Confessions of a Reluctant Landlord...

Lola - very valuable information, any homeowner thinking of renting out their house would be wise to take your advice. And I think pictures are a must have. 

Lola, we had/have so many sell lords in MI, we devised a lease from our board. It has an application attached to it to check these things.

Lola, I've been a landlord many times, but like you, I've had mixed experiences. 

Lola, such a great post!  Every time I have been a landlord, I get disgusted and sell the property.   I know we Realtors are supposed to own real estate but I hate managing the tenants.  Now I have a ski area condo that I rent on a short term basis and that is all.  How much damage can they do in three days to a week?  If they leave it looking like a pigsty or if they smoke in it, I don't won't rent to them in the future.  In three years, I only have two names on that list. 

Lola- Sound advice for would-be landlords.  I love your tip about driving by the potential tenant's  apartment.

Excellent Post.  Love the graphics.

Hi Lola! Good advice...we have a "caught in the re vacuum" house right now that we were in the middle of flipping, so we're landlords again, too! Credit check and rental refs a must!

Oh my, Lola!  :)  I am a landlord - and for the most part don't have any complaints.  I think this might be why...

1.  I require an application that is processed through a company that is tremendously thorough.  I will know if this person has ever been evicted anywhere in the United States.  I will also know why.

2.  If the person passes the credit/eviction check the next hurdle is the criminal background check.  This has saved me literally thousands of dollars.

3.  I require a security deposit payable at the time of lease signing.  If the person can't pay it in full then they don't rent.  Strung out deposits are a sign that you aren't going to get all your money at one time - ever.

4.  I don't allow pets.  It's in the lease in plain English.  I highlight it in yellow and the prospective tenant initials and dates that clause.

5.  Late payments are also highlighted.  And they are steep in the sense of it is the maximum the law allows.  I make sure that the tenant knows I have no reservations about collecting it.  Non payment of late fees is cause for eviction.

6.  I also use two separate addendums - one is a Drug Free Housing Policy that clearly states that if there is evidence of illegal activity on the property while the tenant is in residence then they can bet on an eviction notice.  There is no second chance if the information is verified through local law enforcement.  I also use a General Housekeeping/Maintenance Policy that spells out lawn care, snow removal, trash removal, recycling schedules and parking.  Violation of this policy results in ONE warning.  There is not a second one.

7.  I don't allow pools of any kind.  This is also highlighted and initialed/dated by the tenant.  If they choose to install one anyway it is grounds for eviction.

So far I have only had to toss one tenant.  And it took me 5 months to get it done - but we never went to court.  I knew when she was gone that it was going to cost me major dollars to fix the house, and it did - just a little over $5700.00.  

Right now I have 2 tenants and 2 vacancies.  I would rather have the vacancies than deal with filth, destruction and non-performance.  My accountant and attorney both agree.  :) 

Being a landlord is certainly not for everybody.  Some people don't treat it like a business and they wind up getting taken advantage of.  For me it's a business, plain and simple.  And I'm not in business to lose money or subsidize someone's existence in one of my properties. 

Hi Sandra, This is advice from the "school of hard knocks."

Missy, what a great idea.  Our Board just added a "For Lease" search criteria within the past year.

Tracey...I don't think it's an experience I want to have anytime soon.  Too much excitement for me. :)

Hi Joanne, I like the owning real estate part....it's the managing real estate that turns me off.

Hi Jennifer, asking to see where a potential tenant lives or driving by is a good tool for investigation particularly if this rental is a means to an end...meaning a temporary measure for a home which you intend to sell.

Thanks Fred.

Lania...I feel your pain. :)  Hope all goes well.

Very good tips Carol!  Thanks for adding some valuable insights for prospective landlords.  Now, where was this post when I needed it?? :)

Lola, great advice.  I like your idea of driving by the prospective tenant's current home.  Very creative!  :-)

This is a great list. I gave a similar list to one of my clients who chose to rent out his home this year instead of selling it. As you pointed out, it can be a good situation or it could turn into a nightmare. You need to go into it with your eyes wide open. Thanks for sharing!

Great bunch of tips for the would be landlord.  Sometimes I think there is wayyyyy more work involved in property management than sales...but someone's gotta do it.

Lola,

This is some excellent info on becoming a landlord. I always take a video of the property to keep until the tenant leaves, but I like the idea of them signing off on a checklist. That will be good enough to stand up in any court, should it come to that. Thanks for an excellent post. I bet there are a few Realtors who are considering becoming property managers that would benefit from these pointers as well.

Had some great experiences...had many, many more bad ones.  I'm out of the landlord business and my hair has started to grow back.  I feel 10 years younger and I get a full night's sleep (that is, once my daughters get home from their dates).

Actually, it wasn't QUITE as bad as that and no doubt I'll do it again, but I'll follow your tips a little more closely.

Excellent advice Lola. We've owned scores of rentals in the last 20+ years and have heard and seen it all. (Our daughter sends us info from her RPM courses letting us know what we're doing wrong!) LOL!

