Who here owns rental properties?

[300zx_tt]

So I just bought my first rental:
3 bed 1.5 bath townhouse
Purchase price: $165k
Rehab budget: $15k
P&I with taxes and hoa $1020
Current rents in development $1300-1600
This unit when I’m done will be the nicest in the area, design and finish wise, so I’m thinking I’ll be able to get the upper end

So I’m wanting some advice on finishes for this place. I can cut 2k off of my rehab budget by buying $2.00 sqft vinyl flooring. I’m wondering in people’s experiences if it’s better to step up on quality for the flooring, or do tenants just fucking destroy everything and I should be cheaping out and replacing things every few tenants. The expensive floor that I want is a step under commercial grade, has a 20 mil wear layer and is extra wide plank 9” wide and 72” long so instal will go quick and it should last a fair amount of time. I’m thinking the floor is something I should buy once cry once and be done with it for 10+ years.

I have it torn down now, its almost gutted, everything is gone, but the drywall.

 

[JJMoody]

They’ll mess up whatever you put in. The cheap “luxury vinyl plank” is pretty tough, looks good and it’s a bit more …meh… if it gets destroyed.

 

[BLEE]

I have rentals. In my experience, about half the tenants will wreck the place and it will require a major make ready for the next renter. My advice is to pick the cheapest flooring that matches the rental space. If it's a low end rental, choose a low end flooring. If it's middle of the market, then go with the cheapest mid-grade flooring.
We had one tenant, despite a no pets rule, which covers ALL pets, the tenant had a 30 gallon aquarium. My wife mistakenly allowed this exception. One day the tenant complains that the floor is buckling and asked if we would we fix it. They never admitted to dumping the aquarium water, but there's no other way the floor buckled, as there are no roof, or plumbing leaks, especially in the living room. Needless to say, they did not get their deposit back.
That being said, I am grateful, currently, we have very tidy, quiet tenants who pay on time and in cash. I hope it stays that way.

 

[2aBaC̶a̶]

I would go with best durability for the buck.

 

[AIAW]

They destroy everything as 99 out of 100 people just don’t give a shit. There is that chance that you will find a responsible and reliable tenant but those are a rare species.

Expect the weirdest shit to be broken too if you ever visit during a lease. Things like toilets literally partially ripped from its studs because 350+ pound Star (that’s her stripper name down at the club) has to rock her ass onto that poor thing from a full standing position. Door knobs that are just somehow completely gone… Outlets pushed entire into the back of their boxes. It’s like WTF, really people?

A lot of damage happens when they move in or out, and the fit/finish doesn’t net you that much more in the real world in that particular price range, generally.

Golden rule: Stick to finishes that you can afford to replace every 12 months if needed.

 

[BLEE]

They destroy everything as 99 out of 100 people just don’t give a shit. There is that chance that you will find a responsible and reliable tenant but those are a rare species.

Expect the weirdest shit to be broken too if you ever visit during a lease. Things like toilets literally partially ripped from its studs because 350+ pound Star (that’s her stripper name down at the club) has to rock her ass onto that poor thing from a full standing position. Door knobs that are just somehow completely gone… Outlets pushed entire into the back of their boxes. It’s like WTF, really people?

A lot of damage happens when they move in or out, and the fit/finish doesn’t net you that much more in the real world in that particular price range, generally.

Golden rule: Stick to finishes that you can afford to replace every 12 months if needed.

What's up with tenants and door knobs? They are destroyed, or disappear. I've red loctited the last few, just so it wouldn't be so easy.

 

[Jgunner]

Cheap vinyl plank is still one of the most durable floors out there. Just buy enough to replace some of it when a piece or two get damaged. Mileage will go up. Its going to be hard for them to trash it, but anything is possible.

 

[AIAW]

What's up with tenants and door knobs? They are destroyed, or disappear. I've red loctited the last few, just so it wouldn't be so easy.

No clue, but it’s pretty common for some reason.

Either door knobs are getting way cheaper in design, or people are getting way angrier at them these days.

 

[Jaron3]

The only advise I can give is do a criminal AND a credit check on them. Refuse anyone that has a credit score of 630 or below.

 

[Jaron3]

Maybe even 650 depending on the area.

 

[D̷e̷v̷i̷l̷D̷o̷c̷A̷Z̷]

Most your problems are solved not renting to the lowest common denominator.

while following all laws:
-Price it above what the poors can afford
-Smaller house to discourage people w kids
-No pets
-No smoking
-Add landscaping and charge for it
-include tasteful, quality upgrades

the biggest issue is finding renters who will respect yours things as you would. If you can find that, and yes they exist, your experience will be a pleasant one.


good renters should get better pricing. It’s expensive to replace a good renter

Wait till you find out that other people’s children like to kick holes in your doors. Idk wtf reason why…..one went to the room to leave the fight and the other needed to kick in a door.

