances. Stoves and Refrigerators are easy enough to find on Craigslist. Giving up $24 a year for me is a no brainer... so unless the applicance is built-in, I no longer furnish it.

Nothing can ruin a holiday like getting a frantic call on Thanksgiving or Christmas from an upset resident saying "I've" ruined their Holiday... it is a no win situation.

[stevep]

Off the top of my head, here's a list of things to do. Some of the other posters have mentioned some of them....
1 - join the local landlord association - they might have a student rental lease
2 - find a good attorney
3 - find a good accountant
4 - set up a business entity - ask your attorney/accountant which is best
5 - set up a business bank account
6 - I personally own newer properties, because I don't like dealing with all of the maintenace issues of older properties. Plus, whenever I need to replace any appliance, I always purchase a new appliance.
7 - learn about the lead paint laws
8 - find out when the students are looking for properties.
9 - carpet vs tile. I have some apartments with 100% tile and we just come through them at the end of the year with a big buffer. The other properties with carpet, each year we steam clean them.
10 - when looking at your profitability projections, factor in expenses for upgrades, repairs, etc. Even though my apartments are newer, I always try to improve them every year. This creates a higher demand for my properties which means they're easier to rent and tenants renew their leases.
11 - there are a lot of other things, but this is a start. It's taken me several years to get it down to a turnkey business, but once you get there, it's alot easier..... except for the unexpected calls that you can get day or night.
12 - What college town are you close to?

[Arcticthaw]

depending on your landloard tennant laws. Enter into a month to month or lease contract (agreement). This allows you to include by reference apartment rules, and may superseed certain laws as you have a pre agreed contract. When I was in the business I would give a discount for paying ontime. There was also a clause that put a 10 day limit on late rent and allowed for a late fee. Repeat offense allowed for 10 day eviction. This way if you want to get rid of someone all you had to do was in the worst case take them to court and show the rental contract. I never had to do that. but nice to have.
Rent as if you have to live with them, that will help you pick the best tennant. Listen to your intuition, have a bad vide? Cheaper to leave it empty than go back and fix a destroyed unit.

Lastly up here posession is still 9/10ths the law. So if it is a real bad tennant get them out what ever way you need to, change the locks and let them sue you. This way you still have a unit not destroyed, with the potential to make income.

P.S. there is alway some one ahead of the person that is looking into the unit. However you do it, you choose the tennant, not them choose you.

Good Luck.

[LEGALANDLORD]

No matter what else, consult a good attorney familiar with the landlord/tenant laws of your state. There is no excuse for ignorance of the law and some states are far more demanding of landlords than others. Get to know your state and local building codes, sanitary codes, ordinances and the history of any building you buy BEFORE you buy it. Then there are federal laws; You cannot discriminate against Section 8 - period. You don't have to take a Section 8 tenant if they are not qualified for other legitimate reasons. The standards must be the same for everyone. Section 8 is actually a very good deal - look into it before you judge. Be careful what you say in ads , again because of discrimination laws. Be prepared to be there a lot no matter what, even with good tenants. Rental buildings are like kids - they keep growing older, they keep needing, they keep costing money. They are an investment that is capital and labor intensive. I am an attorney and a landlord so don't fool around with this unless you know what you are doing. It can be a rewarding long term committment. It is no short term hobby.