We're not cut out to be a landlord, collecting rents. Renting is one thing; property management is another. 

Lola,

Great post, especially during these current market conditions where more and more homeowners are finding themselves in a position to either become a landlord or start paying 2 mortgages.  As a mortgage broker, I discuss the pros and cons of renting, lease options and land contracts and your insight will be valuable as my clients evaluate becoming a landlord.

Thanks!

Lola -- Very nicely written and you have  a lot of instight.  Don't rush into renting,  Check ou the potential tenant carefully.

you offer some excellent advice!

Lola, this is a great checklist for landlords! 

I don't particularly care for dealing with tenants and toilets myself, but I understand how homeowners find themselves faced with the necessity in this market.

It can be a pain. I'm batting 2 for four. Not bad but could be better. My last was an absolute peach.

Lola,  Great post and very sound advice.  I also thought the comments/suggestions above made by Carol Smith added additional value with this post, for anyone who is looking to become a landlord as an investment opportunity or simply finds themselves in a situation where they cannot sell and must rent to be able to make payment.   

Sounds like your old tenants should be investing in the pizza industry!!  :-) 

I've been a Landlord for over 20 years. This has been very good for me. My rentals started out as a college fund for my kids and have far surpassed that. I make more money being a Landlord than selling real estate and I have a retirement fund that the wife and I will probably never deplete. My biggest problem now is how do I minimize my huge tax bill.

However, being a Landlord is not for everyone. The key is to screen all tenants. Check past references and credit. I hire a company to do this. I have had very few problems with tenants. (The minor problems I have had is when I lowered my standards. A few years ago the pool of qualified renters had shrunk because all the best ones we buying houses.)

Treat being a Landlord just like a business. Consider your tenants customers. Just like being a Realtor, it is a people business.

Do not rent to someone just to fill the space. I used to think I was a good judge of character. Hah! Rely on the screening process. When a tenant moves out, do all the repairs before the next one moves in. Drive to where they are living now and see how they live. Knock on the door because there was something omitted on the application and see how many cats they have. (They always belong to the mother in law!) Are there junk cars on the property? Very, very few people are going to change the way they live when they move into your property.

There are obviously risks to being a Landlord. All businesses have risks. The Landlord Tenant Laws highly favor the Tenant and need to be followed to the letter. However, if it is done correctly, it can be a profitable business.

Lola:  Good advice... and my favorite is to identify (in writing) how many people can occupy the home.  I actually have them write their names and those of their children.  No other parties have permission to "live" on the premises.  I hadn't thought of restricting the number of vehicles, but that's a good one too.

I also am a reluctant landlord and would agree 100% with the advice you have posted.  It never hurts to have the rental association as a crutch!!u

Yes, there are some horror stories of what renters have done to rental property.

Lola, very good points.  I would also remind the readers that there are many things that you can do to increase cash flow, and incerease the chances of recooping the costs of bad tenants.

I have a short article and a podcast on my main site addressing these, and I will probably post them here eventually.

I advocate a specific clause that allows the landlord to not only keep the deposit, but get an additional 3-4 months of rent from a "Deadbeat tenant."

Irina...you can learn a lot from a drive by!

You're welcome Kelly.

Sally, if you've got good tenants, it can be a real blessing to provide for someone's need for shelter and have them reciprocate by taking care of the property.  It's the tenants who are inconsiderate which are a problem...

Hi Andrew...The tenant checklist is mandated by law here in Michigan...but many landlords don't do it.

Bruce LOL...you have me laughing as I read your comment.  I sooooo understand.  Better luck next time.:)

Debbie...and you've survived! :)

Sharon...You're absolutely right!  Property management IS a specialized skill set.

Thanks for your comment Evan.

Yep, Joan...learned this the hard way.

Thanks for stopping by to read and comment Bill & Barbara Jo.

Anonymous...tenants have a lot of rights & landlords have to be aware of them to keep on the right side of the law.  Fortunately, most tenants are good and simply desire a good place to live.

Eric, Thanks for your comment.

Robert...may you have many more peaches! :)

Therese...Carol Smith's comments were excellent.  I had no idea that a garage could be used in that fashion.:)

Wayne, Thanks for some very good advise.  Your comment along with Carol Smith's have really added value to this post.

Carol...Thanks for this addition to the discussion.  I do have them identify all occupants by name.

Ryan...the rental association can be a life saver when it comes to a resource pool of knowledge and support.

Great advise Lola,especially in light of current market conditions.

Great post and great tips. I don't think I would ever take that on!

Very good advice. We have been landlord once and that was a great experience. I was blessed to have a good tenants.

 All you have recommended here I have followed well except the number of cars. That was a great thing you suggested. I have noticed one of the rental homes in a neighbor's subdivision have 7 to 10 cars park on the drive way or on grass. That was awful. I think there are at least 15 people live there "illegally". If that was my rental property I would not allow that many people live there.

One of my clients went to prison and lost his job all because Tenant's one phone call. You have to be very careful how you treat your tenants. I think the best way is to check them out carefully before you bring them to your home.

Good luck!