Dont price yourself into the poor market. It cost a lot more in the long run.

congrats on the investment.

 

[pmclaine]

Rent to a Japanese family working at MIT they will keep the place immaculate and checks reach you via mail 4-5 days prior to the end of the month. They wouldnt even think of taking on the "shame" of not paying on time or leaving the building in worse shape than when they arrived.

 

[BLEE]

Most your problems are solved not renting to the lowest common denominator.

while following all laws:
-Price it above what the poors can afford
-Smaller house to discourage people w kids
-No pets
-No smoking
-Add landscaping and charge for it
-include tasteful, quality upgrades

the biggest issue is finding renters who will respect yours things as you would. If you can find that, and yes they exist, your experience will be a pleasant one.


good renters should get better pricing. It’s expensive to replace a good renter

Wait till you find out that other people’s children like to kick holes in your doors. Idk wtf reason why…..one went to the room to leave the fight and the other needed to kick in a door.

Dont price yourself into the poor market. It cost a lot more in the long run.

congrats on the investment.

I agree. That's how we have better tenants, now. Price it up, until it eliminates the riff-raff. We get a security deposit, first and last month's rent, up front. We include all utils, so tenants aren't out those deposits. If they can't pay the up-fronts, then no deal.

 

[BLEE]

Wait till you have to get rid of roaches, rats, mice and bed bugs.... fun, fun.

 

[John Glidewell]

like others have said, renters destroy everything. Consider adding limiting factors, no smoking, no pets, no HUD programs etc, require a credit check and I recommend requiring at least an annual inspection as a part of the rental contract.

 

[Timsar]

30 yrs of Landlording experience.

1. Take a look at other prop available in the market for material, finish and rental price and do accodingly.
2. Call the other rentals and ask if they are the owner and talk to them about their experiences and dos & donts.
3. take your time to find a good tenant. a Bad tenant will cost you a lot more in money and headache to deal with, than another extra month of lost rent, waiting for a good one. Less stress too.
4. Ask the tenants to provide 2 months of recent pay stub and a copy of their credit report. Not a screen capture of credit score.
5. Advertise on Zillow and use their rental process for app and credit check, evication records etc..
6. Customary to get first months rent plus Sec deposit, equivalent to one month rent. In Calif. where I am, it is illegal to ask for 1st, last and Sec deposit.
7. Tell the tenant that Sec deposit is for damages. not last month's rent. Use the local Dept of Real estate lease/rental agreement. They are very thorough.
8. if the tenant has hard time to come up with First months and or Sec deposit, that's a red flag. although in todays post C19 shutdown and unemplyment, it is a touchy subject.
9. On the day of the walk through and getting the keys and signing the lease, Document everything on the walk through on a signed form and take pics from everything. USe words like, clean, new, free of damage etc..
10. Scan and email or provide hardcopy so they have it.
11. Tell the tenant that in order for them to get their sec deposit back, they need to return the unit in the same condition as they received it. Less normal wear & tear.
12. Normal wear & tear is a nail hole in sheetrock to hang a pic. Not a fist size hole. Dirty carpet due to walking, not coffee, soda and burn stain.
13. Tell them they need to have the carpet and the unit professionally shampooed and cleaned before returning the unit to get their deposit back.
14. Use a truck mounted carpet shampoo, rather than upright portable carpet cleaner. The latter leaves the carpet and padding too wet to dry and will smell after while.
15. if move out in less than a year or two, they need to pay for painting of the unit etc..
16. use their current address to drive by where they live and check out the conditions. If dumpy, then they will treat your place like a dump.
17. Trust your gut feeling. if you didn't feel right about someone. Don't rent. don't let greed get to you. in 30 years of landlording, I have only been burned 3 times, by people that raised a red flag when I met them. But greed got the best me and I learned my lesson.
18. You cant discriminate based on anything these days. All you can do and say is that you found a more qualified tenant. you dont need to state how they were more qualified.
19. you dont need to tell them that you are the landlord. Tell them that you are the manager.
20. Require rental insurance from your tenants to protect their assets and damages to your equipment. Certain policies do provide that.
21. On the walk through, flush all the toilets and show them the free drain. tell them the following, word by word: let me give you an advice to save you couple of hundred of dollars so you dont have to call a plumber. Dont put anything except what came out of your body and toilet paper in the toilet. No Flushable wipes, no diapers, no hair from hair brush, no Q-tip ear cleaner. nothing except your poop and a reasonable amount of toilet paper. Not half of the roll. These might go down the toilet, but get stuck in the pipe and backup when they least expect it, on a Sunday night, where plumbers will charge 2x the normal rate.
22. Same thing for kitchen sink disposal. Tell them that they need to throw all the scrapes from plate and cooking into the garbage, Not into the disposal. Only very small pieces of food that is stuck to the plate. No bacon grease, no egg shells, no asparagus stalks, coffee grinds etc..
23. On move out, they need to remove everything and throw inside the trash container, not left by the dumpster.

