Author Topic: Help! 411 Resources for the Newbie Landlord?  (Read 2705 times)

Evie

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Help! 411 Resources for the Newbie Landlord?
« on: February 22, 2016, 02:37:22 PM »
Hi everyone,

I've searched the forums, but haven't found much info on finding tenants, and general first time active landlord questions.  Do you all mainly use property management services, or have such good luck you don't have much turn over?  Can anyone point me to threads I may have overlooked, or share what services they use here?  I'm specifically interested in:


Screening
I saw someone mention MySmartMoves.com, and I like the idea of not handling social security numbers. I had a prospective tenant use it, but in the credit report no bank accounts popped up. It seems weird to me this person would have an auto loan, but no bank account.  I declined them due to their income being insufficient, but am considering switching to rentalutions for subsequent tenants since even though the cost is $45 instead of $35 they can apparently download and reuse their credit score with other landlords (if they will accept it).

Also, I stupidly realized a day later MySmartMoves does NOT include an application (Rentalutions does).  I may just use the form out of my CA NoLo book, but any thoughts on whether to package the application and credit check or keep them separate?  I had an open house yesterday with good showings and people expressed interest, but I feel that not having them fill out an application on site meant that they went home and just lost interest.  Thoughts?

Finding Good Tenants/Pets Etc for an owner occupied duplex? 
I prefer one tenant for our back unit as it is 600 square feet, there is only one parking space, and we live in the duplex in front. I feel like two people equals more headache and more wear and tear. have priced the apartment slightly lower than I would for a couple to attract this type of tenant, and the price is inline with other rentals and in good condition. But I keep getting couples applying.  Should I be firm on this or should I consider relaxing this criteria for the right couple.  Has anyone had similar experience?

How would you balance desiring one tenant against say someone with a cat?  We stated no pets, but we did get a single professional with a cat.  I am hesitant as we have hardwood floors and I am terrified of cat pee.  I also am concerned about animal smells, and in CA if someone stays longer than a year you cannot charge them for painting as it is considered wear and tear. In the case of someone with no pets, I may be able to keep from having to completely repaint (e.g. just touch up), but with a cat I would have to repaint everything. CA also doesn't let you charge more for a pet each month, only a larger deposit.

Taxes
Finally, any other good resources for newbie landlords to ask questions? I get the sense most of the MMM forum on real estate is in the investment side.  I am an active landlord, not an investor.  I do my own repairs, or call and manage my own trades people, and even do my own taxes. I figured there would be a lot more tax discussion in this forum (depreciation how to, which tax programs can handle complexities of real estate and landlording, etc.) but haven't found it. Am I looking in the wrong place?  Are you all doing your own taxes, using Turbo Tax, HR Block, specialized accountants?

THANK YOU everyone for your replies and links.

arebelspy

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #1 on: February 22, 2016, 02:41:34 PM »
It's midnight and I'm going to bed, but PM me a reminder and I'll come back, delete this post, and answer some of these questions for you. :)

Just a quick comment: bank accounts aren't listed on credit reports, so my smart move wouldn't have that, no matter how many bank accounts they have. You can always ask them for a copy of their statement, if it's somehow relevant.

EDIT: Reply done, a few posts below.
« Last Edit: February 23, 2016, 01:53:55 PM by arebelspy »
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Evie

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #2 on: February 23, 2016, 11:56:57 AM »
For some reason I thought that a credit report included bank balances, but maybe it is that when I have applied as a tenant I listed my accounts separate and had to state what was in them.  How do landlords typically determine if someone has the cash reserves to weather a storm? Do you ask on the application, or assume that if they can come up with first month and deposit without any problems that they must have the reserves?

arebelspy

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #3 on: February 23, 2016, 12:38:25 PM »
For some reason I thought that a credit report included bank balances, but maybe it is that when I have applied as a tenant I listed my accounts separate and had to state what was in them.  How do landlords typically determine if someone has the cash reserves to weather a storm? Do you ask on the application, or assume that if they can come up with first month and deposit without any problems that they must have the reserves?

Typically people don't.

But if you get the deposit, and they have sufficient income, that's enough.

If you want to set a minimum amount of cash in the bank as one of your criteria, you can, and then just ask for bank statements.

The reason why cash on hand is less important is you don't know what they'l do with that the second after they've printed that account statement for you.  Maybe they blow it all on furnishing the place, or on lotto tickets.

More important is their ongoing ability to pay (i.e. income).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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arebelspy

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #4 on: February 23, 2016, 01:53:31 PM »
I've searched the forums, but haven't found much info on finding tenants, and general first time active landlord questions.

Check the book recommendations thread:
http://forum.mrmoneymustache.com/real-estate-and-landlording/real-estate-book-recommendations/

There's generally way too much to cover in short forum posts, so I'd check your local library for landlord resources.

Do you all mainly use property management services, or have such good luck you don't have much turn over?

