Return On Investment, or ROI, is a very important performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. The ROI measures your income returned to you based on how much money you are using to put into an effort. ROI is important to consider because if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken. This measure is used a lot to analyze income property, real estate, business performance, small business investments, and even to determine upgrades or equipment purchases to help add services or improve services performed by a business. Here is how you calculate ROI.
To calculate ROI, the benefit (or return of money or income gained) of an investment is divided by the cost of the investment. ROI is usually shown as a percentage. This formula can also be used to suit a number of different situations. Here is the formula for ROI: (Income from Investment - Cost of Investment) / Total Cost of Investment = ROI
When I look at an investment property, I use my formula to determine if it is worth buying the property or not. In the case of an investment property, ROI is calculated by dividing the cash flow after taxes, insurance, and expenses by the total invested. So the formula to help you determine your ROI on an investment property is: (CFAT)+(insurance)+(expenses)/(Total Invested in property) = ROI When working with an investment property, it is best to determine each cost over the course of a year to find out the yearly ROI.
For example, if $50,000 were put down to purchase an investment property and I had to spend another $5,000 in property repairs then my total invested so far would be $55,000. We are assuming that I paid cash for this house, so I do not have a mortgage. Now let's say that I could rent the house out for $800 a month. I would earn a total of $9600 a year on the property. Now I have to take into consideration the cost after taxes on my cash flow. So lets say the taxes are $600 a year. I have to also add insurance and other expenses for the year. For the sake of the example, we will say my insurance cost $400 a year, and my other expenses are $300 a year. So my equation would look like: ($9,600)-($600 + $400 + $300)/($55,000) = ROI ($8300)/($55,000) = 0.15 or 15% ROI per Year on my investment property
Now ROI looks a little better when applied to a vending machine company or to capital equipment. For example, if I were to spend $5,000 to purchase a vending machine, and another $1000 for the product for the year, then my total invested so far would be $6,000. Now let's say that I made a profit of $200 a month from the machine. I would earn a total of $2,400 a year from the machine. Now I have to take into consideration the cost of my rent for the machine in a building and any repairs. So lets say my rent for the year is $300, and my repairs are only $100 for the year. Here is what my equation would look like for this scenario" ($2,400)-($300 + $100)/($6,000) = ROI ($2,000)/($6,000) = 0.333 or 33% ROI per Year on a vending machine
Calculating out ROI is the best way to see how fruitful your investments or passive income strategies are going to pan out. If the ROI on investment is lower than another equally interesting investment, then you have a solid baseline for rejecting the lower investment strategy.
Friday, October 31, 2008
How to make money with tax liens
Ever since there has been real estate ownership in our country, the government has levied taxes against it. These taxes help to fund a lot of county services, such as public schools, law enforcement, road construction & maintenance, parks, and other hospital funding. When real estate taxes are not paid, the local government can not support the county infrastructure. So to help the local government make back the capitol they need, the offer tax liens on real estate to investors. Here is how to make money with tax liens.
First of all, this is not a get rich quick scheme. This takes some time and research. I have seen a lot of sites out there offering info on tax liens and courses - but honestly, all you have to do is go to your local county government office and ask about tax lien info. Tax liens are not to be confused with tax deeds -these are two different ways to pick up property, and not all states offer tax liens! SO DO YOUR HOMEWORK! We will talk about tax deed sales in another article.
Tax Sales are offered up by local government agencies at auction to the public. During Tax Lien Sales you DO NOT purchase land, but you do purchase a debt to be collected on. You are paying the home owners tax debt, and hoping that they pay you back with interest. It is a gamble, and you are essentially loaning them money to pay their taxes. Investors receive the governments lien for property taxes or first lien position on title, ahead of mortgages, deeds of trust, and judgments, subordinate only to State tax liens. So if these homeowners default, you could pick up a property that you could later auction off, but you really only want the interest on the loan, not the property. That is the point! If you want the property, then you want to go to a TAX DEED sale.
Local governments allow investors to pay off these taxes so that they can raise money to pay for basic city functions like police protection, public schooling and medical services. Depending on state laws and competition, investors can realize returns as high as; 16% per year If everything works out as planned, the city and county will get their money, the home owner will be able to stay in their home, and the investor gets a real estate secured, high yielding investment that performs better than the stock market - hopefully.
Generally, a tax lien sale is held once each year by the county, as a public auction. If you are interested in participating in a Tax Lien or Tax Certificate Sale, contact the county your local county office for specific information and details about these sales.
It is extremely important to know and understand which type of sale you are attending. YOU WANT TO GO TO A TAX LIEN or TAX CERTIFICATE SALE, not a TAX DEED sale. Each has specific rules and guidelines which must be followed promptly, and which can differ greatly county to county. It is strongly recommended that anyone interested in attending a tax sale be aware of the method and timeliness required for payment and delivery of a property. For further information, familiarize yourself with property tax law, consult a legal attorney, and contact the government agency conducting the sale.
First of all, this is not a get rich quick scheme. This takes some time and research. I have seen a lot of sites out there offering info on tax liens and courses - but honestly, all you have to do is go to your local county government office and ask about tax lien info. Tax liens are not to be confused with tax deeds -these are two different ways to pick up property, and not all states offer tax liens! SO DO YOUR HOMEWORK! We will talk about tax deed sales in another article.
Tax Sales are offered up by local government agencies at auction to the public. During Tax Lien Sales you DO NOT purchase land, but you do purchase a debt to be collected on. You are paying the home owners tax debt, and hoping that they pay you back with interest. It is a gamble, and you are essentially loaning them money to pay their taxes. Investors receive the governments lien for property taxes or first lien position on title, ahead of mortgages, deeds of trust, and judgments, subordinate only to State tax liens. So if these homeowners default, you could pick up a property that you could later auction off, but you really only want the interest on the loan, not the property. That is the point! If you want the property, then you want to go to a TAX DEED sale.
Local governments allow investors to pay off these taxes so that they can raise money to pay for basic city functions like police protection, public schooling and medical services. Depending on state laws and competition, investors can realize returns as high as; 16% per year If everything works out as planned, the city and county will get their money, the home owner will be able to stay in their home, and the investor gets a real estate secured, high yielding investment that performs better than the stock market - hopefully.
Generally, a tax lien sale is held once each year by the county, as a public auction. If you are interested in participating in a Tax Lien or Tax Certificate Sale, contact the county your local county office for specific information and details about these sales.
