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Old 02-07-2014, 04:10 AM
 
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I agree that you need to hire a property management company..this isn't something you can do on your own.

Let them screen your tenants, collect your rental payments, evict bad tenants and deal with the maintenance. It's so much easier when you have a good PM handling your property. That way you aren't emotionally involved in what's considered a common business deal.

I also agree about home owners insurance...make sure you have the right coverage and enough of it.

Tenants are a crap shoot..you can get a crappy tenant on a 12 mth lease or an awesome one on a 2 yrs lease. You can always evict them if needed...your PM will handle that for you. Just make sure you read up on your landlord/tenant laws because you are the owner and they are acting on your behalf.
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Old 02-07-2014, 04:58 AM
 
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insurance is a big issue in many states. h03 homeowners is for owner occupied. everyone living in your property is considered a household member ,even a tenant. if he steals ,burns down or vandalizes your place it can be considered an insurance job.

landlord insurance breaks that important link that considers a tenant a household memnber since ho3 is only owner occupied insurance.

you never learn about this until it is to late. i found out after it was to late as to why you do not cover a rental with your regular homeowners insurance.
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Old 02-07-2014, 05:32 AM
 
5,989 posts, read 6,711,527 times
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Get the book Landlording from the library and read it. Get the make, model, year, license plate of all their cars and write it into the lease that these are the only cars allowed on the property - keeps people from running an auto repair shop out of your property. Make sure that you factor in to the rental finances that all that work that you did on the house - redone floors/carpeting, painting, etc. will have to be redone again. People are hard on houses that they are renting. Get the largest deposit allowed by law in your area, and last month's rent, too, if you can. If you live only 12 miles from the house, you don't need a property management company. It will be cheaper to do it yourself. No one will watch over your property as well as you will.
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Old 02-07-2014, 06:36 AM
 
Location: St Thomas, US Virgin Islands
24,665 posts, read 69,418,810 times
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Personally I wouldn't enter into a 2.5 year lease for a residential rental. You can certainly renew a lease after the first term expires if the tenant proves to be a good one and your best bet is to include a renewal clause in your lease noting that 60 days notice of intent to renew or not must be given by both parties or else, without any such notice being given, the lease automatically goes to a month to month agreement with the same terms and conditions under the original lease. It's a pretty standard clause.
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Old 02-07-2014, 06:21 PM
 
Location: Austin, TX
16,787 posts, read 48,814,423 times
Reputation: 9477
Quote:
Originally Posted by IDontKnowWhyIDidIt View Post
Hi All, We bought a house recently but cannot live in it because of certain reasons. So we are looking to rent the house. We have always been renters not landlords and this is making me nervous. We have rejected a number of what our agent calls 'good' renters.

We have another family who is interested but they want to sign a 2.5 years lease. I think the reasoning is the school in the area where their kid still has about 2 years and 3 months left. I want to know from experienced landords (provided these are good renters financially and by history), are their disadvantages, things to watch out for when renting for so long.

Thanks
Quote:
Originally Posted by IDontKnowWhyIDidIt View Post
We have a mortgage and we have a letter from the bank approving us to rent the house even though the initial mortgage was owner occupied. We paid a large down payment (35%) and hence they feel more confident.

Our screening criteria is
a. 700+ credit score
b. atleast 3 times income
c. no pets
d. good renting history

We are planning to do our own property management. We spent quite a bit of money in the house, remodelling and just make everything perfect. So there should be no small hassles. There maybe big ones but since we will leave 12 miles from here, I should be able to manage.
If you are reasonably intelligent, willing to spend some time reading and understanding your states landlord-tenant laws, and live close enough to the property and have the time to manage it, then there is no reason you can't manage it on your own. You can learn alot by spending some spare time reading many of the threads here in this forum, getting a feel for the kinds of problems and how most are dealt with.

If you do a proper job of screening your tenants to get a new one, most of them won't be much of a problem to deal with.

Add to your screening criteria:

e. no history of child molesting
f. no criminal history
g. no evictions, most payments on time

I am a retired architect, who when we bought our second house 11 years ago, decided to keep our first house and rent it out. I worked at a very demanding job 6 of those years before retiring and was able to manage the rental of the property in my spare time. I'm retired now so its no problem at all. If you work hard at getting a good tenant in the property, there is usually very little work required from then on.