Depends.  I self-manage some, and I have property managers for others. Some people don't want to deal with tenants, so they hire PMs.  Others want to save money, so they DIY.  If you go the PM route, make sure you vet the PM thoroughly.  If you go the DIY route, make sure you're familiar with all fair housing laws and practices as well as your local and state laws.

Screening
I saw someone mention MySmartMoves.com, and I like the idea of not handling social security numbers. I had a prospective tenant use it, but in the credit report no bank accounts popped up. It seems weird to me this person would have an auto loan, but no bank account.  I declined them due to their income being insufficient, but am considering switching to rentalutions for subsequent tenants since even though the cost is $45 instead of $35 they can apparently download and reuse their credit score with other landlords (if they will accept it).

See above comments about bank accounts.

I check their credit score, paystubs, verify employment and talk to current and previous landlords, and get first month's rent + security deposit (check your local laws on security deposits--how they have to be held, how much they can be, etc.).

Also, I stupidly realized a day later MySmartMoves does NOT include an application (Rentalutions does).  I may just use the form out of my CA NoLo book, but any thoughts on whether to package the application and credit check or keep them separate?  I had an open house yesterday with good showings and people expressed interest, but I feel that not having them fill out an application on site meant that they went home and just lost interest.  Thoughts?

I screen over the phone, then set up appointments for people who pass that early screener. They have to text me before the appointment confirming they'll show up, and then on-site they fill out an application if they're interested.

Finding Good Tenants/Pets Etc for an owner occupied duplex? 
I prefer one tenant for our back unit as it is 600 square feet, there is only one parking space, and we live in the duplex in front. I feel like two people equals more headache and more wear and tear. have priced the apartment slightly lower than I would for a couple to attract this type of tenant, and the price is inline with other rentals and in good condition. But I keep getting couples applying.  Should I be firm on this or should I consider relaxing this criteria for the right couple.  Has anyone had similar experience?

This may not be legal.  There are often fair housing rules around this--i.e. X number of bedrooms = Y tenants, and it's not up to you.  This often has to do with discrimination against families.

Read this link, the first answer is spot on:
https://www.thelpa.com/lpa/forum-thread/334288/Can-I-restrict-my-rental-to-only-one-person%3F.html

You've demonstrated one of the risks of DIYing it without knowing the laws.  Fair housing descrimination penalties are no fun.  :)

How would you balance desiring one tenant against say someone with a cat?  We stated no pets, but we did get a single professional with a cat.  I am hesitant as we have hardwood floors and I am terrified of cat pee.  I also am concerned about animal smells, and in CA if someone stays longer than a year you cannot charge them for painting as it is considered wear and tear. In the case of someone with no pets, I may be able to keep from having to completely repaint (e.g. just touch up), but with a cat I would have to repaint everything. CA also doesn't let you charge more for a pet each month, only a larger deposit.

Totally up to you.  I don't descriminate against pets, but some landlords do.  I'd get the higher deposit and move on, but it's your call.

Taxes
Finally, any other good resources for newbie landlords to ask questions? I get the sense most of the MMM forum on real estate is in the investment side.  I am an active landlord, not an investor.  I do my own repairs, or call and manage my own trades people, and even do my own taxes. I figured there would be a lot more tax discussion in this forum (depreciation how to, which tax programs can handle complexities of real estate and landlording, etc.) but haven't found it. Am I looking in the wrong place?  Are you all doing your own taxes, using Turbo Tax, HR Block, specialized accountants?

THANK YOU everyone for your replies and links.

Check the DIY section of the forums when you have repair questions, and the tax section of the forums when you have tax questions.  Also check out other useful forums like BiggerPockets.com (though they have a lot higher noise-to-signal ratio).

Good luck!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Evie

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #5 on: February 23, 2016, 02:50:36 PM »
Thank you, this is so helpful!  For legal stuff I am using the NOLO press CA Landlord book, and it seemed like as long as I wanted one tenant it wasn't a problem, but that I could not say no children, or only accept married or unmarried couples.  I will go back and double check it.  In my ad language I have said "due to size and layout, as well as limited parking one tenant is preferred."  Obviously if that one adult had a kid under 18 they would be allowed under CA law, but they also would not technically be a tenant with a separate application since they are under 18.

As far as PM, I am mainly concerned they will just move someone in as quickly as possible to collect their money and not do as careful a job in screening.  Since I live on site I would prefer to just do it myself, but if I can't find anyone easily I may end up turning it over to a PM. Seemed like less work to do it myself than have to interview PM companies!

I'll definitely check out the books you mentioned.  Good idea to screen by phone. I have been doing it by email, but phone may be better.  I just have a hard time stepping away from the office to do it, and I really hate phones. I think it is a generational thing.  My husband works from home so I could have him do the phone screenings. 

One concern I have is that the people who are able to afford to rent the place on their own have all been older women, and I am in my early 30s (and look like I am in my 20s). I think they take me seriously since I am very professional and on top of things, and the unit is in nice shape, but they may also just be uncomfortable with the idea of such a young landlord. I live in a very high cost of living town, and not very many young people own property. We also live on site, and the duplex is attached to the front house.