Good luck

 

[dragman]

as people have said, Put the CHEAPEST stuff in possible that looks decent. When you get the 1 in 4 tenant that is great and will stay forever just upgrade them at some point. I have a hand full of rentals and my best advise at the first sign of a shitty renter just offer them $1000 to leave.

 

[SilentStalkr]

Ok, I was looking into getting in this game despite my parents telling me to stay away. They used to have rentals and said it wasn’t worth it. I’m starting to agree unless you can rent it for significantly more than the payment. For example, if you are paying $900 a month on a $165,000 house with say $30,000 down and you rent it for $1200 a month then you are only making $3600 a year off of it. Right? Am I missing something? And you are still liable for upkeep and all, correct? Ok, so goes great for a couple years and you’ve made $7200 off of this one house. That’s taxable income is it not? So by the time Uncle Sam gets his cut for doing nothing you likely to be down to $5500 profit in two years. Ok now, tenant moves out and you got $15,000 worth of shit you have to fix from their damaging it. Well, now you are in the house almost $10k! Am I missing something?

 

[2aBaC̶a̶]

Factor in how much the property value increases over time.

How much has home values in your area increased in the last 10yrs?

Rent can gradually go up, where your mortgage will likely stay the same. If you put that extra towards the mortgage then you can have a fully paid off house in less time. Sell it for its increased value and profit.

 

[Jefe's Dope]

I always felt that your rental price must be at least 20% more than your payment on the loan and the entirety of that must be put into a fund for upkeep and emergencies. If you can make some money monthly, great. But, the real money is at the end when you sell the property and someone else paid your mortgage.

Commercial real estate frees you of all the regs associated with home rentals.

 

[300zx_tt]

30 yrs of Landlording experience.

1. Take a look at other prop available in the market for material, finish and rental price and do accodingly.
2. Call the other rentals and ask if they are the owner and talk to them about their experiences and dos & donts.
3. take your time to find a good tenant. a Bad tenant will cost you a lot more in money and headache to deal with, than another extra month of lost rent, waiting for a good one. Less stress too.
4. Ask the tenants to provide 2 months of recent pay stub and a copy of their credit report. Not a screen capture of credit score.
5. Advertise on Zillow and use their rental process for app and credit check, evication records etc..
6. Customary to get first months rent plus Sec deposit, equivalent to one month rent. In Calif. where I am, it is illegal to ask for 1st, last and Sec deposit.
7. Tell the tenant that Sec deposit is for damages. not last month's rent. Use the local Dept of Real estate lease/rental agreement. They are very thorough.
8. if the tenant has hard time to come up with First months and or Sec deposit, that's a red flag. although in todays post C19 shutdown and unemplyment, it is a touchy subject.
9. On the day of the walk through and getting the keys and signing the lease, Document everything on the walk through on a signed form and take pics from everything. USe words like, clean, new, free of damage etc..
10. Scan and email or provide hardcopy so they have it.
11. Tell the tenant that in order for them to get their sec deposit back, they need to return the unit in the same condition as they received it. Less normal wear & tear.
12. Normal wear & tear is a nail hole in sheetrock to hang a pic. Not a fist size hole. Dirty carpet due to walking, not coffee, soda and burn stain.
13. Tell them they need to have the carpet and the unit professionally shampooed and cleaned before returning the unit to get their deposit back.
14. Use a truck mounted carpet shampoo, rather than upright portable carpet cleaner. The latter leaves the carpet and padding too wet to dry and will smell after while.
15. if move out in less than a year or two, they need to pay for painting of the unit etc..
16. use their current address to drive by where they live and check out the conditions. If dumpy, then they will treat your place like a dump.
17. Trust your gut feeling. if you didn't feel right about someone. Don't rent. don't let greed get to you. in 30 years of landlording, I have only been burned 3 times, by people that raised a red flag when I met them. But greed got the best me and I learned my lesson.
18. You cant discriminate based on anything these days. All you can do and say is that you found a more qualified tenant. you dont need to state how they were more qualified.
19. you dont need to tell them that you are the landlord. Tell them that you are the manager.
20. Require rental insurance from your tenants to protect their assets and damages to your equipment. Certain policies do provide that.
21. On the walk through, flush all the toilets and show them the free drain. tell them the following, word by word: let me give you an advice to save you couple of hundred of dollars so you dont have to call a plumber. Dont put anything except what came out of your body and toilet paper in the toilet. No Flushable wipes, no diapers, no hair from hair brush, no Q-tip ear cleaner. nothing except your poop and a reasonable amount of toilet paper. Not half of the roll. These might go down the toilet, but get stuck in the pipe and backup when they least expect it, on a Sunday night, where plumbers will charge 2x the normal rate.
22. Same thing for kitchen sink disposal. Tell them that they need to throw all the scrapes from plate and cooking into the garbage, Not into the disposal. Only very small pieces of food that is stuck to the plate. No bacon grease, no egg shells, no asparagus stalks, coffee grinds etc..
23. On move out, they need to remove everything and throw inside the trash container, not left by the dumpster.