It is extremely important to know and understand which type of sale you are attending. YOU WANT TO GO TO A TAX LIEN or TAX CERTIFICATE SALE, not a TAX DEED sale. Each has specific rules and guidelines which must be followed promptly, and which can differ greatly county to county. It is strongly recommended that anyone interested in attending a tax sale be aware of the method and timeliness required for payment and delivery of a property. For further information, familiarize yourself with property tax law, consult a legal attorney, and contact the government agency conducting the sale.
How to evict a tenant
There are times when owning rental property is a lesson in human nature and conflict. There will be times when you may need to evict a tenant and reclaim your property. If you have to evict a tenant there is a proper eviction procedure that needs to be followed very closely. You need to stay calm, be respectful, and take care of the situation professionally. Here is the way to evict a tenant.
The first thing to do when evicting a tenant is to be calm and stay professional. Do not get mean, do not threaten your tenant, and do not give them a reason to get upset at you. This is a very touchy thing to do, and if you have gotten to the point in your relationship where the tenant is not paying you or where they are causing issues at your rental property, then you need to follow a very specific and exact eviction process. I have had tenants threaten me, trash my property, and even sue me over evicting them - staying calm and professional in every situation is the most important thing to remember. This is a process that can take as short as 5 days or last as long as 30 days. Expect it to last at least 30-40 days because you will need to get the city court involved.
I hope that you have a city approved rental property. If you do, then good, move on -If you do not, you are going to have to apply for a temporary rental permit from the city - which costs a bit of money, and have your property inspected for a rental license. This can happen while you are waiting to evict the tenant, but you really need to have the property approved and licensed before you rent anyway! Look at the link in my resources to learn how to get a rental license or visit this link here: http://www.ehow.com/how_4559543_become-landlord-landlord-license.html
Step3If your tenant is not paying or if they are breaking any of the agreed upon articles in your lease, try first to let them know that you are not happy with what is going on and find out why they are not paying or violating the terms of your lease. At this point, you have two options: 1) File a "7-day notice for non-payment" with the city - read step 4 2) File a "30 day termination of lease" with the city - read step 5
If you want to try and work things out with the tenant and get the money they owe you, then you need to file a "7 day notice for non-payment". This notice lets the tenant know that they have 7 days to pay you the money they owe you or else the eviction process will begin. This notice helps you to get the rent collection process going, and these notices cost you money to file with the court. Expect to pay anywhere from $50 - $100 dollars to get this done. Save these receipts and write them off at tax time, as well as the loss of rent you are incurring because of these tenants. Once you send out the "7 day notice of termination of lease", wait for your tenant to call you and come up with the money or resolve the issues that they are in violation of. They have only 7 days to take care of this. Normally, this notice is all you need to correct the issue, and they will pay you or stop violating your lease terms. However, if you come upon the end of the 7th day and you still have not been paid or they still are violating your lease terms, you will need to file for the "30 day termination of lease in Step 5.
Go down to the city courthouse - civil division, landlord/tenant office - and let them know that you would like to evict a tenant from your property for violation of your lease agreement/payment. Tell them that you do not want to try to resolve the issue with them and you simply want them out of your property. You will need to file for a "30 day notice of lease termination". These are generally free to file. You need to serve the tenant with this notice and then go back to the court house to have them physically sign off for the fact that it has been served. Now, this is a pain because you are going to potentially lose an entire month and 1/2 worth of rent. I had a couple of tenants that I had to do this to, and the eviction process ran about a total of 40 days. In the end, I was awarded all money owed, and they were evicted - I never saw the money, but they were thrown out of my property, so there is a light at the end of this mess.
Alright, so now here we are a few days later after you have served your tenant the "7 day non-payment notice", or the "30 day notice of lease termination". At this point, you could be quite a few days into the eviction process, so I hope you planned ahead so that you will not be getting into next month and losing more money. If your tenant has not paid you, has not corrected their lease violation, or has not moved out by this point, then you just have to wait for the 30 days to expire and take them back to court to get them evicted officially.
Once your 30 days is up, go back to the city courthouse and let them know the tenant is still in your property and causing problems. Try not to talk to you tenant, refrain from going there, do not threaten them, do not stop by, do not meet with them - unless they have the money for you (bring a police escort) - and just wait for the court to do their thing. The court clerk will then set up a court date to have your case heard in front of a judge. They will send you and your tenants a notice of this date.
If you are served a notice that the tenant wants to fight you in court, then go to the court hearing. Also go to the city court and see if they can schedule the hearing for a date that is close to the end of the 30 day notice so that you are not going too long without collecting rent. They generally will try to help out with the scheduling.
When you go court - if it gets this far - you really do not have much to say except that the tenant was in violation of the lease, they failed to pay you, and you followed the procedures for eviction. The city lawyer may want to try and resolve the issue without going in front of a judge - BUT I RECOMMEND THAT YOU GO IN FRONT OF THE JUDGE. The last time I tried to work it out with the tenants and the city attorney, the tenants still failed to pay me, and I had to deal with them for another 10 days until the city booted them out on the street. SO - go in front of the judge, and let them know that you want them out of your property. You can try to get the money owed to you, but unfortunately, the tenants always get away without paying you - so as one judge told me - be happy that you are getting rid of these people and move on!
After the court ruling, the tenants will have probably about two-three days to get out of your property. If they still refuse to move, go to the court-house immediately, and the will send an officer over to physically evict them.
Record all of your loses against your business expenses and write these off at tax-time. Clean up your property (because they will trash it), change the locks, and get the unit rented out as fast as possible - now DO NOT RENT TO PEOPLE LIKE THAT AGAIN, AND CHECK THEIR BACKGROUND TO AVOID THE ISSUE AGAIN
The first thing to do when evicting a tenant is to be calm and stay professional. Do not get mean, do not threaten your tenant, and do not give them a reason to get upset at you. This is a very touchy thing to do, and if you have gotten to the point in your relationship where the tenant is not paying you or where they are causing issues at your rental property, then you need to follow a very specific and exact eviction process. I have had tenants threaten me, trash my property, and even sue me over evicting them - staying calm and professional in every situation is the most important thing to remember. This is a process that can take as short as 5 days or last as long as 30 days. Expect it to last at least 30-40 days because you will need to get the city court involved.
