Man, stellar feedback, Dudes. THANK YOU ALL!!!!
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Originally Posted by Run Silent
1) I hope that the house you are planning on renting out is paid for. If not, I don't typically recommend financing a rental property. If you are financing, then at bare minimum, don’t count on the rent from a tenant to cover the deficit in your budget if you can’t afford a mortgage.
2) The minute you rent out your home, it becomes an investment property. Investment properties come with state-specific insurance and lease agreements. You’ll need to understand the rules and regulations in your state regarding rental properties first.
3) Renters should be aware of your expectations upfront and understand the consequences of not abiding by those rules.
4) Ongoing upkeep and maintenance could be a chore. Renting out a home in theory sounds great—but throw in the cost of unexpected repairs on electrical panels, appliances or hot water heaters, and renting might not sound so appealing after all.
Regarding tips on securing quality tenants:
1) I check the place they used to live before. We pull a credit bureau on them. We get a huge deposit upfront—at least a month but usually two months’ rent in addition to the first month’s rent to be paid. We interview them. We talk to them. We want to see how they converse. They’ve got to be pretty good con artists to get past me now. You just spend more time screening your tenants and digging into what’s going on there.
2) I’ll tell you another trick I learned. Depending on the type of property you are and where the people live that are moving, you can drive by the place they live in now. I’d like to see what it looks like—how they’re maintaining it. If they’ve got a bunch of junk sitting in the front yard and the grass is grown up around the windows where they’re living now, I don’t want them in my house. That’s another indication of how good a care they’re going to take of your property. But more than anything, if you just do a good, strong interview with the tenant, dig in, and be sure you are pulling up the checks for previous rentals. Show me some proof of the actual payments being made on time.
3) The big thing is that people who are landlords are just like people that are employers. They don’t take enough time screening the relationship meaning that most people who do hiring don’t spend enough time doing the hiring. Most people that put tenants in their homes don’t spend enough time interviewing the tenant and digging into what’s going on there.
Overall, I think it is okay if done correctly, but I strongly recommend against having a tenant in a home with a mortgage. The same question reversed would sound like this: if you had your new house built and had the cash to pay for it without a mortgage, would you borrow on it to purchase a rental house in the neighborhood you live in now? The answer should be “no” because you don’t want debt. You should build wealth slowly and take the risk out of it.
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Hear ya loud and clear on the mortgage. We do have a mortgage on the current house but it's peanuts at this point. We can float it indefinitely if needed. The plan was to pay it off in 7 years then rent the place out and move onto a new home with a mother-in-law unit on the property. Mom's health is declining a bit more rapidly than expected and we are prepping to have her move in with us sooner rather than later. Hence the need to move on this before the current place is paid.
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Originally Posted by Mardio
I manage properties for a living. As others have advised screen, screen, and screen. My hardest lesson learned was rushing into placing a tenant so I didn't have to eat a month or two of the mortgage. I started investing in your location (Seattle) many years ago. The eviction process in your area heavily favors the tenant. My point being it's better to wait for the right qualified renters and losing a month or two rather than going through the six month eviction process (trust me).
You can also add an addendum to any lease agreement for some of your pet peeves. For example a limit on how many "guests" can stay in the home and the duration period. I actually got together with a Real Estate attorney to make sure my extra addendum rules were applicable to the state laws. If you're in it for the long haul it's worth it.
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Solid idea on the real estate attorney. Will do that for sure!
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Originally Posted by UncleWede
If you can't get to their previous homestead, look at their car. Would you want them to treat your house like that?
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Sooooo by that measure I need to evict my wife and her rolling dumpster she calls a car.
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Originally Posted by MKSixer
Get a property management company. Pay the 8 or 9 percent fee and collect your check at the end of the month and a nice tidy statement at the end of the year. Anything else is insanity.
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You and I run in different circles, MK. You're in the M6 circle with your property management companies and no time for the fiddly details. I'm in the M2 circle and feel compelled to change that water heater myself to save $200.
