Saturday, January 24, 2009

I Will Be A Better Landlord

Many people have asked me if I intend to rent out my house again after finally getting rid of the tenants from hell. At first I was undecided. But since my neighbor wants to move in I am going to give this landlord thing another try. Most people think I am crazy for that. Hopefully I have learned a lot about being a landlord and the landlord/tenant law and I am better prepared. Like they say, if you fall off a horse you should get right back on. I'll be an expert in no time.

I downloaded a free rental application and gave it to my neighbor. One thing that I noticed was that the rental application that I used before was only 2 pages. This new application is 7 pages. It covers everything from employment to criminal history. That would have been helpful. I am going to require the full deposit allowed by Arizona which is 1 and a half times the rent. Last time I only asked for $700 because I was thinking short-term. I inspected my neighbor's rental house and it is very neat and tidy, they have no pets and it doesn't smell like cigars or any illegal substances (and they actually know what a trash can is for!).

I have also thought of a few things that I would like to add to the rental contract:

No guests for longer than a week without notification.
No pets without notification and $200 pet deposit.
Inspection of premises every 3 months.
No waterbeds. (maybe I should say no fish tanks?)
Require change of AC/heater filter!(I gave the last people TWO spare filters. Did they change it...NO! I have never seen a filter with an inch of dirt before!)

I'm sure I will think of more.

I haven't decided how to incorporate tree trimming and pest control. Perhaps I will say the landlord or designee will perform those duties every 3-6 months. It would give me another excuse to drop by. My termite warranty runs out next year and I want to keep an eye on the place. It costs $1200 to renew the warranty but everyone I talk to just sprays the perimeter of their house themselves.

The main reason I want to continue renting out my house is that it is an integral part of my early retirement plan. And it is the fastest way for me to meet my goals (as long as I rent to the right people). Plus, with my job on shaky ground, if I was laid off I would only have to worry about my basic needs instead of my mortgage. I hope that doesn't happen and that I can continue to pay off my mortgage at an accelerated rate. Then in 2 years I won't have to worry about my mortgage at all.


Over the Cubicle Wall said...

You have a very good attitude about it all. Practice makes perfect, as they say. You definitely had a full range of practice with your last renters! Best of luck!

Anonymous said...

I like the plan! I think as long as you continue to learn from your experiences, you'll get better and have less headaches. (hopefully!) :) It also helps us wanna-be's learn vicariously!

I mentioned the larger security deposit a few weeks ago... the other three tips that my landlord friend mentioned to me that has helped him A LOT is:
1.) pay to pull the person's credit report. This has helped him avoid people way over their heads in debt and flags those that are missing payments on other obligations (and may soon miss payments on rent too);
2.) actually call the person's employer to verify employment, and ask what kind of employee the person is. His logic is that he doesn't want someone who is a poor employee (potential problems as a renter, and greater chance of them getting laid off).
3.) call their previous landlord for reference check (pay on time, damage, etc...)

It's definitely above and beyond and requires a bit of extra work, but, after having 3 duplexes for about 5 years, I think he has successfully avoided any negative tenant experiences.

Thanks again for sharing your experiences.

Lizzie @ her homeworld said...

I think you are doing the right thing. It will bring you closer to your goal & you are in a position to really check out your new 'customer'.
Good luck

Sallie's Niece said...

I'm sorry you had to learn the hard way about being a landlord. At the end of the day the mortgage repayment plan is about owning your home so don't lose sight of how important it is to have that place in good shape! I second previous commenters about credit, reference, employment check. My landlord made me give him my parent's address and phone number when I first moved in! He also has a habit of needing to "stop by" to change a lightbulb, caulk the bath tub. etc. These visits are completely legal as long as he gives me 24 hours notice (though check your state's law) and I know he does it to investigate his property. Once he called me out on my bathroom being a mess (how embarrassing) and dropped off some Soft Scrub! You should definitely make a habit of dropping by the place more often. I would definitely say no pets (including fish!) after that debacle and if they want fish you should make them give a bigger deposit. Good luck!

Living Creekside said...

Your plan sounds great ...I would like to know where you got your rental application at on line ..the last time I rented out our house I picked up a pack at staples and it was only 2 pages now I am wondering if I should be OK after reading what you have gone through I am not wondering I am KNOWING I should screen people better although we have been landlords for 12 years and have never had any major problems knock on wood....
I am also wondering what you are going to do for health insurance for early retirement? have you checked into private pay that's one thing that keep throwing a wrench in the works for us, is what are we going to do about health insurance....

Money Minder said...

Good for you! Don't let those people scare you off and change your plans.

It is common where I live (Ontario, Canada) to spell out in the lease what maintenace the tenant is responsible for (changing filters, mowing, trimming hedges etc) and stipulating that if not maintained, rent increases by $100 per month to pay for said maintenance.

Anonymous said...

I really think you have the right strategy. I would follow all of Gavin's suggestions. Many rental agencies require credit checks. Our landlord had to see an employment contract (complete with salary), and she followed up with TWO previous landlords to make sure we were good tenants. I also offered to give her my previous employer's name and number and although she didn't follow up with it, I agree that it's an excellent suggestion.