I hope that you have a city approved rental property. If you do, then good, move on -If you do not, you are going to have to apply for a temporary rental permit from the city - which costs a bit of money, and have your property inspected for a rental license. This can happen while you are waiting to evict the tenant, but you really need to have the property approved and licensed before you rent anyway! Look at the link in my resources to learn how to get a rental license or visit this link here: http://www.ehow.com/how_4559543_become-landlord-landlord-license.html
Step3If your tenant is not paying or if they are breaking any of the agreed upon articles in your lease, try first to let them know that you are not happy with what is going on and find out why they are not paying or violating the terms of your lease. At this point, you have two options: 1) File a "7-day notice for non-payment" with the city - read step 4 2) File a "30 day termination of lease" with the city - read step 5
If you want to try and work things out with the tenant and get the money they owe you, then you need to file a "7 day notice for non-payment". This notice lets the tenant know that they have 7 days to pay you the money they owe you or else the eviction process will begin. This notice helps you to get the rent collection process going, and these notices cost you money to file with the court. Expect to pay anywhere from $50 - $100 dollars to get this done. Save these receipts and write them off at tax time, as well as the loss of rent you are incurring because of these tenants. Once you send out the "7 day notice of termination of lease", wait for your tenant to call you and come up with the money or resolve the issues that they are in violation of. They have only 7 days to take care of this. Normally, this notice is all you need to correct the issue, and they will pay you or stop violating your lease terms. However, if you come upon the end of the 7th day and you still have not been paid or they still are violating your lease terms, you will need to file for the "30 day termination of lease in Step 5.
Go down to the city courthouse - civil division, landlord/tenant office - and let them know that you would like to evict a tenant from your property for violation of your lease agreement/payment. Tell them that you do not want to try to resolve the issue with them and you simply want them out of your property. You will need to file for a "30 day notice of lease termination". These are generally free to file. You need to serve the tenant with this notice and then go back to the court house to have them physically sign off for the fact that it has been served. Now, this is a pain because you are going to potentially lose an entire month and 1/2 worth of rent. I had a couple of tenants that I had to do this to, and the eviction process ran about a total of 40 days. In the end, I was awarded all money owed, and they were evicted - I never saw the money, but they were thrown out of my property, so there is a light at the end of this mess.
Alright, so now here we are a few days later after you have served your tenant the "7 day non-payment notice", or the "30 day notice of lease termination". At this point, you could be quite a few days into the eviction process, so I hope you planned ahead so that you will not be getting into next month and losing more money. If your tenant has not paid you, has not corrected their lease violation, or has not moved out by this point, then you just have to wait for the 30 days to expire and take them back to court to get them evicted officially.
Once your 30 days is up, go back to the city courthouse and let them know the tenant is still in your property and causing problems. Try not to talk to you tenant, refrain from going there, do not threaten them, do not stop by, do not meet with them - unless they have the money for you (bring a police escort) - and just wait for the court to do their thing. The court clerk will then set up a court date to have your case heard in front of a judge. They will send you and your tenants a notice of this date.
If you are served a notice that the tenant wants to fight you in court, then go to the court hearing. Also go to the city court and see if they can schedule the hearing for a date that is close to the end of the 30 day notice so that you are not going too long without collecting rent. They generally will try to help out with the scheduling.
When you go court - if it gets this far - you really do not have much to say except that the tenant was in violation of the lease, they failed to pay you, and you followed the procedures for eviction. The city lawyer may want to try and resolve the issue without going in front of a judge - BUT I RECOMMEND THAT YOU GO IN FRONT OF THE JUDGE. The last time I tried to work it out with the tenants and the city attorney, the tenants still failed to pay me, and I had to deal with them for another 10 days until the city booted them out on the street. SO - go in front of the judge, and let them know that you want them out of your property. You can try to get the money owed to you, but unfortunately, the tenants always get away without paying you - so as one judge told me - be happy that you are getting rid of these people and move on!
After the court ruling, the tenants will have probably about two-three days to get out of your property. If they still refuse to move, go to the court-house immediately, and the will send an officer over to physically evict them.
Record all of your loses against your business expenses and write these off at tax-time. Clean up your property (because they will trash it), change the locks, and get the unit rented out as fast as possible - now DO NOT RENT TO PEOPLE LIKE THAT AGAIN, AND CHECK THEIR BACKGROUND TO AVOID THE ISSUE AGAIN
How to set up a lease with option to buy
A lease with option to buy is a lease that allows a tenant the right to purchase the property for a specific price within a certain time frame. In most lease-option situations, a portion of the rent is applied to a future down payment. Lease options are most popular among buyers who don’t have enough funds for a down payment and closing costs. Here is how you set one up:
To set up a Lease with Option to Purchase with a tenant, you need to still have all of the usual documents that you would have in a rental agreement situation (see my article here), BUT IN ADDITION, you also need to have an Option agreement that protects you as the Optionor. Many option forms available favor the Optionee.
Attached to the Option, you should also draft up a Purchase Agreement, which will spell out the terms of the sale that will allow the tenant to purchase the property. Both the landlord and tenant should initial this document to show that it was agreed to.
Since you as the landlord still own the property until the tenant pays you and takes full possession, use an Option form that is not recordable at the deeds office so that it does not get recorded against the properties public records. This will keep your title clear until you sell the property.
When you structure the Lease with Option with your tenant, be sure to charge the market rent amount. This is an area where many landlords make mistakes. Just because the tenant is planning on buying the house does not mean that they get any special treatment - they are still a tenant, the deal could fall through, and you are still responsible for the property. The Lease with Option is separate from the rental agreement.
Be sure to get a down payment from the tenants at the very beginning of the agreement. The more that your potential buyers put down up front, the less likely they will be to back out as their risk for loss is greater if they do not follow through. Credit the option fee towards the sale price if they close, and if they do not close, be sure to let them know that this fee will be non-refundable.
Additionally to protect your rights, make your option cancelable by you if the tenants default in any of the terms of the standard rental agreement.
Be sure to check into your state's laws regarding how much money you can collect from your tenants when you structure a lease with option. For example here in Michigan, a landlord can only collect 1/2 the rent amount as a security deposit and you have to give it back when the tenants move. It is common not to charge a security deposit when you structure a lease with option so that you do not have to give any money back to the tenant. It is best to apply the security deposit amount to the non-refundable option fee.
When you make a lease with option, the advantage is that you can ask for more than the current market price for your home. It is important to note though that the property will have to appraise for the purchase price you agree upon with your tenants when they go to secure a mortgage, or else your agreement will have to adjust. Take the current market price of the home and increase it by about 15% or higher to determine the selling price and account for appreciation. Remember to deduct their option fee from the final selling price.
