Becoming a landlord - need 101 advice.

daniella2727

We will be renting our town home shortly in the DC Metro area (we live in Northern VA) - its a hot renters market.

We have nothing done this before and I have specific questions but would also appreciate overall advice on what you've learned...

1. whats the norm in terms of collecting money when signing renters - one months? deposit? how much for deposit? last months?

2. if you found renters on your own (craigslist) how did you draw up your contract? examples from online? what should you ensure is in your contract?

3. I'd like access to the home to ensure its being managed. Can I say that everything 3 months I need to visit to change the AC filter?

4. Can the contract specify that they are responsible for managing the yard? they must keep grass cut etc?

5. what websites do you use to run credit? background checks? do you ask for references?

6. how do your renters pay you? mail you a check? can you set up auto deposit? 

MNVegas

daniella2727:

We will be renting our town home shortly in the DC Metro area (we live in Northern VA) - its a hot renters market.

We have nothing done this before and I have specific questions but would also appreciate overall advice on what you've learned...

1. whats the norm in terms of collecting money when signing renters - one months? deposit? how much for deposit? last months?

You need to find out what your state landlord/tenant laws are as the vary from state to state. We charge security deposit equal to 1 months rent and first months rent upon signing lease.  You also need to check how deposit money needs to be held. We are required to set up separate escrow account to hold deposit money. 

2. if you found renters on your own (craigslist) how did you draw up your contract? examples from online? what should you ensure is in your contract?

Again this will vary from state to state, so you will need to get standard lease approved for your state. We use a standard RI lease agreement that DH has access to as a RE broker. You should be able to purchase from legal forms website or office supply store in your area that sells legal forms.

3. I'd like access to the home to ensure its being managed. Can I say that everything 3 months I need to visit to change the AC filter?

Again this will fall under landlord/tenant laws for your state. We need to give tenant 24 hours notice before entering the unit for any maintenance issues except in the case of an emergency. You can't just go into the rental anytime you want to snoop.

4. Can the contract specify that they are responsible for managing the yard? they must keep grass cut etc?

For a single family home you should be able to do this, but again check. 

5. what websites do you use to run credit? background checks? do you ask for references?

We have prospective tenant fill out a rental application listing employment, banking and credit references. We run background checks thru tenantalert.com and also check our state's court website.

6. how do your renters pay you? mail you a check? can you set up auto deposit?  

We have numerous tenants and they pay by check, money order, electronic deposit and we still have a couple of tenants who pay by cash.

Get a copy of landlord/tenant laws for your state which will answer many of your questions and other you probably haven't even thought of. You should be able to do a simple google for this information.

 

TarHeels&Rebels

Ditto MN - google for Virginia's landlord tenant laws.  Your state's website may also include leases you can use.

daniella2727:

We will be renting our town home shortly in the DC Metro area (we live in Northern VA) - its a hot renters market.

We have nothing done this before and I have specific questions but would also appreciate overall advice on what you've learned...

1. whats the norm in terms of collecting money when signing renters - one months? deposit? how much for deposit? last months?

Due at signing, first month's rent and deposit.  On one of our houses, we have one month's rent for the deposit; on the other we have 2 months.  My advice, from being burned terribly, is to charge as high a security deposit as the local market will support. 

FYI if you don't know, the Uniform Landlord-Tenant Act (no idea if VA adopted it, but it's good practice regardless) requires the tenant's security deposit to be held in a separate checking account that has no other purpose.

2. if you found renters on your own (craigslist) how did you draw up your contract? examples from online? what should you ensure is in your contract?

I drew up my own, using what I liked from previous contracts and adding in my own items from experience.  One thing common here (not sure if it's everywhere) is to have 2 documents: the lease that includes the basic legal stuff and Rules & Restrictions that cover all the particular stuff: painting, lawn care, no junk cars, etc.

