Grand Rapids, MI
OK, I’ll admit it. I’ve been a Landlord 3 times. This is not my chosen occupation. You see, I’m not really constitutionally set up to be a good landlord. I don’t enjoy being mean, nor do I like making reminder calls for over due rent.
I entered the land-lording business because I had bought a house. My first home came with a tenant. The tenant was actually a model tenant….neat, orderly, considerate and on time with the rent payments. If this was my sole experience, I’d be enthused about owning homes which other people live in. But it wasn’t. I became a landlord two more times and those experiences were markedly different from my first entree into the industry.
The second time, not unlike many home owners, I had bought another home and had been unable to sell my current home. Since, I had one good tenant, I thought that having two tenants would be great. It was certainly better than having two house payments!
My prospective tenants told me that they had lived in military housing and had their home checked out all the time. The inference being they were very neat people…or so I thought. I’ll never forget the day I walked into the kitchen to check on my home. There was a narrow pathway barely visible through the piles of junk, paper and garbage on the floor. These tenants also didn’t like to pay for trash pick up, so they used my one stall garage as a trash dump. There were literally pizza boxes up to the ceiling. I ended up paying the tenant to leave the home.
Over the past 24 months in Grand Rapids, MI many homeowners are becoming reluctant landlords. When you’ve moved or bought another house prior to your home selling, this may be the only option to deal with the looming possibility of 2 huge payments every month. Unfortunately, this solution sometimes creates unforeseen difficulties.
I’ve learned some lessons through these experiences which I can now pass on the clients who are investors or need to rent their homes like I did. Taking these steps can reduce the risk of moving from the frying pan of a difficult financial situation to the hot fire of a home with renters who are ruining it AND not paying you!
1. Check our references.
- In my eagerness to collect rent, I didn’t ask for or check out rental references. This is a big mistake. You can learn a lot from a call. Even if no negative information is shared, the reluctance to say anything about a renter may be cause for further investigation.
2. Obtain a Credit Check
- This is very important. Prior payment history will reflect what is likely to happen to you. If a tenant did not pay a previous landlord, there is a high likelihood that eventually they will stop paying you. Sometimes, a situation occurs which has a valid explanation and an exception may be made. But this should be done only after taking into consideration the entire picture including previous rental history.
3. Take A Drive in the Neighborhood.
- If you’re renting out a home which is your primary residence and you intend to sell it, it may be wise to ask to drive by or ask to see the home that the person who wants to rent your home is currently living in. Their upkeep there will mirror what you may anticipate in your home. While this should not be the only criteria, it can be helpful. If they refuse to clean up now where they are…well they’re unlikely to start when they move.
4. Join the Rental Property Association.
- In Grand Rapids, Michigan, this association is worth every cent of the $200 or so yearly fee. This organization gives landlords access to legal advice, excellent lease forms, seminars and teachings and the opportunity to network with other landlords. You can learn a lot from other people’s experiences and avoid a lot of heartache.
5. Be Very Clear and Concise in the Terms of Your Lease Agreement.
- A clearly and concisely written lease can save you a lot of grief. Be clear about when a late fee kicks in and for how much. Be clear about how many tenants can live in the home and how many cars can be parked on the premises. Be clear about whether you will allow pets and what the fee will be if you have to repair damage. Be clear about the reasons why a security deposit will be forfeited.
6. Collect a Security Deposit.
- This should cover at least one months rent.
7. Detail the Current State of Your Home WHEN the new tenant takes possession.
- Make sure you fill out a detailed checklist of every room in your home and have your tenant fill out any issues which they observe as well. This written document will substantiate the state of the home. In addition, you may want to take pictures for posterity.
This list of 7 items provides steps which can significantly reduce the risk of having a bad experience…especially ifyou find yourself in the role of a reluctant landlord. If you’re considering offering your home for rent, you may want to contact us. We can assist you in evaluating if this option makes sense for your specific situation. We can also place your home for lease on the local Multiple Listing System and increase the potential of getting a good tenant.
Photo courtesy of extremeezine on flickr.com
Copyright 2007 Audu Real Estate All Rights Reserved