Be sure to include a clause in your Lease with Option to purchase that makes the tenant responsible for repairs and maintenance to the property during the term of the lease with option. You want to be very clear to state in your rental agreement that the tenant is the one responsible for the cost of any repairs and renovations. As the landlord, you are still ultimately responsible to perform repairs when you rent property, and you will be the one fined and penalized by the city of repairs are not done, but often tenants will perform or arrange needed repairs under a lease option.
Finally, before you decide to make a final agreement with the tenants who are interested in potentially purchasing your property, have a loan officer do a background check on them and let you know if they will qualify for a mortgage to purchase your property. Have the loan officer advise you on how long it will take to have the tenant "mortgage ready", so that you can set your lease option term accordingly and plan to see if you even want to sell to them.
A Lease with Option can be used to produce better profits, less intense and less involved management scenarios, less headaches, and an all around solution to sell your rental property at top dollar. It also gives your tenants the ability to become home owners and allows the to take pride in the property. It truly is a win-win situation.
To set up a Lease with Option to Purchase with a tenant, you need to still have all of the usual documents that you would have in a rental agreement situation (see my article here), BUT IN ADDITION, you also need to have an Option agreement that protects you as the Optionor. Many option forms available favor the Optionee.
Attached to the Option, you should also draft up a Purchase Agreement, which will spell out the terms of the sale that will allow the tenant to purchase the property. Both the landlord and tenant should initial this document to show that it was agreed to.
Since you as the landlord still own the property until the tenant pays you and takes full possession, use an Option form that is not recordable at the deeds office so that it does not get recorded against the properties public records. This will keep your title clear until you sell the property.
When you structure the Lease with Option with your tenant, be sure to charge the market rent amount. This is an area where many landlords make mistakes. Just because the tenant is planning on buying the house does not mean that they get any special treatment - they are still a tenant, the deal could fall through, and you are still responsible for the property. The Lease with Option is separate from the rental agreement.
Be sure to get a down payment from the tenants at the very beginning of the agreement. The more that your potential buyers put down up front, the less likely they will be to back out as their risk for loss is greater if they do not follow through. Credit the option fee towards the sale price if they close, and if they do not close, be sure to let them know that this fee will be non-refundable.
Additionally to protect your rights, make your option cancelable by you if the tenants default in any of the terms of the standard rental agreement.
Be sure to check into your state's laws regarding how much money you can collect from your tenants when you structure a lease with option. For example here in Michigan, a landlord can only collect 1/2 the rent amount as a security deposit and you have to give it back when the tenants move. It is common not to charge a security deposit when you structure a lease with option so that you do not have to give any money back to the tenant. It is best to apply the security deposit amount to the non-refundable option fee.
When you make a lease with option, the advantage is that you can ask for more than the current market price for your home. It is important to note though that the property will have to appraise for the purchase price you agree upon with your tenants when they go to secure a mortgage, or else your agreement will have to adjust. Take the current market price of the home and increase it by about 15% or higher to determine the selling price and account for appreciation. Remember to deduct their option fee from the final selling price.
Be sure to include a clause in your Lease with Option to purchase that makes the tenant responsible for repairs and maintenance to the property during the term of the lease with option. You want to be very clear to state in your rental agreement that the tenant is the one responsible for the cost of any repairs and renovations. As the landlord, you are still ultimately responsible to perform repairs when you rent property, and you will be the one fined and penalized by the city of repairs are not done, but often tenants will perform or arrange needed repairs under a lease option.
Finally, before you decide to make a final agreement with the tenants who are interested in potentially purchasing your property, have a loan officer do a background check on them and let you know if they will qualify for a mortgage to purchase your property. Have the loan officer advise you on how long it will take to have the tenant "mortgage ready", so that you can set your lease option term accordingly and plan to see if you even want to sell to them.
A Lease with Option can be used to produce better profits, less intense and less involved management scenarios, less headaches, and an all around solution to sell your rental property at top dollar. It also gives your tenants the ability to become home owners and allows the to take pride in the property. It truly is a win-win situation.
How to pre-screen a potential tenant's credit
When showing your property to tenants, it is important that you run a very through background check on their credit history to ensure that they pay on time, and that they do not have any large outstanding debts. Chances are that if they do, you will be stuck with tenants that do not really care about paying you on time, that do not care about taking care of the property, and who will probably be more likely to scam or sue you to try and get money from you. Everytime you decide to select a tenant, take the time to run a background check on them and you can avoid 95% of all issue right up front.
Before you rent your property or even put it up for lease, make a list of questions to ask a potential tenant and bring it with you during your tenant interviews and unit showings. You can check online for numerous "tenant questionnaires" "tenant background check forms", but be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake. Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
When selecting a tenant, you should be pre-screening them as soon as you first talk to them or meet them. Usually you will meet a potential tenant for the first time over the phone. Discuss the property you have for rent, your lease, and other details, and gauge their level of interest. If they want to come and check the place out, inform applicants of rent and security deposit requirements and other relevant information that might disqualify the prospective tenant to see how serious they really are. If they are still interested in checking out the property, then you can go over your questionnaire you prepared in Step 1 with them in person.
When you first meet the tenant in person, there are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for: 1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
Now that you have gone through steps 1-4, and probably turned away quite a few applicants, you might have one or two people left that you would be willing to rent your property to. One of the most important tools for a good tenant screening is a rental application. Make sure the application includes questions that you feel are crucial to renting to this person. It is very important that the application be filled out thoroughly and accurately. Be sure to request a copy of the person’s driver’s license and social security card to verify their identity. You need these pieces of information to run a credit report. Despite what their appearance tells us, a credit report will give you a much more accurate perspective of the applicant.
Now, go to the site that I have included in the resource link, and run a credit report on this applicant. I have used the resource provided many times, and they offer excellent services and other reports that you might find useful. The name of the company is Citi Credit Bureau.
Once you are satisfied with this potential tenant as someone that you want to rent to, set the time, date and place for your lease signing. Instruct the applicant to bring the proper amounts of money, how you would like to be paid (cash, or check) and identification.
Using a legal residential lease, read over the entire lease with the tenants at a lease signing, and have them initial each page. Since this is the final agreement it is extremely important to be sure that all parties involved agree to it. By having them initial each page, this shows that you did your due diligence and went through every item with them. If you need to make comments on items, that is also fine, just initial them. I had a court case against a tenant once, where they disputed the agreement in court - the attorneys went over the document copies we had and saw that they initialled every item, and threw the case out. As you read the terms of the lease with the tenants, look for any points of contention they may have, and discuss late charges and fees. Be sure that any specifications that you have set forth are included in this lease, or are added as an addendum to the agreement signed by all parties
Remember, it is not too late to change your mind. If you do not agree with the tenant’s response or something just does not feel right, do not rent to this tenant.
