Financially speaking; Investing in Real Estate can be a rewarding and enjoyable part of your Investment Portfolio. One of the great things about Real Estate is that it is tangible. That is you can touch it, see it and control for the most part the condition and uses allowed in that property. It is also a product that has fairly stable demand. People love living in houses and apartments, I don't see that changing anytime soon, unless the Zombie Apocalypse happens then the security deposit on your two bedroom takes on less importance. Basically, people need housing! That equals demand.
Now that we have that covered...not everybody makes a good tenant. My job as a Real Estate Professional is to help guide my clients through the process to ensure their investment is profitable and as hassle free as possible. I've been getting many calls, lately, from beleagured property owners and other landlords that their seems to be a high proportion of delinquent renters out there. While that varies from market to market (even neighborhood to neighborhood in some cases,) I find a solid rental screening and placement system can minimize your exposure to problem tenants before they ever become a serious candidate for your new renter.
I have a confession to make! I have dropped the ball and have suffered through bad the bad tenant conundrum. (read BULLSHIT!) They say that you learn your lesson when it has been costly. This has proved to be true for me as well. Along with some other fellow landlords we have devised a checklist system to help us weed out potential problems before they arise. Here's what we came up with: Remember, sticking to your system and following through every step of the way will determine your new systems success.
1. Getting the Property Ready for it's new tenants:
In General, a clean, rental ready apartment that shows well is ideal. However, in the real world defiencies do exist. Try to repair or correct damages prior to showing. Small touches like clean appliances, kitchen and bathrooms go along way to appealing to good tenants. Document the condition in pictures and video and have the prospective tenants sign off on the apartments conditions. This eliminated questions of damage responsibility upon vacating the property. If I had a nickel for everytime I heard"that was like that when I moved in", I could buy another apartment building. Also, be very clear, in writing what is included and what tenants will be responsible for. Include your State's required disclosures. State clearly the rent and security deposit. I no longer let tenants move in until all rent and security deposits are paid. Take a full application for all potential occupants and DO a background check and check ALL References given. Ask former landlords a simple question: Was "Mr. Doe" a good tenant and would you rent to them again? and maybe a follow up question, Did they pay the rent on time? Many Landlords are tight lipped because they fear retribution or worse their crappy tenant will stay!
2. Have a written and signed Lease or Rental Agreement prior to turning over the keys. Spell out all policies regarding their tenancy: Smoking, pets, rent and other issues like how many vehicles or "toys" are allowed and where. I now include a disclosure to my tenants that explains what will happen if the rent is not paid or the lease is violated.
Even though it is a pain and an additional expense for me, I follow through with all threats of eviction and small claims procedure. I think as a group. landlords have been to lenient on th Scumbags: so they get away with it. Not on my watch!
3. Trust your gut insticts as well. If someone has lots of cash and wants to skip the formalities or is in a big hurry. Be Careful...Hasty , greedy decisions can open the door to Nightmare tenant scenarious, nefarious and less than legal activity or no rent scenarious and little recourse but a lengthy and costly eviction process. Do your homework.
4. Follow through at the first sign of trouble. Each State has their process for eviction. Learn the process and know which documents and when you need to serve them to a tenants. The courts are fairly liberal and skew in favor of the tenants. Swift and decisive action limits your exposure to freeloaders. If it is going bad...get it done as quickly as possible. Some forms in Maine you may need: 7 day notice to Pay or Quit, 30 Day Notice to Quit, FED (a forceable entry and Detainer) (Obtained through your District Court and must be served by a Sherriff) and Finally a Writ of Possession ( when the State grants a forcible eviction and you get your property back)
5. I know what your thinking. What a pain...who wants to be a landlord. Don't beieve all the horror stories. Landlording can be a great Investment if done properly, like any business you partake in, you must minimize expenses and losses and maximize your revenue. Rents are revenues. Treat them so and use your system and you will love your rental business. Where else can a person can you leverage your investment dollar so thoroughly, and have your renters pay the mortgage and expenses. It is an can be a great business for you!
If you have any further questions about landlording or have a suggestion or idea for future articles please feel free to contact me at any time. If your in the market for a rental property , 2nd home or you are a first time homebuyer. Search all listings on the Market at www.GeorgeSoldMyHouse.com
Comments(3)