Landlord to be-what do I need to know?

Parent Cafe
1

<p>Like many others, we have a house that is not selling. This house was purchased by my husband and son for my son to live in while attending medical school. The town the medical school is in usually has a great turnover in housing due to the new students, residents and faculty that arrive each year; unfortunately, the medical school suggested to the new incoming not to purchase a house :(</p>

<p>While sales are down, rentals are up; at least a bit of good news. We have decided to rent the home for a few years until the market turns and it looks like 3 medical students will be renting it for the fall.</p>

<p>For those that have been landlords for a while, I am looking for any and all suggestions and words of wisdom. A few question I have at the moment:</p>

<p>1-lease: Do you just use a basic lease online, is there one you have found to be better than others? Do you prefer to have each tenant have their own lease or just one for the house?</p>

<p>2-deposits: I am seeing from $100 to one months rent; what is best for a 3 bedroom house with 3 roommates? My thought was to get one months rent plus first months rent in advance; if they are signing now for August 1, maybe just a months rent to hold the place? My mother, a lover of daytime tv, was insistent that I get a deposit as well as first and last months rent; she learned that from watching Judge Judy and the other daytime judges ;)</p>

<p>3-maintainance: We are going to try to handle everything long distance as we have people to do any repairs we need. If it gets out of hand, we will hire a management company. While I don’t know the students renting the home, the parents of two of them are friends of friends and live in our school district. What can I expect the tenants to do themselves; can I expect them to change the filters in the house if I leave a box of them?</p>

<p>4-background and credit check: Suggestions for a company to use; I have seen several online. How much do you charge for the background check; I have seen $30-$50 and I believe my daughter paid $50 the last time she rented.</p>

<p>5-renter’s insurance: Do you require your tenants to have insurance? Of course, I will have landlord insurance on the house once we switch over from my son’s current policy. I may have to have empty house insurance for a couple of months which I understand is more expensive.</p>

<p>I am sure I will have a 100 more questions as the week progresses, but this is a start! It looks like the students will sign a lease this weekend, so I am trying to get everything in order.</p>

2

<p>Each tenant should sign their own lease. Security deposit is one month’s rent. Get last month’s rent in advance. Rent is due by 5th of the month. I wouldn’t concern them with the filters, but they should take out the garbage, and be clear on who they should call if there are problems. Mention that problems like dripping faucets, leaks under the sink, etc. are something they should call about (water damage is your worst enemy). </p>

<p>We don’t require renters insurance - their belongings are their problem, and they may be covered under their parents.</p>

<p>Are you paying utilities, or are they?</p>

3

<p>

We never do this, we require all the tenants to sign the same lease. That way they are all equally responsible for the entire rent, so if one moves out the others still have to come up with the entire rent. And then they are motivated to find a replacement.</p>

<p>We also require them to pay with one check. I don’t want to deal with three checks and having one of the three pay late or not at all, and make that my problem somehow.</p>

<p>We always do first/last/security deposit of one month in advance. We will occasionally let a tenant pay the security deposit over time if we like them.</p>

<p>You need to familiarize yourself with the laws of whatever state the rental property is in with regards to handling the deposits, what is legal in the lease, eviction procedures, etc. Often there is a book or manual available for that state from landlord groups that give a good summary, it’s worth checking around to see if you can find something.</p>

<p>Most on-line leases are not very good. Landlord-tenant law varies a lot from state to state, you really need a lease that is specific to the state your rental is in. We started with a standard lease for our state and have modified it considerably, generally to disallow certain behaviors - for example, you can’t park cars on the grass, you can’t to car repairs on the property, you can’t wash your cars, you can’t fill up external tanks with house water, quiet hours (maybe not relevant in a house), etc.</p>

<p>Hopefully one of them is at least a little bit mechanically inclined and can change a filter or talk to you intelligently if something is wrong. It’s not too helpful when you get a call and a tenant says “something made a loud noise, can you fix it?”</p>

<p>They need to know about any special rules for the area (for example, at one of my rentals, if they put the garbage out the night before, I can get fined).</p>

4

<p>The students are paying all utilities; I didn’t want to deal with sky high bills when they leave the thermostat set at 65 all summer!</p>

<p>So at lease signing are you suggesting they give a months rent for deposit as well as last months rent? Then August 1 they would pay first months rent? I don’t mean to sound stupid, just want to see what the norm is.</p>

5

<p>NRE is right on the leases. You do not want individual separate leases, you want them sign the same lease. I won’t let two unrelated parties to sign a lease if I can avoid it. There will be more trouble than it worth. I won’t let thrid party leases, the one sign the lease must live in the premises.
Regarding the security deposit amount, it is market driven. In our area, the best you can do is probably one month. If you require three months deposit in our area, you won’t be able to rent it at all.</p>

6

<p>In my state, we are limited by law to being only able to collect first month, last month, and a security deposit that doesn’t exceed one month’s rent, up front. Generally the lease gets signed fairly close to when they move in, if it was months ahead of when the lease started I might let them pay first month closer to when the lease starts (but before they move in).</p>

<p>And the laws in my state around handling the security deposit are hella complicated, I know many landlords who don’t bother with it for that reason. If you can’t answer questions like, what forms are used for it, where does the money go, how to I make deductions from it, etc., then you need to do a bit of research, or don’t collect it.</p>

<p>For example, in my state, one of the forms used has wording that is specified by law, and it has to be printed in a specific font of a specific size and boldness. Failure to follow this exactly is grounds for the tenant to sue you for triple the amount of the deposit, and they will win unless you immediately refund their deposit.</p>

