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Becoming a land "lord"....

post #1 of 12
Thread Starter 

Last year my husband took a job that required us to transplant as a family 5 hours away.  For our family this move has been AMAZING we've grown, bonded, became a stronger unit. His other job had him traveling a lot and this new job requires little to no travel and everyother friday off. In addition his former job had him working most weekends (60-90 hour weeks were common for our family).


As part of his relocation package they paid for 3mos of rent for "temp" housing. They also covered our moving expenses and have covered other relocation money. Because of the move we put our home of 6 yrs on the market in October 2010. We had a full priced offer in Jan. However their funding fell through in by Feb and by March we were back on the market. We dropped the price when we went back on the market and then again 2 weeks ago. We just want to unload this.


Financially we are renting a 1200sq townhouse and really don't want to own two properties. We can pay our rent and mortgage and still make bills but things get a tight feeling. We do have savings, we are paying down debt and could pay off all consumer debt now but would reduce liquid assets to a 3mo emergency of living expenses and it's not something we are wanting to do.


We could drop the house one more time price wise and still break even. We don't have an ARM. But if we were to become landlords and rent it, we wouldn't beable to rent it for the current mortgage. We'd come close but not totally. AND WE REALLY DON'T WANT TO BE LANDLORDS.


But if we can't sell it this summer we are kind of planning on renting it. Maybe refinancing. Walking away isn't something we really want to do.





Anyone have any BTDT advise on become a landlord?






Edited by Paxjourney - 8/18/11 at 4:23pm
post #2 of 12

We were not able to sell our house for even close to the asking price (our house was the cheapest on the area market, but we were still getting offers of nearly 50% the asking price).  We had no mortgage on the property so we decided to take it off the market and rent it.  So far it has been a good experience, a year+ in we've gotten paid on time except for once a day late, we like our tenants, and so on.  I'm now glad we did not sell the house and have an investment property.  Just be careful who you get in the house as renters. 

post #3 of 12
Thread Starter 

Our listing price, even before the two drops is competitive and somewhat of a steal. It's 2003 prices and slightly less than what we purchased it for. For us it's not a case of asking to much, more of a case of lots of inventory and not a lot of ppl buying.



We had been thinking of going with a property agency. We know we would lose some of the rent but we are 5 hr away and once you factor in what gas would be to go and handle it all, it less.


How do you go about picking your renters?


post #4 of 12

We ended up accidental landlords due to job change as well.  Being a landloard hasn't been too bad.  We have had good tentents that paid the rent and kept the place up nicely. 


We manage it ourselves from about 40 miles away and it can be a pain.  The garage door spring broke and I had to spontaneously drive to meet the repairman.  With five hours I would also think that a property company or a handy trusted relative would be must.


My friend that has several properties says friends of friends are the best tenants.  Your friends don't want to refer you an idiot, but you are not their friend/emotionally involved in their life.

post #5 of 12

I have been a landlord for 14 years. First to the house I'd owned before my husband and I bought a house and for the last 12.5 years for the 2 little houses next door that we bought and fixed up. If I were to live 5 hours away, I'd probably hire a management company, though if you have reliable repair people, you can do it long distance. I was in Puerto Rico when I got a call from my tenant about sewer problems. I had someone at her house within a couple hours. However, since you've never managed a property before you probably don't want to do this from so far away.


Either way, you need to get VERY informed with the laws in your state. I read a book about renting properties in my state. I also read an older version of http://www.amazon.com/Landlording-Handymanual-Scrupulous-Landladies-Themselves/dp/0932956335/ref=sr_1_1?ie=UTF8&qid=1310104514&sr=8-1 There may be better books out there now, I don't know, that's just what I read.


The two most critical things you can do when being a landlord are


1. Treat everyone alike. Establish a list of requirements potential tenants have to meet. NEVER, EVER, EVER stray from that list. Make sure it is requirements anyone of any race, age, sex, etc. can meet. NEVER make statements that are related to protected classes. EVER. You do not want to be hauled into court for discrimination. If there is a local real estate school, take a class on equal opportunity housing.


2. Be VERY selective on who you let move in. It's better to have the house sit vacant for a few months than to let someone with a less than stellar background move in. I gave this advice to a friend, she disregarded it because she felt desperate, then she called me with even bigger desperation when she was having trouble with her tenant. However, if someone meets all your requirements, you have to let them move in. Failure to do so could end you up in court with a discrimination lawsuit. 


Some of my requirements are:


Each person must do a background check. They pay the cost. I personally do income/employment references and prior landlord references. Then I do personal references. If those are all stellar, I do the background check. You can find companies that will do this for you. The things I have checked are: credit history, local and national criminal, prior evictions, bad checks, sex offenders. It seems there's something else, but I can't remember. They must be pretty perfect for me to let them move in.


Each person must earn 3 times the monthly rent each month. (I'm not sure what I would do for married couples since I've never had a married couple. You want each person to have enough money to pay the rent by themselves in case there's a fight and someone moves out.) I do use student aid as income and I do let the parents of students co-sign, but the parents must have a background check done as well.