If you don't feel comfortable, it is a VERY good idea to invest the few hundred dollars in having an attorney draw one up to protect you.  And it's just that - you're trusting someone else with your home - how good do you want the lease?  I've heard NoVA is a hotbed of un- and underemployed attorneys, so it should be easy to find someone.

3. I'd like access to the home to ensure its being managed. Can I say that everything 3 months I need to visit to change the AC filter?

Use what's below at your own peril.  I'm just giving you an idea of what I wrote and what I was comfortable with and what met my state's laws.

My lease says, "Rights to Inspect. Tenant shall, at any reasonable time with notice, allow Landlord and/or Landlord?s agent access to examine and inspect Premises." 

And then in more detail, my R&Rs say, "Inspection. Tenant shall permit Landlord?s agent, general contractor Name Name Number or housekeeper Name Name Number, to enter Premises on a date and time mutually agreeable to both parties between March 1 and March 15, 2012 for the purpose of a walk-thru inspection to ensure proper treatment of the home. Such inspection will focus on the physical condition of Premises, primarily on Fixtures and Mechanical Systems, and will not be invasive into private matters such as dresser drawers and cabinets. Initial:_______"

For the above, March was 60 days after they signed the lease.  My thinking was that that was far enough after they'd moved in that they would have relaxed and really been living the way they were going to, but not so far into the lease that they could have done significant harm to the property.  And yep, the initial block is for the tenant to sign off that they understood just that provision, in addition to their regular signature below.

4. Can the contract specify that they are responsible for managing the yard? they must keep grass cut etc?

You can say it, but it might not happen.  And how are you going to enforce it?  Drive by the property weekly?  If you're smart, you'll hire a pro to take care of it and plus up the rent by that much. Be sure to actively advertise that it's included so it doesn't look like you're overcharging.

One of our properties is on an acre of treed land, only about half an acre of which is actual yard.  After tenants living there for 18 months - we left the yard magazine-worthy - we had to do $2,100 in remedial yard care.  It is infinitely smarter for me to pay a guy $93.10 a month and bump the rent up by $100.  That way I know my beds, my gutters, my lawn are all taken care of to a level I approve of.  Bonus: that's an extra set of eyes on the property who knows what it looked like when I handed it over.   Second bonus: plenty of tenants don't want the hassle and will gladly pay the little bit extra to not have to fool with it, so it can help your house rent faster.

5. what websites do you use to run credit? background checks? do you ask for references? 

mysmartmove.com. It's all-in-one and very user friendly.

Yes, I get references.  Tell the tenants that their references must return your call within XX hours or their application is rejected.  Not getting call backs is annoying as hell, wondering whether you're not getting a call back bc they don't want to say that they wouldn't rent to the people.

6. how do your renters pay you? mail you a check? can you set up auto deposit? 

Direct deposit.  I can set up online through my bank to send electronic funds to anyone in the world  if I have the routing and account numbers.  Can you not?  I thought that was pretty standard. 

So on the receiving side, create an account just for the rent so your regular checking account number isn't just floating around, then transfer the money into your usual account once it arrives. 

GildedIcon

Hire an attorney NOW.  They will guide you and prevent problems you would have NEVER thought of.

 

sarasparks

GildedIcon:

Hire an attorney NOW.  They will guide you and prevent problems you would have NEVER thought of.

 

Ditto.  You can save yourself a lot of money and grief by talking with an attorney on the front end.  Yes, it will cost you some money to do this.  But it will save you so much more money in the long run. 

=Jewel=

daniella2727:

We will be renting our town home shortly in the DC Metro area (we live in Northern VA) - its a hot renters market.

We have nothing done this before and I have specific questions but would also appreciate overall advice on what you've learned...

*Note, we live and own in CA, so laws could be different.

1. whats the norm in terms of collecting money when signing renters - one months? deposit? how much for deposit? last months?

We collect first month's rent and deposit at lease-signing. Our deposits are slightly higher than one month's rent (rounded up to the nearest hundred), so that there is never any confusion about whether than money was for a deposit, or a month of rent.