Great advice!  I ask my tenants to use the same colors they found...  no bright, colorful stuff.

Lola, great advice. I just rented a property for some of my best clients, and I know they appreciated the time I took to prepare them for being a landlord. It is soooo much more than just collecting a check

LOL Lola...

I should have known your comment on my post would turn into a post. Good for you.

As a Big Bad Landlord myself I would add one more thing...

Collect first month, last month and a security deposit. It's been my experience that this gives tenants the incentive not to break their lease :)

It's also a great idea to take photos of the property right before the tenant moves in. This has shocked several of my tenants when they tried to tell me those holes in the walls were there they moved in. Liar...Liar...Pants on fire :)

Okay...I'll knock it off... But you know I could go on and on about this topic. But I won't. Why? This is your pretty blog post :)

P.S. Are you going to tell these nice folks not to build relationships with tenants? LOL. I guess I lied about knocking it off :)

TLW...ROAR!

Lola...

Did I mention the Cars? No...

Well...I "Always" look inside a potential tenants car. How the inside of the car looks will reflect how your rental house will look once it's in the hands of a tenant.

If the car is full of trash and beer bottles...That's what your rental house is going to look like :)

TLW...ROAR!

I have 2 rentals, but I too am not a good landlord. I allow Coldwell Banker's leasing dept. to run the credit checks and manage the property. I think the 8% is worth it.

As usual, I learned a few things from your post! I never thought about driving by their current home, but that is brilliant! That just became my new policy!!! Blessings, my friend!

Your experiences solidified my thinking that should I ever become a rental owner I would use a property manager to take care of everything for me. We have one right in the office, so it's much better (and easier) for me to let a professional handle it.

Lola,

One thing I would recommend to a landlord, especially a first-timer, is to have the property inspected by a profesional inspector.  Many inspectors, myself included, do rental inspections.  Yes, it's an additional expense, but a lot cheaper than trying to wring the repair costs out of the tenant in court with limited proof.  I suggest a rental inspection both at the time of the client taking possesion and the day after the tenant moves out.

Hi Bob & Carolin...Hopefully, this list will reduce the number of horror stories! :)

John Denver...that's an interesting notation about the special clause for deadbeat tenants...haven't heard of that one before.

Thanks Paul.

Christy...Being a landlord is quite a job...certainly not for everyone. :)

Linda, I'm glad that you've had pretty good experiences.  The cars being registered is also a risk management issue from the landlord's perspective.  This is an additional way of keeping tabs on who is actually renting your home.  Thanks for sharing your insights.

Robert...I'm a little more cautious...I tell the clients that I'll take care of the painting.

Sean...Sooooo true!  Having good counsel can save a lot of grief.  Sounds like you gave it! :)

TLW..Thanks for stopping by!  You have me laughing as I'm reading your comments.  I'd actually taken one look at the picture and KNEW I would be featuring it on Fraiche Aire & then came back and read the post later.  Boy, did it bring back memories...thus the post! :)  It's interesting the comment you made about the cars...hmmmmmm  Hadn't thought about that one.

Lola...

Just so you know I actually cracked myself up with all of that yesterday :)

Vrooooooooooooom :)

TLW...ROAR!

Lola, Why don't you try making your reluctant landlords sellers by using a lease option?

Some of the commenters are so tough that the prospective tenant would qualify for a mortgage easier.

I've had some really good tenants that could never "qualify" by these extra tough standards. They treated me well and they treayed their unit well as well.

Bill Roberts

Really excellent post. Being a landlord is a job. And not one for the faint of heart. I was too much a soft touch. The next time I become a landlord, it will be for a property that I don't have to manage personally.

Lola- Been there, done that.....some people just don't care about a property they don't own.  If I have heard it once i have heard it a million times...."It's not my house" when asked why they didn't fix something, or do something requiring basic upkeep.....

Your list is pretty good.....I also used to look at the car, and who was waitnig outside in it...sounds funny, but it saved me a few times when I did Apartment Rentals :) :)

Bill, you've been mighty lucky!  I think some of the comment probably reflect the anguish and hassle that so many have experienced when an experience with being a landlord has gone badly.  I will definitely agree that there are many more EXCELLENT tenants than bad ones.  I, for one, was such a good tenant when I rented that landlords wrote me letters or made comments thanking me for how well we maintained their property.  Thanks for adding a different perspective to this discussion.  I appreciate it.

Sarah...That may be the key right there..."become a landlord for a property that I don't have to manage personally!" :)

Hi Kathy, thanks for stopping by to add a comment to this discussion.  Unfortunately, there are tenants who take that stance.  The key is getting a good tenant...that's a WIN WIN for everyone.

Lola, Good advise. I recently bought my first rental property. I will use your advise to my advantage. Thanks. I printed it out and will put it in a safe place.

Lola, I loved the post! It was full of helpful information. I wanted to mention that another option is to find a great property management company to care for the property.  Being a landlord comes with many legal requirements.  A good company has systems in place to screen prospective tenants, and maintain the home in order to insure it's future value.