Good luck

Some good stuff in here. Thanks!

Ok, I was looking into getting in this game despite my parents telling me to stay away. They used to have rentals and said it wasn’t worth it. I’m starting to agree unless you can rent it for significantly more than the payment. For example, if you are paying $900 a month on a $165,000 house with say $30,000 down and you rent it for $1200 a month then you are only making $3600 a year off of it. Right? Am I missing something? And you are still liable for upkeep and all, correct? Ok, so goes great for a couple years and you’ve made $7200 off of this one house. That’s taxable income is it not? So by the time Uncle Sam gets his cut for doing nothing you likely to be down to $5500 profit in two years. Ok now, tenant moves out and you got $15,000 worth of shit you have to fix from their damaging it. Well, now you are in the house almost $10k! Am I missing something?

I’m doing everything right now, new floors, bathrooms, kitchen, new fixtures, new doors, new trim, new everything.
I put $8400 down, no need to put down any more. Plus my 15k in rehab for a total of $23,400 out of pocket. If I make 3k a year and somebody else pays the mortgage in 30 years I’ll have a completely paid for $220k townhouse I can sell. So I put up ~$24k and just sit back and wait, then I collect 220k when I want to sell... multiply that by 5 or 6 and I’ll be pretty happy

 

[W54/XM-388]

All this works right up till the government says you can't evict folks because "Covid" and now you are paying property taxes, house payment, utilities so somebody can live in your house for free and trash it then will walk away if/whenever the government stops stealing the use of your property.

 

[isofahunter]

Follow @Timsar guidelines, and do not deviate from them. You make the rules and enforce them without mercy.

15 years of being a landlord and evicting my last tenant next week via the Sheriff and out of the long term rental business.

Have working capital to cover the unexpected event such as murder in your unit. Did not see it coming and that was a long drawn out process.

Make sure your lease spells out the rules and what you are going to do if the rules are broken. No Mercy!

Get up to speed on how to evict a tenant and follow those rules to the letter if you need them.

Good luck.

 

[Bigfatcock]

Don’t rent to poors.

 

[TheGerman]

I did in Florida before I sold them to get ahead of the market finally giving out.

As far as putting money into a rental, figure out what the mean rent is in your area/neighborhood for that size house, what others are getting and what is offered in those homes at that price. Then do nothing above that unless you want to charge more. Chances are, you won't recoup any premium costs on nicer stuff anyways and in the long run, its a rental for them, so whatever.

Get ready for retards and poors no matter what. Also realize that most people are just completely fucking dirty which is only made worse when its not their own stuff. You also need to kind of ask them random questions to trip them up and see if they're going to be those faggots that somehow think its your job to replace a light-bulb that went out or start threatening to 'withhold rent' or some bullshit whenever something they don't like happens.

You will need to condition them from the get go that you're not nice, but fair and that you aren't going to repeat yourself or put up with any shit, so don't even come here if thats a problem. Being a bit of a dick at first helps.

You need a credit report on everyone 18 and over in the house at an absolute minimum. If they are 18, they need to pay for and get their credit ran - no exceptions. Poors like to burn one person's credit and then use the other for the new stuff because they'll have little to no bad credit whereas the spouse/relative will have a credit score of -6. Also gives you more people to go after on the back end. You shake enough of those poors and something will fall out.

Get actual income verification, not some pay stub. Call and get what you can. Pay stubs can be total and complete bullshit. Also see if there are garnishments or income from child support. Then gauge the calculation of 'can they even afford this' on income that is NOT from shit like child support as that can disappear at any time. It will also give you an idea of how irresponsible with money the child support recipient is if she literally relies on it to pay her current bills instead of it being extra money.