Also, it is a gentrifying neighborhood, with high density and lots of rentals.  Luckily, the cops and the city confirmed that the absolutely terrible nuisance neighbors in the house next door have been evicted (all 15 of them) and they will all be out end of Feb. That may also improve things, though their chaos isn't visible from the back unit and they have not been out in force during showings. They are definitely the worst on the block, and once they and their RV (that more people are living in illegally) are gone the neighborhood should improve a lot.


plainjane

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #6 on: February 23, 2016, 02:57:37 PM »
One concern I have is that the people who are able to afford to rent the place on their own have all been older women, and I am in my early 30s (and look like I am in my 20s). I think they take me seriously since I am very professional and on top of things, and the unit is in nice shape, but they may also just be uncomfortable with the idea of such a young landlord. I live in a very high cost of living town, and not very many young people own property. We also live on site, and the duplex is attached to the front house.

Have you considered implying that you are the beneficiary of parents who bought the place and you're landlording on their behalf?

arebelspy

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #7 on: February 23, 2016, 03:10:22 PM »
Thank you, this is so helpful!  For legal stuff I am using the NOLO press CA Landlord book, and it seemed like as long as I wanted one tenant it wasn't a problem, but that I could not say no children, or only accept married or unmarried couples.  I will go back and double check it.  In my ad language I have said "due to size and layout, as well as limited parking one tenant is preferred."  Obviously if that one adult had a kid under 18 they would be allowed under CA law, but they also would not technically be a tenant with a separate application since they are under 18.

Yeah, the "preferred" is super red flags, cause then you aren't even consistent with it.  The fair housing stuff is federal.  Read more at the quote I linked, he actually cited and linked to the guidelines.

Quote
As far as PM, I am mainly concerned they will just move someone in as quickly as possible to collect their money and not do as careful a job in screening.  Since I live on site I would prefer to just do it myself, but if I can't find anyone easily I may end up turning it over to a PM. Seemed like less work to do it myself than have to interview PM companies!

You are the boss of the PM company. They can't just do whatever they want.  Discuss with them how they find tenants. You can let the PM know your criteria, and you can have final approval.

Quote
I'll definitely check out the books you mentioned.  Good idea to screen by phone. I have been doing it by email, but phone may be better.  I just have a hard time stepping away from the office to do it, and I really hate phones. I think it is a generational thing.  My husband works from home so I could have him do the phone screenings. 

I do email as well, and prefer it as well, but when trying to rent very quickly, I'll answer phones for a day (say, a half dozen times or whatever) after posting an ad to schedule appointments.

Quote
One concern I have is that the people who are able to afford to rent the place on their own have all been older women, and I am in my early 30s (and look like I am in my 20s). I think they take me seriously since I am very professional and on top of things, and the unit is in nice shape, but they may also just be uncomfortable with the idea of such a young landlord. I live in a very high cost of living town, and not very many young people own property. We also live on site, and the duplex is attached to the front house.

I was 22ish? when I rented my first place.  Be professional, and your age won't matter.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Evie

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #8 on: February 23, 2016, 03:15:21 PM »
I actually did consider having my mom do an open house since she is local to see if we got a different reaction, but since we live on the property we would likely run into the same issue eventually anyway and I want whoever we get into the unit to want to be there. 

We tried pricing it to be competitive for one tenant, but maybe we should just up the rent and throw it back on with that language removed and see what we get, especially given the housing language you cited. Having two people in such a small space (640 sq feet) is just going to add a lot of wear and tear, so I would want to charge more. While this sq footage may seem sufficient for a couple in NY, culturally where I am it is very unusual and the couples you would normally get looking for that type of arrangement just aren't the highest caliber tenants. The other option would be to allow pets (which no one here does), and see what happens.  It's listed at $1575 now, but if we allowed dogs we could probably get $1700 (especially if we removed the size restriction). 

Which tend to be more destructive, dogs or cats?

Our vacancy rates locally are less than 2%, housing costs are high, and the month to month lease should make it attractive.  We also have only been actively posting and looking for a tenant for about a week and a half.


 

robartsd

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #9 on: February 23, 2016, 03:34:37 PM »
Properly cared for, pets do not generally cause problems; if they are neglected, then any pet can cause damage.

robartsd

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Re: Help! 411 Resources for the Newbie Landlord?
« Reply #10 on: February 23, 2016, 03:44:55 PM »
My understanding of California law is that the deposit (including any pet deposit) can not exceed two month's rent. If you do charge a pet deposit, it can ONLY be used for pet related damages - so some would recommend just having a larger security deposit without a separate pet deposit. Personally (I don't have any landlord experience yet) I'd ask for the maximum deposit allowed and potentially allow lower deposit amounts on a case by case basis (very high credit, personal network of trust, etc.). I don't think I'd have an issue renting to a tenant with pets, but would probably state that I have to approve each individual animal.