Before you rent your property or even put it up for lease, make a list of questions to ask a potential tenant and bring it with you during your tenant interviews and unit showings. You can check online for numerous "tenant questionnaires" "tenant background check forms", but be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake. Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
When selecting a tenant, you should be pre-screening them as soon as you first talk to them or meet them. Usually you will meet a potential tenant for the first time over the phone. Discuss the property you have for rent, your lease, and other details, and gauge their level of interest. If they want to come and check the place out, inform applicants of rent and security deposit requirements and other relevant information that might disqualify the prospective tenant to see how serious they really are. If they are still interested in checking out the property, then you can go over your questionnaire you prepared in Step 1 with them in person.
When you first meet the tenant in person, there are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for: 1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
Now that you have gone through steps 1-4, and probably turned away quite a few applicants, you might have one or two people left that you would be willing to rent your property to. One of the most important tools for a good tenant screening is a rental application. Make sure the application includes questions that you feel are crucial to renting to this person. It is very important that the application be filled out thoroughly and accurately. Be sure to request a copy of the person’s driver’s license and social security card to verify their identity. You need these pieces of information to run a credit report. Despite what their appearance tells us, a credit report will give you a much more accurate perspective of the applicant.
Now, go to the site that I have included in the resource link, and run a credit report on this applicant. I have used the resource provided many times, and they offer excellent services and other reports that you might find useful. The name of the company is Citi Credit Bureau.
Once you are satisfied with this potential tenant as someone that you want to rent to, set the time, date and place for your lease signing. Instruct the applicant to bring the proper amounts of money, how you would like to be paid (cash, or check) and identification.
Using a legal residential lease, read over the entire lease with the tenants at a lease signing, and have them initial each page. Since this is the final agreement it is extremely important to be sure that all parties involved agree to it. By having them initial each page, this shows that you did your due diligence and went through every item with them. If you need to make comments on items, that is also fine, just initial them. I had a court case against a tenant once, where they disputed the agreement in court - the attorneys went over the document copies we had and saw that they initialled every item, and threw the case out. As you read the terms of the lease with the tenants, look for any points of contention they may have, and discuss late charges and fees. Be sure that any specifications that you have set forth are included in this lease, or are added as an addendum to the agreement signed by all parties
Remember, it is not too late to change your mind. If you do not agree with the tenant’s response or something just does not feel right, do not rent to this tenant.
How to purchase a short sale home
Buyers pursue short sales to get a good deal on a house or investment property. However a short sale home is a home that is undergoing the pre-foreclosure process and has a lot of red tape associated with its purchase. No matter how good the deal may seem on a short sale, you really have to do a lot of research before making an offer. A short sale home can yield you great house at a great price and also help the seller out of trouble, but be sure to pay close attentions to the steps of this article if you are thinking about purchasing a short sale.
The most important piece of advice I can give you right off the bat is to hire a real estate agent that has short sale experience. I used to be a real estate investor, and I thought I knew a lot about purchasing property - but a realtor who has done short sales time and time again, knows the in's and out's - trust me - eat a little of your pride and profit margin and hire a realtor who knows how to do short sales. They know how the details involved with the sale, they know how to guide you through the process, they will be interested in protecting you, and they will be able to cut through the red tape quickly.
Now that you have hired a real estate agent that knows how to short sales, you can work with them on these next steps. They already know to do this, but it is good that you also know. You will have to go to the city office and ask for the public record information on the short sale house that you are interested in. Your agent can find out who is on the property title, the status of the foreclosure, notices that have been filed against the seller, and they can even find out how much is owed to the lenders. If there are more than one lender' s on the property - for example in the case of a 40/20 loan - then the purchase of the home will be even more difficult because both lenders have to agree to the short sale and buyout plan. It is also important to check the insurance required on the property and to try to figure out the utility costs including city utility costs and maintenance. Work with your agent to get these details.
Understand that the seller may still have external debts related to the property that need to get taken care of before the banks will agree to sell the property. Sellers may also owe taxes, city fines and fines, and utility fees that need to be taken care of before the debt can be forgiven, or this may get rolled into your purchase of the property based on negotiations. This can all delay the sale of the property. Additionally, the seller also a time frame in which to re-claim the property, and believe it or not, some people are able to come up with the money and save their property.
It is important to make sure that all of the proper documentation has been submitted by the seller and by you and your agent in the negotiations to purchase a short sale property. The seller needs to submit a hardship letter to the banks and start the discussions with them about a short sale. Once that process has been started, and you are interested in the property, you will need to make an offer to the seller. If you offer is accepted, you then need to send it to the property lender for final approval. You may also have to send along an earnest deposit for the property as well to the lender or to the sellers agent. You will also have to secure your own loan for the accepted price of the property and be able to show all of that documentation to the sellers bank as proof of your ability to purchase the property. Send a pre approval letter to the lender and to the sellers agent. Your agent should also send along a comp listing of homes sales in the are that are comparable to the price you are offering to pay for the home.
Always provide a solid date for the sellers lender to get back to you with the approval of the deal. You do not want to waste your time waiting on the approval of the sale only to find out at the last minute that it will not go through. Be sure to have your agent give the lender a time frame in which to respond. If they do not respond by that time, be sure to make it clear that you will be free to cancel your offer and get back your earnest deposit. Some lenders take two to three weeks to approve the final sale. Make sure that your real estate agent has the proper name and number of the lender contact that will be making the final decision.
Expect to pay a commission out of your own pocket. In a short sale, the bank is the one paying the sellers commission, and they will try to negotiate a final commission price to avoid paying out any more than they have to. Before you sign an agreement with your agent, ask them if they will waive the difference due. Most of the time they will not, and you will have to pay this out of your own pocket.
You will also be asked to purchase the property "as is" by the bank. It is in your best interest to get the property inspected and make your final offer contingent upon the approval of the inspections. This will cost a little more money up-front, but it will save you a lot of grief down the road. Just because there are people living in the home now, does not mean that it will pass current city inspections. Many cities require that the property get inspected before a new occupant moves in, and you will be hit with fines, penalties, and other hardships if you fail to take care of this up-front. I had this issue with a property once and the list of items I had to fix on the property were so long and so expensive that I should have never purchased the property. Get a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, and fireplace inspections. Also follow up with the city to see when the last inspections were conducted and ask the city what the expect should happen with the property.