By state law I must allow 2 people per bedroom, but I will not go over that no matter what. It would just get too crowded.


No smoking. (Do not say no smokers as that is a discriminatory statement.)


I do not allow my tenants to do any repairs. No matter how qualified they are (or say they are) I don't do it. If I let one person, then don't let another person, they could complain about discrimination. Plus, I have no way of knowing what quality their work will be. I don't want to offend anyone so I just say no tenants can do repairs.


I will not let someone pay me the security deposit in installments. If they don't have the cash upfront, they can't move in. Sometimes they can have really sad stories, but I don't budge. I don't know who these people are and I want the full deposit. 


Always have you (or your property manager) meet the potential tenant before signing a lease. I live near a university and advertise on craigslist. I get a lot of people who want to rent before they arrive for school. I always say no to this. I was so glad I had this policy when someone wanted me to lease to her and her fiancee. I won't go into the details, but based on what she was saying he sounded like a scam artist who was scamming her. I just kept repeating my policy that I needed to meet him before I would rent to him. It really saved me.


I change the locks between tenants. That way no one can ever claim that someone with a key broke in.


I put in the lease that either me or my representative can inspect the inside of the house for preventative maintenance. We can do this once a month with at least 24 hours notice. However, I am not required to make these inspections. (I do this because I want to be able to get inside my house to make sure it is well cared for. Without this clause, the tenants could refuse me entry while they are damaging my house.)


I include in my lease that they won't be noisy (I put it in legalese.) I also tell them I expect them to be respectful of the neighbors and that loud noise will not be tolerated.


Frankly, I come off as pretty harsh with all my rules. I like it that way. It really lets a lot of people self-select themselves away from my houses. If they're going to cause problems, I want to make my circumstances harsh for them so they'll go far, far away.


Include installing a security system. Our personal residence uses http://www.alarmrelay.com/. It's only $8 a month for constant monitoring. We've gotten great service. Although the security system would be a nice feature for a tenant, my main reason for suggesting it is so you can have the smoke detector plugged into the monitoring company. If something happens and your house catches on fire, you want it caught as soon as possible.


It's getting kind of late so I'll stop here. PM me if you have any specific questions.



post #6 of 12

Oh, someone mentioned renting to a friend of a friend. Frankly, I've been landlording for a long time and only once did that happen. Frankly, she was one of the worst tenants I have had. 

post #7 of 12

Could you consider a lease-option or owner financing? Maybe you could get someone into the home with a vested interest in maintenence and stability. Just a thought.

post #8 of 12
Thread Starter 

I want to thank you all for your thoughts. Please keep them coming. We would consider a lease to own. Quite frankly we just want to be rid of the property.

Edited by Paxjourney - 7/9/11 at 9:44am
post #9 of 12

I became a landlord when I married DH.  SundayCrepe's advice is excellent, especially the part about renters needing all the cash upfront and the super-strict rules/self-selection.


Being new to the process, it might be best to find a property management company to deal with securing a tenant and the maintenance issues.  The ones in my area will screen the tenants, collect the security deposit and dispatch repair men. 


Tenants will break your heart if you let them.  Some people have a sob-story for everything.  


We had some that were wonderful, the one couple moved out due to being relocated for their jobs and we cried as they drove down the street.  We had horrible ones that left in the dark of night owing months of back rent. 

post #10 of 12
Originally Posted by Caneel View Post

We had horrible ones that left in the dark of night owing months of back rent. 

They should have been evicted long before that.


I have been a landlord for 14 years and I have had nothing but absolutely wonderful tenants. I believe that is because I have very high standards for who can move in (again, nothing discriminatory, a list of behaviors anyone of any class could attain.) Also, I live right next door. I'm sure that helps a lot. 


post #11 of 12

If your hubby has clearance then you HAVE to do whatever it takes not to lose the house or get behind on the mortgage payments as it absolutely could mean losing your clearance for being a "financial risk". Period. Meaning no more clearance in the future too.


Do whatever you have to and eat whatever is "over" to keep your credit clean!!! If you can't sell it then rent it and try to sell it again later.



Good luck!

post #12 of 12
Originally Posted by SundayCrepes View Post

They should have been evicted long before that.


I have been a landlord for 14 years and I have had nothing but absolutely wonderful tenants. I believe that is because I have very high standards for who can move in (again, nothing discriminatory, a list of behaviors anyone of any class could attain.) Also, I live right next door. I'm sure that helps a lot. 


Yes they should have but she was a single mom with a baby and we felt sorry for her.  Her mother paid the security deposit and first/last month rent and she (the tenant) could manage to cobble together just enough to keep us from evicting her.  Then a new boyfriend started coming around and her situation went from bad to worse.  He was abusive (the neighbors were calling the cops all the time and then calling us to complain) and I suspect that annoyed him so he moved her out to avoid the preying eyes. 


Your advice about money, list of behaviors, etc. is absolutely true.   I worked in real estate for a number of years and then in banking.  Both of these jobs put my in relationships with landlords and the successful ones operated just how you do.  It has to be run like a business.  That was hard for me.  We moved and sold that rental and I was relieved to be out of the rental business.


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