I would check to make sure you can legally inspect the place every 3 months... just make sure that's legal, and if you do, you need to give the tenant 24 hours notice of when you'll be coming by.

The pest control and tree trimming should be your responsibility and I think that if you put that in the contract it will be an excellent excuse to pop by, like you say.

This can be a great learning experience and ultimately you can gain from this. Good luck!

Anonymous said...

You don't want to know what lessons you learn with 5 units over 8 years!

Keep at it, can only learn from mistakes.

Anonymous said...

Love your blog... just happened to start reading it today. I admire your grit in taking care of the big clean up. You definitely have what it takes to handle the downsides of rentals, that's for sure! And that chat with the tenant's guest was eye opening, to say the least. As a fellow landlord, can I suggest a really good resource? Mrlandlord dot com has good state specific links, as well as an active discussion board with quick responses from experienced landlords. Don't think you need to have a multi-page application for good tenant screening, by the way, a one pager should be enough.

Anonymous said...

I think YOU should be the one to replace the filter. It gives you another reason to be on the property (ahem, inspect the property). Make sense?

moocifer said...

In general I think it is better to do the air filter stuff yourself. That's part of the landlord's job, plus it gives you a chance to check in with them on other problems. It is very unusual and perhaps unprofessional to require a tenant to do maintenance like that.

One of the qualities of theideal tenant is the person who tells you *everything and anything* that is wrong with the place so you don't overlook something and end up spending thousands in avoidable repair costs, or make unnecessary repairs because you didn't know that the "problem" you experienced and "fixed" at high cost (like a high water bill) was just caused by a chronically leaky toilet that your tenant "politely" didn't bother mentioning to you so as to not "bother" you.

As my friend's landlord once said to me, "I WANT my tenants to tell me about problems!".

Anonymous said...

I think you are doing the right thing, and it seems like fate that this lady next door who helped you clean up wants to now rent your home. This will be really great for you I think:) Good luck and hopefully you can breathe a sigh of relief now it's all over. Courtney.

Jacob said...

Should definitely expect to take care of any maintenance yourself. Don't expect the tenants to change/do anything even if they say they will.

From a renter's perspective, I'd say our last rental was partially a failure. We rented from a person who was really into gardening. So it turns out that to maintain a garden like that requires $200+/month in water bills. We did not know that and thus we turned the water down enough to barely keep it alive.

In such a situation, the water should probably have been included in the rent and the rent should have been raised.

Beyond that I can see how control of the tenants is nice. As a tenant, however, I'm not particularly fond of draconian terms e.g. I don't want to inform anyone if someone is staying over for a couple of weeks, say. I can see the point of this stipulation e.g. that you don't suddenly find 8 people living in the house.

If I was a landlord I would probably spend tons of time vetting. Quite likely post the vacancy where it would be most likely not to be seen by bad tenants e.g. company bulletin boards, say.

Daizy said...

Over the Cubicle Wall, thanks. I do hope this one turns out well.

Gavin, all very good tips. Last time I let the tenants rush me and skipped too many of those.

Hi Lizzie, since I did live next to my neighbor for part of 2007 I can say they were quiet and never had parties so at least they aren't total strangers like the last ones. Now I just have to make sure they pay their rent and they are in!

Wow, Sallie's Niece, I can see why you want to move. Telling you the bathroom is too messy seems a bit over the top for a landlord!

That's Me, the first rental application was the short form from landlord dot com. Actually it was only ONE page. Really bad form to use. This time I found one on rentingauthority dot com. But I like the form on mrlandlord dot com that anonymous suggested. If your form asks lots of questions about past rentals and criminal history then it is better than the form I used last year.
And I am planning to get a high deductible health plan with a health savings account. I found some on ehealthinsurance dot com.

Daizy said...

Money Minder, it is good to hear that other leases are so specific. I am really going to tailor mine to meet my needs. No generic lease this time.

Saver Queen, thanks for the extra tips. We have to give 48 hours notice and this time I am making sure the renters aren't going to flip out when I suggest it. Hopefully they won't have a stash of drugs they are protecting. I don't think they will mind at all since they readily invited me in to their current home. It will be nice to rent to some normal people after the last bunch.

Chris L. I know you are an expert! I bet you've heard every strange excuse in the book.

Anonymous, thanks for the link! That isa great site. Their application was more professional than the one I used.

Big Sis, yes, everyone seems to agree that I should do more maintenance myself. When I lived in an apartment the office staff never came by and if I had a request it took days for a response. I just assumed that was normal.

bugbear, I am surprised to hear that changing the filter is a landlord responsibility. I guess I have always lived in places with hands-off landlords. I will gladly require such maintenance from myself though. I want to be more involved this time.

Courtney, yes, little did she know that she was scrubbing her soon-to-be fridge and oven :) At least I know she knows how to clean.

Jacob, $200 a month for water! Your landlord should have warned you about that. I disconnected my water timer because last year it froze and broke creating a flood in the yard. I was glad to see that almost everything survived except one small tree that the dog used as a chew toy. The house backs up to a softball field and I bet my trees got their water when the field was watered...especially since the dog also chewed up the drip line.