Get a background check and mention to them its required. See what the push-back is - its very telling and sometimes hilarious. Anything on the background that isn't outstanding parking tickets or whatever is enough for me to not want to go further. I don't care what happened. Go somewhere else.

If they keep calling you asking 9889809987908099 questions about the house, they're not fucking worth it and this points to them being total fucking dumb-asses. Move on.

If they tell you they work at/are a property manager or real estate office - someone else has already rented the house, sorry.

Any money due for anything like an application fee (keeps the poors away), background/credit check fee, etc is to 100% of the time be collected in advance, in cash.

Nothing is negotiable with the rent. Ever. Want to negotiate price? Feel free to go outside and talk among yourselves while I close and lock the door.

Put into the contract that payment is made via billpay checks or transfers like Zelle if they have a participating bank. We don't accept checks and if transfers or bill pay checks (which cannot bounce) are an issue, well, there's usually reasons for that. (see: Poors, and you're about ti hear a story of how they dont have a bank account because reasons). Billpay checks have records of when they were input to be paid, when they were issued and have an ID number. There's no room for the bullshit 'it got lost in the mail' excuse because it all has an electronic record at the bank and again, they can't bounce. Feel free to post some retarded late rent fee as well just to see who actually looks at it; usually means this applies to them.

24 hour inspection notice. Use it a few times randomly the first 1-2 months. Will let you see if they were hiding anything like all of a sudden theres 6 people there and 3 dogs when the lease said 2 people and 0 dogs. It will also give you a heads up on how much monitoring they will need as you'll see how dirty they are. The more bullshit you see, with the more unbelievable bullshit story of how they are 'dog sitting' for friends you get, go back more and more often on those 24 hour inspections.

If for whatever reason you get an application in and everything paid, and you get a credit or background check back (or other reasons you just dont want to rent to them) you are under ZERO obligation to tell them why; just tell them it went a different direction. People will want reasons and then they will try and play bullshit 'gotcha' games with you and threaten to call a lawyer or some shit because it has to be because you're racist or whatever. Give them nothing.

I think the best one I had was this guy that was in his mid 50s, showed up in a Mercedes AMG with some 19-20 year old asian chick in tow that was 100% a mail order/90 day fiance thing going on. He was talking about how he was going through an ugly divorce and his wife was just wrecking everything for him, etc. He filled out an app and I ran his credit. Basically 2M+ in collections between credit cards, car payments (including the AMG that was on a repo list he came in), and houses that I guess he/the ex wife just stopped paying on. LOL nope. Then he threw a fit on the phone after I emailed him that his app was denied due to derogatory financial info that ended up with him threatening to come and burn the house down. I then reminded him that I had a background report, filled out app and every bit of info about him infront of me and he just went away.

 

[Jefe's Dope]

If they tell you they work at/are a property manager or real estate office - someone else has already rented the house, sorry.

This caught my eye. Why not?

 

[TheGerman]

This caught my eye. Why not?

In my limited experience, the biggest pains in the asses ahead of time were people who worked property management or real estate.

Either they had 9879080 questions about the dumbest shit or they'd literally start everything with 'well at my property management job we do this' as a response to anything they didn't like.

Basically became a red flag as the sampling size was small but strangely repeatable.

Sorry you're poor and have a shitty job. I don't care. Fuck off.

 

[sheepdog697]

Go cheap, as others have mentioned you’ll just end up replacing it...

 

[gac700]

You should require a minimum Personal Liability coverage amount of at least $300,000 and collect proof of insurance from your tenants listing your company as Additional Insured.

For commercial businesses, we suggest a minimum of $1,000,000 for General Liability coverage along with your tenants listing your company as Additional Insured.

Your tenants should also carry property insurance to insure their own property as your policy will not cover a tenants personal property.

The first three paragraphs are from my insurance broker. Make sure that all of your tenants are listed on your lease AND those same names appear on their insurance policies.

I asked my broker for that info after a friend had a tenant fire in one of his apartments. Both tenants were on the lease, but the one that caused the fire was NOT on the renter’s insurance policy.

I buy the commercial grade flooring, wait months for the right tenant, try to rent to people I know, and lay the law down on what I call floppers.

I’ve rented to one person on a few occasions, then a cousin show up, then co-workers, it can snowball. I hate floppers, bill on-site for damage, update leases, escalate deposits.

Keep buying rental property. I like mixed use - commercial on ground floors, apartments second floor.

Tismar’s list is excellent.