If you follow all of these steps closely and work with an experienced short sale agent, you should be able to avoid a lot of the pitfalls and issues associated with a short sale home. When conducted properly, a short sale home can actually help you to save money in the long run and once you go through a short sale, you will have excellent experience for taking on your next property purchase.
The most important piece of advice I can give you right off the bat is to hire a real estate agent that has short sale experience. I used to be a real estate investor, and I thought I knew a lot about purchasing property - but a realtor who has done short sales time and time again, knows the in's and out's - trust me - eat a little of your pride and profit margin and hire a realtor who knows how to do short sales. They know how the details involved with the sale, they know how to guide you through the process, they will be interested in protecting you, and they will be able to cut through the red tape quickly.
Now that you have hired a real estate agent that knows how to short sales, you can work with them on these next steps. They already know to do this, but it is good that you also know. You will have to go to the city office and ask for the public record information on the short sale house that you are interested in. Your agent can find out who is on the property title, the status of the foreclosure, notices that have been filed against the seller, and they can even find out how much is owed to the lenders. If there are more than one lender' s on the property - for example in the case of a 40/20 loan - then the purchase of the home will be even more difficult because both lenders have to agree to the short sale and buyout plan. It is also important to check the insurance required on the property and to try to figure out the utility costs including city utility costs and maintenance. Work with your agent to get these details.
Understand that the seller may still have external debts related to the property that need to get taken care of before the banks will agree to sell the property. Sellers may also owe taxes, city fines and fines, and utility fees that need to be taken care of before the debt can be forgiven, or this may get rolled into your purchase of the property based on negotiations. This can all delay the sale of the property. Additionally, the seller also a time frame in which to re-claim the property, and believe it or not, some people are able to come up with the money and save their property.
It is important to make sure that all of the proper documentation has been submitted by the seller and by you and your agent in the negotiations to purchase a short sale property. The seller needs to submit a hardship letter to the banks and start the discussions with them about a short sale. Once that process has been started, and you are interested in the property, you will need to make an offer to the seller. If you offer is accepted, you then need to send it to the property lender for final approval. You may also have to send along an earnest deposit for the property as well to the lender or to the sellers agent. You will also have to secure your own loan for the accepted price of the property and be able to show all of that documentation to the sellers bank as proof of your ability to purchase the property. Send a pre approval letter to the lender and to the sellers agent. Your agent should also send along a comp listing of homes sales in the are that are comparable to the price you are offering to pay for the home.
Always provide a solid date for the sellers lender to get back to you with the approval of the deal. You do not want to waste your time waiting on the approval of the sale only to find out at the last minute that it will not go through. Be sure to have your agent give the lender a time frame in which to respond. If they do not respond by that time, be sure to make it clear that you will be free to cancel your offer and get back your earnest deposit. Some lenders take two to three weeks to approve the final sale. Make sure that your real estate agent has the proper name and number of the lender contact that will be making the final decision.
Expect to pay a commission out of your own pocket. In a short sale, the bank is the one paying the sellers commission, and they will try to negotiate a final commission price to avoid paying out any more than they have to. Before you sign an agreement with your agent, ask them if they will waive the difference due. Most of the time they will not, and you will have to pay this out of your own pocket.
You will also be asked to purchase the property "as is" by the bank. It is in your best interest to get the property inspected and make your final offer contingent upon the approval of the inspections. This will cost a little more money up-front, but it will save you a lot of grief down the road. Just because there are people living in the home now, does not mean that it will pass current city inspections. Many cities require that the property get inspected before a new occupant moves in, and you will be hit with fines, penalties, and other hardships if you fail to take care of this up-front. I had this issue with a property once and the list of items I had to fix on the property were so long and so expensive that I should have never purchased the property. Get a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, and fireplace inspections. Also follow up with the city to see when the last inspections were conducted and ask the city what the expect should happen with the property.
If you follow all of these steps closely and work with an experienced short sale agent, you should be able to avoid a lot of the pitfalls and issues associated with a short sale home. When conducted properly, a short sale home can actually help you to save money in the long run and once you go through a short sale, you will have excellent experience for taking on your next property purchase.
How to find a real estate agent
Finding a good real estate agent is the most important part of purchasing property. They help to keep the transactions smooth, they help to look out for all of the details, they protect your interests, and they provide very helpful insight. The best agent is a professional who listens to your needs and wants in a property, conducts themselves in an ethical and timely manner, someone who knows the market, and who also genuinely is interested in helping you find the perfect place. Here is how you find them.
Look for Real Estate agents that are part of the Realtors® National Association of Realtors and have the Realtors® logo on their card. Not all real estate agents are Realtors®. Realtors® that are part of this Association pledge to follow a strict code of ethics, and are held to a higher standard of conduct than the ordinary business practices of other real estate agents required by law. As you begin looking for real estate agents that are part of the Realtors® Association, you will notice that not all agents are part of this group.
Ask your family, friends, and co-workers if they could refer any good real estate agents to you. A lot of real estate agents get most of their business directly from referrals. Since you know these people that you are asking for a referral, ask them to describe their experiences working with the real estate agent. Try to find an agent who goes above and beyond their responsibilities and really satisfied the needs of your friends, family, or co-workers.
You can also look online and research real estate agents in your area. Do a Google search for the top real estate companies in your area. Make a list of these companies, and then follow up with them by calling their offices or checking out their own company websites. A lot of real estate websites have agent profiles that you can read and learn more about their track record and areas of expertise. Look for their experience, length of time as a real estate agent, areas of expertise, and any customer testimonials they might have listed. If possibly, follow up with the customers they helped out to how they felt about working with their real estate agent.
One of the easiest ways to find a real estate agent is to drive around your neighborhood or neighborhoods in your area and make a note of the home for sale. Read the signs to see which agents are being used. You should also make a note about when the property went on the market, and how long the property stays on the market. Agents that list multiple properties in an area probably know the area very well, have multiple leads, and are very well referred. Additionally, agents that sell homes quickly in your area might also be the best agent for you to contact. It all depends on their results and you can track those results by knowing the homes they have listed.
Open houses are also a great way to meet real estate agents and collect their business cards. Take a look in your area for any open houses and make it a point to attend and meet with the listing agent. You will be able to feel them out and see how they represent their clients and the property they are selling. If you're thinking about selling your home, pay attention to how the agent is showing the home. Are they personable, informative, and knowledgeable? Do they have any take-away promotional material about the home? Do they describe the features of the home in a positive way? Additionally, you can also find other business cards for real estate agents that might have left their information behind at the open house. Collect these cards or write down their information.