2. if you found renters on your own (craigslist) how did you draw up your contract? examples from online? what should you ensure is in your contract?

We actually got our from my uncle, who has rented out several properties for over 30 years, and had his drawn up by his attorney. He has also added 20+ conditions over the years, based on his experiences (no working on cars in the driveway, no waterbeds, no large fish tanks, etc)

3. I'd like access to the home to ensure its being managed. Can I say that everything 3 months I need to visit to change the AC filter?

In our lease, we must provide 24 hour notice to enter the property, unless in case of an emergency, we can enter immediately. That said, we do not typically enter the properties and do not provide those kinds of small, regular maintenance. We've state in the lease that any repairs under $20 are the responsibility of the tenant. The first year, I did not include this in the lease and was constantly over for light bulbs, smoke detector batters, screws missing, etc. It was crazy, and I'm not a micromanager.

4. Can the contract specify that they are responsible for managing the yard? they must keep grass cut etc?

We can, and do. However, I don't think they are managing the yard well. The front is covered by HOA, and the last time we were over, the back was pretty unruly. My husband was able to get everything fixed up again in a few hours, so I'm not really worried. After that, I did let the tenants know that they would need to hire someone to keep it up, if they do not. In the future, I may add a clause into the lease stating something like "If the tenant does not provide regular yard maintenance, they agree to pay $75/month for landscaping services" just to keep them motivated.

5. what websites do you use to run credit? background checks? do you ask for references?

I don't remember, off the top of my head, but it's similar to what other's have listed. I'm really only worried about credit check and criminal background. I also ask for 2 month's worth of pay stubs from their current job. I think that personal references/calls are a waste of time. Most people will not list a bad reference, and will give you the number to their friend for a fake reference, a la Seinfeld.

6. how do your renters pay you? mail you a check? can you set up auto deposit? 

They all pay by check. We offer all options, and also state that we will only accept checks, until and if ever, one bounces. We also have a PO Box set up for rental purposes so that our tenants never have our home address.

Good Luck!

melissaeydenberg

1. Don't do it!

2. If you have to do it, get a lawyer.

3. Go through the lease before you submit it and pretend in each paragraph that the renters are not doing what you expect or they are supposed to - what does the lease provide to protect you?

4. Make sure any deficiency on their part - not fulfilling obligations, not having insurance, etc., allows for you to do it instead and collect the money as "additional rent" which is due the same as regular rent and if they do not pay it they can be evicted, same as nonpayment of rent.

5. SPECIFY dates in terms of the lease or obligations.

6. Call and speak with every reference personally and ask questions about their relationship with the tenant and what they have seen them do or not do.

7. Specify that, per the law, tenants may not go ahead and do any maintence, repair, or improvement work or work of any kind at the property without written permission. They should secure an approved estimate first. Our tenants liked to go ahead and do work and then withhold rental money. They may not do this.

 

8. If you have any intention of selling hte house, specify that you may place a lockbox on the house 60 days prior to the lease ending (use a date!) and that tenants may not interfere with marketing and sale of house. They must not interfere with signage advertising hte property and must give access to prospective buyers accompanied by a licenced realtor or your advocate (you can use "reasonable" 24 hours notice.

We have the most awful tenants in my property in NJ, Nick and LIndsay Van Houten Leone. They are trying to steal my house by telling people it is sold, they own it, it is not for sale, and tearing the for sale sign out of the yard and preventing it being reinstalled. The guy threatened me and lied in court, no one cares. The judge let him get away with it. Now I have them back in court for nonpayment - they owe me about $7000, including 2500 in legal fees.  They have contracted for services of which I do not approve and are withholding rent for them. I hope to get them evicted after court tomorrow.

 Definately also listen to the entry above this one. Note that no work is to be done in the home, no business run out of it(you don't want a daycare in there either!)  no work in the yard or driveway. 

 

I have them electronically pay - there is an immediate record of when, how much is paid. 

Good luck!