I would not sign more then a 1 year lease to start with, assuring the prospective tenants that if they are good tenants, paying on time and take decent care of the place, you will renew the lease, subject to reasonable market rate rent increases. There is no reason for you to agree to less.

Most tenants wanting more than a 1 year lease expect you to give them a discount on the rent in exchange, which is foolish, because it is no harder for a 2.5 year lease tenant to break the lease than it is for a 1 year lease tenant. Don't do it.

Make sure you get a good lease, written for your state laws, read it and understand it.

U.S. Legal Forms - 36,000 Legal Documents, Forms, Real Estate, Landlord Tenant, Name Change and more. is one good source

LegalZoom: Online Legal Document Services: LLC, Wills, Incorporation, Divorce & More is another.
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Old 02-07-2014, 07:22 PM
 
Location: Riverside Ca
22,146 posts, read 33,197,505 times
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CptnRn this is great advice. My screening process is similar to that. . I tried the management company way but truthfully they did a less then mediocre job, I decided to DIY. It's always a learning experience but as time goes on you learn what to do and what not to do. And you ALWAYS learn something new. I screen the hell out of my tenants now. I have turned plenty away.
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Old 02-07-2014, 09:08 PM
 
Location: Silicon Valley
18,812 posts, read 32,248,860 times
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I will also chime in against getting a property manager. They can be terribly expensive. It starts out with 6% of the rent. Sounds good. Oh yeah, and there's the one month's rent to start. And they get 10% for supervising any maintenance/repair jobs. And, hey, they hire their own guys to do the repairs, and get a kick-back for charging you up the ying yang to change lightbulbs. And, if the PM says it's an emergency, then they don't have to get your permission before doing a huge job...next thing you know, all your reserves are gone...

My daughter is one of many who was thoroughly ripped off by a property management company with all of the above.

Yes, there are good ones. But, I think that it would behoove you to first learn how to be one. Then, if you decide to hire one down the line, you can effectively oversee them. It's like two separate learning curves - one for being a landlord, another for dealing with a PM.

It's not that hard to be a landlord, as others have said. You just need to take the time to learn the ropes.

I love the Nolo books. I got the one for CA landlords. They come with all the forms you need on a CD, and are written in easy to understand language:

Landlord Books - Nolo

As far as the 2.5 year lease. I like month-to-month contracts. As an apt mgr, when I got tenants who wanted a year lease because they were concerned about the rent going up, what I would sometimes do is write the contract to say that it is a month-to-month contract, but that the rent would not be raised for 12 months. They get the security of knowing their rent won't go up, but I can still easily kick them out if I want to.

Just a thought.
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Old 02-09-2014, 11:06 PM
 
88 posts, read 523,018 times
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The family insists on a 2.5 year lease. They say they do not want their kids to go through another hassle of moving till they are done with elementary school. I think this is not going to work out. We will continue waiting
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Old 02-10-2014, 05:31 AM
 
Location: St Thomas, US Virgin Islands
24,665 posts, read 69,418,810 times
Reputation: 26726
Quote:
Originally Posted by IDontKnowWhyIDidIt View Post
The family insists on a 2.5 year lease. They say they do not want their kids to go through another hassle of moving till they are done with elementary school. I think this is not going to work out. We will continue waiting
Just a gut feeling but if they are indeed "insisting" rather than "really wanting" then bid them bye-bye and keep taking applications from people who know your terms and accept them. Better to wait for the right tenant than make a compromise with which you're uncomfortable. Good luck!
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Old 02-10-2014, 07:42 AM
 
10,746 posts, read 25,858,805 times
Reputation: 16022
Quote:
Originally Posted by IDontKnowWhyIDidIt View Post
The family insists on a 2.5 year lease. They say they do not want their kids to go through another hassle of moving till they are done with elementary school. I think this is not going to work out. We will continue waiting

They can insist all they want, but you're the landlord and if you don't want a 2.5 yr lease (and maybe your state doesn't allow 2 yr leases) then you just say no and move on to the next applicant.

I agree with STT...let these guys move on, you're wasting your time with them..the right one will come along.

Good luck
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