If you have tried all of the steps above, and you still have not found a real estate agent that you would like to work with, you could always take a look in your local Sunday newspaper for ads run by real estate agents in your targeted neighborhood. Write down a list of the agents names, and then look up their websites or agencies. You might be surprised how many of them have listings in your area. You can also take this new list of real estate agents and compare it to the signs and open houses you see in your area to see if these agents already have listings close to you. These agents could be specialists in your neighborhood, and you could get a hold of them to meet with them and learn about their experience.
If you have done all of the steps above, found a few agents, met with them, and still feel like they are not the perfect real estate agent for you - ask them for referrals. Agents are happy to refer buyers and sellers to associates if the service you need is not a specialty of theirs. Agents know many other agents that specialize in the area you are looking for. Additionally, you can even follow up with mortgage brokers to find an agent that they trust and know has a proven track record.
Look for Real Estate agents that are part of the Realtors® National Association of Realtors and have the Realtors® logo on their card. Not all real estate agents are Realtors®. Realtors® that are part of this Association pledge to follow a strict code of ethics, and are held to a higher standard of conduct than the ordinary business practices of other real estate agents required by law. As you begin looking for real estate agents that are part of the Realtors® Association, you will notice that not all agents are part of this group.
Ask your family, friends, and co-workers if they could refer any good real estate agents to you. A lot of real estate agents get most of their business directly from referrals. Since you know these people that you are asking for a referral, ask them to describe their experiences working with the real estate agent. Try to find an agent who goes above and beyond their responsibilities and really satisfied the needs of your friends, family, or co-workers.
You can also look online and research real estate agents in your area. Do a Google search for the top real estate companies in your area. Make a list of these companies, and then follow up with them by calling their offices or checking out their own company websites. A lot of real estate websites have agent profiles that you can read and learn more about their track record and areas of expertise. Look for their experience, length of time as a real estate agent, areas of expertise, and any customer testimonials they might have listed. If possibly, follow up with the customers they helped out to how they felt about working with their real estate agent.
One of the easiest ways to find a real estate agent is to drive around your neighborhood or neighborhoods in your area and make a note of the home for sale. Read the signs to see which agents are being used. You should also make a note about when the property went on the market, and how long the property stays on the market. Agents that list multiple properties in an area probably know the area very well, have multiple leads, and are very well referred. Additionally, agents that sell homes quickly in your area might also be the best agent for you to contact. It all depends on their results and you can track those results by knowing the homes they have listed.
Open houses are also a great way to meet real estate agents and collect their business cards. Take a look in your area for any open houses and make it a point to attend and meet with the listing agent. You will be able to feel them out and see how they represent their clients and the property they are selling. If you're thinking about selling your home, pay attention to how the agent is showing the home. Are they personable, informative, and knowledgeable? Do they have any take-away promotional material about the home? Do they describe the features of the home in a positive way? Additionally, you can also find other business cards for real estate agents that might have left their information behind at the open house. Collect these cards or write down their information.
If you have tried all of the steps above, and you still have not found a real estate agent that you would like to work with, you could always take a look in your local Sunday newspaper for ads run by real estate agents in your targeted neighborhood. Write down a list of the agents names, and then look up their websites or agencies. You might be surprised how many of them have listings in your area. You can also take this new list of real estate agents and compare it to the signs and open houses you see in your area to see if these agents already have listings close to you. These agents could be specialists in your neighborhood, and you could get a hold of them to meet with them and learn about their experience.
If you have done all of the steps above, found a few agents, met with them, and still feel like they are not the perfect real estate agent for you - ask them for referrals. Agents are happy to refer buyers and sellers to associates if the service you need is not a specialty of theirs. Agents know many other agents that specialize in the area you are looking for. Additionally, you can even follow up with mortgage brokers to find an agent that they trust and know has a proven track record.
How to interview a potential tenant
When trying to rent out a property to a potential tenant, it is very important that you get to know them and that you set their expectations for renting from you and what you expect out of the relationship. It is not always easy to gauge how a person lives or behaves behind closed doors, but these steps will help you to weed out a lot of unqualified potential tenants.
Before you rent your property or even put it up for lease, you need to be sure that you know who you want to rent to, and what you expect from your tenants. Do a search online to try and find some tenant questionnaires, or tenant background check forms to get an idea for the general items you should be asking.
Once you have taken a look at some of the available questionnaires for tenants, make a list of questions that you want to ask your potential tenant and bring it with you during your tenant interviews and unit showings. Be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake.
Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
Aside from your phone interview with your potential tenant, a lot can be determined upon your first meeting with the tenant in person. There are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for:
1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
If they make it this far, they may be a pretty good candidate to rent to. Ask them to fill out your rental application and your credit/background check form. If they refuse, thank them for their time and get rid of them. If they fill out all of your requested information, go ahead and run a credit check on them.
Before you rent your property or even put it up for lease, you need to be sure that you know who you want to rent to, and what you expect from your tenants. Do a search online to try and find some tenant questionnaires, or tenant background check forms to get an idea for the general items you should be asking.
Once you have taken a look at some of the available questionnaires for tenants, make a list of questions that you want to ask your potential tenant and bring it with you during your tenant interviews and unit showings. Be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake.
Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
Aside from your phone interview with your potential tenant, a lot can be determined upon your first meeting with the tenant in person. There are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for:
1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
If they make it this far, they may be a pretty good candidate to rent to. Ask them to fill out your rental application and your credit/background check form. If they refuse, thank them for their time and get rid of them. If they fill out all of your requested information, go ahead and run a credit check on them.
How to become a landlord - or get a landlord license
If you are interested in renting a room in your house, or renting an entire property that you have acquired, consider this your basic guide for becoming a landlord. There is a lot that you need to know when renting a property that I can not possibly cover fully in this article, but the purpose of this article is to provide you with a basic checklist to help get you started renting. Just read along, follow my steps, and be sure to also follow up with your city housing and inspection offices for additional details and requirements.
So you have decided to become a landlord and start renting your property. There are many reasons that people want to start renting their property. These reasons generally include moving to a new home, purchasing an investment property, getting help to pay for the mortgage on the home they live in now, or trying to break into commercial property management. Regardless of your reasons, here are the basic steps to follow.