7

<p>Make sure you get everything that you can think of covered in the lease to protect yourself. We’ve been renting out a house to college students for 10 years and they always seem to come up with something that was not covered in the lease. Almost every year we add more stipulations: not allowing car repairs on the property (especially oil changes), not changing locks on doors, no smoking anywhere on the premises including the garage etc. Make certain you have video or dated pictures of everything in the house before they move in. Also stipulate that furniture, beds etc cannot be moved without your approval and must be moved back to their original places when they move out (unless you want to break your back doing this yourself). Be careful how you word the lease in regards to payments and make certain they are all responsible for all damages and anything wrong with the house that is not due to your negligence or you may end up with legal fees.</p>

8

<p>Never believe any story a prospective tenant or current tenant tells you. Verify everything you can. Make surprise visits if you can. A lease is just paper. It offers no real protection outside the deposits. Screen tenants carefully. See above.</p>

9

<p>Is the house in an area that freezes in the winter? If so you need a clause in your lease that the house must be kept at a minimum temperature all the time. Otherwise they might turn the heat off if they all go home for winter break.</p>

<p>We have a clause that says if the police are called to the house even once, this is grounds for eviction.</p>

10

<p>Keep the suggestions coming; this is all new to me and a learning experience! </p>

<p>The students are medical students and are all 23 years old; can I still require a parent to sign? With the kids that are looking to rent, I don’t think I will need parents, just curious.</p>

<p>I like the police clause, but lets hope that will not be an issue; these students should be studying most of the time :wink: The house is unfurnished other than appliances; while we left the washer/dryer there, it was suggested that I mention in the lease, if it breaks, it is their responsibility to have it repaired as it is not part of the house. Or they can just not use it if it becomes inoperable. I don’t know how I feel about that, but it was suggested by the local real estate agent we talked to about leasing the house through his company and letting them manage it.</p>

<p>I have contacted an attorney friend and real estate agent I know in our state to see if they have a lease that would be better for me to use.</p>

11

<p>No, you need a lease from THE State where the rental will be and an Attorney from that STATE, Your frieds from YOUR State cannot do ANYTHING, except give you advises that are NOT legal in nature.</p>

<p>Unrelated to this, I had an out of state attoney screwed up a 2 Million deal because he is the buyer’s friend and the buyer is out of state.</p>

12

<p>I wouldn’t bother with a background check. If they’ve been accepted to medical school, you can be sure that their records are clean since they must pass a backgound check in order to matriculate.</p>

13

<p>Everyone I know who is a landlord in a situation like this definitely requires tenant’s insurance. While it’s true that their contents are their concern and not yours, it’s the liability situations where you might have concerns.</p>

<p>If you don’t have a property management arrangement, you’ll need a list of contacts for various and assorted issues to give your tenants, e.g., plumber, electrician, appliance repairman, handyman. Snow removal and yard maintenance will also have to be arranged.</p>

14

<p>

You can require a co-signer if you want; at least find out where the money is coming from to pay the rent. Whether the parents will agree, that is a different story.</p>

<p>You should still run a credit check, 23 is not too young to have developed crappy credit.</p>

15

<p>I don’t think you need a co-signer for medical students. My D is a medical student and has lived in two apartments; no co-signer needed. They are adults, and all should have no problem paying the rent. They can all get loans through the med school and those include living expenses. Medical students do not want to get in any sort of trouble, so any rent issues are unlikely, b/c you could contact the school if there is an issue.</p>

<p>My D lived in the same rental house as an undergraduate for three years. It was a good experience b/c the owners were very responsible and fixed anything that broke immediately. There was a late fee if rent was not paid by the 5th of the month. ($25) One lease, everyone signed, each person wrote separate check for rent each month. If one girl left the house, the others had to find a new girl or split the missing rent portion. Washer/dryer was included with the house.</p>

16

<p>

This is an example of something you see in a lot of generic leases, but this is not legal in my state.</p>

17

<p>Artloverplus- I live in the same state as the rental house, just in a different city. I was asking my real estate friend to see what her company used and would modify if needed. It turns out that our state recently changed their rental contract and she is not allowed to share it, even with another real estate agent unless they are members of this organization or rental one of the companies houses.</p>

<p>With the students that are currently interested, I don’t believe I need a co-signer. As the parents all live within a couple of miles from me and are friends of friends, I think I am good with just the students. Most of the students either have student loans that will cover all cost including housing, or parents that foot the bill; I can not think of a single student in my son’s class that could not afford the rent we are asking. Actually, because it is 3 students, they are getting this house cheaper than they could get an apartment; including utilities, it shouldn’t be more than $500/month to live in the house unless they go hog wild with the heat and air and order every package know to man for their cable!</p>

18

<p>One thing I like about my D’s apt lease is that we pay quarterly. I only have to make that payment 4 times a year and it’s less to remember. </p>

<p>None of the apts my kids have rented required last months rent. Just first and security deposit. D’s apt also charges a cleaning fee which honestly I think is very fair.</p>

19

<p>My parents rented their house out for years and they used a leasing company. I would absolutely highly recommend this. You don’t live in the same city as the house-right. Therefore you are not close by enough for convenience. The real estate company that my parents went with only charged around 10 percent of the entire lease amount to handle the whole thing. That is not a bad deal when you consider how complicated things can be.</p>

<p>There is a whole list of things to consider, that the agent will take care of. They advertise the house and show it to potential renters. that can be hugely time consuming right there. They will then have the potential renters cleared through a financial as well as criminal screening. </p>

<p>Once the renters are in the home, the agent will collect the rent in a professional manner as well as deal with any repairs. That mean dealing with the calls when something needs to be fixed and finding someone to fix it. They will do the inspecting when a renter leaves and eal with deposit refund. For 10% that is not bad.</p>