GET A RENTAL LICENSE: Before even looking into rental agreements, pricing, and stuff like that, you need to get your home qualified to become a rental unit, and you need a rental license from the city you live in. There are a lot of strict city ordinances, rules, and regulations about rental property, so you need to get acquainted with these rules and regulations for the area you live in. Go down to your local city building and ask to talk to the Housing / Development / Ordinance office. Cities have different names for these offices, but if you try one of these, they should be able to point you in the right direction.
Once at the office, let them know that you are interested in renting your property. Let them know that you would like to learn about the rental inspection process and licensing and costs associated with doing this.
It is also helpful to ask them if they can give you a landlord/tenant rules and regulations pamphlet. They may not have this on hand, and you may have to go to the city courthouse to get this. This is very important to read as it highlights all of the most common laws for the city you live in regarding landlords and tenants. I highly recommend that you get this and read through it entirely!
The process for becoming an approved rental property owner is actually pretty easy, but time consuming. You will have to be patient and work with the city every step of the way to ensure a smooth process. The first step you need to take is to schedule and pay for a home inspection conducted by the city ordinance officer. They will give you a date and time that they are available to come out to your property. It is important that you meet the ordinance officer at your home on the date that you have scheduled. Try to be there early, and do not waste the city ordinance officers time. They are very busy. Also avoid having to reschedule these appointments.
On the day of your home inspection, try to be there at least 15 minutes earlier than the city inspector. They will come out to your home, take a look at your property for any code violations, concerns, or problems that you need to correct and they will create a list for you to review. First time inspections can take anywhere from a hour to a hour and thirty minutes. Plan for the inspection to last at least an hour, and do not rush the inspector once they get to your property. I would also recommend that you walk with the inspector, but let them do their job, and only answer questions when asked. Avoid additional small talk.
The inspector will go back to their office and write up a formal list of violations that you need to correct in order to bring your property up to code and get it approved as a rental unit. They will also provide you a due date to get the violations changed.
Once you get this letter, read over each item, and get the items they request taken care of. Call the city housing office back and ask them any questions about the violations you have or advice for fixing the issues should you need it. You will also need to reschedule an appointment for the ordinance officer to come out and check the violations he listed. You generally do not have to pay for the follow up inspections, but you should ask to be sure. The city will also give you enough time to get the violations finished, but if you need more time, just ask to push the re-inspection date back a little.
Plumbing, electrical, and gas/furnace issues should be handled by professional, licensed, and certified contractors. Call these folks, if needed, and let them know that you need them to have them check out/repair certain items for a rental inspection. Ask them for receipts and even signed comments to give to the inspector upon completion of their work.
Once you have completed fixing all of the violations on the list that the city ordinance officer provided you, wait for the next appointment date that you set up
The officer will then back come out to your home and check to see if everything passes. If it does, then you can go to the city office or court house and purchase a landlord license with the city. If you fail the inspection, you can work with the city to reschedule an inspection again. You will have to pay for this new inspection.
Once you purchase your landlord license, you can safely rent your property knowing that it has been approved by the city. Now all you need to do is get a great set of rental application and lease documents, and start looking for tenants! I would also recommend that you also go to the city court house and ask them what the process is for evicting tenants - because every landlord has to deal with that eventually.
So you have decided to become a landlord and start renting your property. There are many reasons that people want to start renting their property. These reasons generally include moving to a new home, purchasing an investment property, getting help to pay for the mortgage on the home they live in now, or trying to break into commercial property management. Regardless of your reasons, here are the basic steps to follow.
GET A RENTAL LICENSE: Before even looking into rental agreements, pricing, and stuff like that, you need to get your home qualified to become a rental unit, and you need a rental license from the city you live in. There are a lot of strict city ordinances, rules, and regulations about rental property, so you need to get acquainted with these rules and regulations for the area you live in. Go down to your local city building and ask to talk to the Housing / Development / Ordinance office. Cities have different names for these offices, but if you try one of these, they should be able to point you in the right direction.
Once at the office, let them know that you are interested in renting your property. Let them know that you would like to learn about the rental inspection process and licensing and costs associated with doing this.
It is also helpful to ask them if they can give you a landlord/tenant rules and regulations pamphlet. They may not have this on hand, and you may have to go to the city courthouse to get this. This is very important to read as it highlights all of the most common laws for the city you live in regarding landlords and tenants. I highly recommend that you get this and read through it entirely!
The process for becoming an approved rental property owner is actually pretty easy, but time consuming. You will have to be patient and work with the city every step of the way to ensure a smooth process. The first step you need to take is to schedule and pay for a home inspection conducted by the city ordinance officer. They will give you a date and time that they are available to come out to your property. It is important that you meet the ordinance officer at your home on the date that you have scheduled. Try to be there early, and do not waste the city ordinance officers time. They are very busy. Also avoid having to reschedule these appointments.
On the day of your home inspection, try to be there at least 15 minutes earlier than the city inspector. They will come out to your home, take a look at your property for any code violations, concerns, or problems that you need to correct and they will create a list for you to review. First time inspections can take anywhere from a hour to a hour and thirty minutes. Plan for the inspection to last at least an hour, and do not rush the inspector once they get to your property. I would also recommend that you walk with the inspector, but let them do their job, and only answer questions when asked. Avoid additional small talk.
The inspector will go back to their office and write up a formal list of violations that you need to correct in order to bring your property up to code and get it approved as a rental unit. They will also provide you a due date to get the violations changed.
Once you get this letter, read over each item, and get the items they request taken care of. Call the city housing office back and ask them any questions about the violations you have or advice for fixing the issues should you need it. You will also need to reschedule an appointment for the ordinance officer to come out and check the violations he listed. You generally do not have to pay for the follow up inspections, but you should ask to be sure. The city will also give you enough time to get the violations finished, but if you need more time, just ask to push the re-inspection date back a little.
Plumbing, electrical, and gas/furnace issues should be handled by professional, licensed, and certified contractors. Call these folks, if needed, and let them know that you need them to have them check out/repair certain items for a rental inspection. Ask them for receipts and even signed comments to give to the inspector upon completion of their work.
Once you have completed fixing all of the violations on the list that the city ordinance officer provided you, wait for the next appointment date that you set up
The officer will then back come out to your home and check to see if everything passes. If it does, then you can go to the city office or court house and purchase a landlord license with the city. If you fail the inspection, you can work with the city to reschedule an inspection again. You will have to pay for this new inspection.
Once you purchase your landlord license, you can safely rent your property knowing that it has been approved by the city. Now all you need to do is get a great set of rental application and lease documents, and start looking for tenants! I would also recommend that you also go to the city court house and ask them what the process is for evicting tenants - because every landlord has to deal with that eventually.
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