Renting a house. Need advice.

[bmcgonig]

A good friend is buying a new home and has decided to rent out his present one. Both are in the same college town in Louisiana. Neither he nor I have done this before but I do remember seeing many here with experience. So I figured I'd ask advice for him. Such things as

How does he check credit score?
Credit score minimums?
Minimum income to rental?
Best place to place ads?
Should he get a property manager? If so how much? He wouldn't be the type to fix things himself but could find the right person to fix whatever broke etc.

The house is quite nice inside and well taken care of with hardwood floors etc. Should he allow pets and if so should he get an extra deposit etc? The rent on the house would be approx $1500/mo.

Any learned lessons?

Any other words of advice?

Thanks in advance [emoji4]

 

[Bamaman]

I wouldn't want to rent out such an expensive asset, especially in a college town. And hardwood flooring wouldn't work out well in any rental as dog claws can destroy them.

We live in a college town, and rental fees are relatively high because students can be so hard on properties. Most rental properties are in the $50K range.

 

[MI-Roger]

Recommend against it

If he can't perform the maintenance work himself, then he will be losing money by hiring others to do these tasks with a portfolio of only one property.

My parents converted a large hoe into two apartments to provide additional income to the college costs of my two sisters and myself. Everything ALWAYS broke at the most inopportune times!

Re-lighting pilots, lost keys, broken toilet internals, plugged plumbing, etc. A myriad of inconveniences to my Dad - whom I nearly always accompanied on these repair missions.

 

[bmcgonig]

I wouldn't want to rent out such an expensive asset, especially in a college town. And hardwood flooring wouldn't work out well in any rental as dog claws can destroy them.

We live in a college town, and rental fees are relatively high because students can be so hard on properties. Most rental properties are in the $50K range.

I don't think he's planning on renting to college students. Maybe faculty or other qualified adults.

 

[calmloki]

We have likely applicants pay for their own credit check - several companies out there, cost to applicant is ~ $15. Applicant gives permission to us to go to the website and view their check.

We look for 650 or better score. Sometimes tough to find, but we mostly rent affordable one bedroom apartments.

Rent = 1/4 or 1/3 income.

We've been using Craigslist exclusively for the last 4-5 years.

One house? No property manager. Main management will be getting it rented, and if expenses = 1/2 income a 10% management fee = 20% of the profit.

Dogs will be really hard on the house - almost as bad as kids. You can't deny kids, but non-"service" animals you can. I hate the bogus service/emotional support animal applicant with a passion.

Check out Biggerpockets.com for the latest greatest rental wisdom. We are creaky antiques at the rental game.

 

[Aerides]

I don't think he's planning on renting to college students. Maybe faculty or other qualified adults.

I don't think you get to pick unless you want to face discrimination issues. I'm not a landlord so I'll let others chime in there.

That said, the ability to break even in cost on a SFH rental - just one - is a real trick, and unlikely on a first time rental.

Why does your friend want to rent instead of sell?

 

[Teacher Terry]

When we had a rental you can pick from the applicants so just don’t choose college kids. We always had a handful of people to choose from. We didn’t let people have pets. We have 4 dogs and there are no scratch on the hardwood floors.

 

[SheitlQueen]

I don't think he's planning on renting to college students. Maybe faculty or other qualified adults.

He better check landlord laws. I don't think he can turn down potential renters because they are students. If he does turn down applicants, he needs to document why and make sure everything is done legally. I own a couple of rentals and due to recent state laws can't wait to sell them once the tenants move out (which may be awhile, they've been there several years.

 

[Sunset]

If he is not careful, he will lose his tax free sale of the proceeds from the house.
Much simpler to sell it, and use the proceeds to pay off his new house, or buy diversified stock index fund.

A dog will destroy the hardwood, so will the tenants dragging chairs over the floor. He can be certain he will need to refinish the flooring every few years or tenant change.

If he is not handy fixing things, then it will be an expensive lesson, even simple stuff like cleaning the gutters costs a lot compared to how easy (non-skilled) it is.

How is he going to do his taxes, does he already pay someone, what will be the added fees , and if not, then he has to read a bunch and learn about all the rental tax rules.

He should run credit reports on the clients, but have internet access and have them do it in front of him and print out, or pay a service to have them run. Watch for scams, like folks show up nicely dressed, seem fine, but never pay their bills.
College students will send 1 or 2 kids to see the property, but their real plan is for 4 or 6 to fill the house.
Have a plan to counter the scam of fake employer (friends cell phone #) , as your friend will need to phone current and past employer.

Have your friend look up how to evict someone, the cost, process, time it takes, so they understand the best decision is picking the right tenant.

 

[NgineER]

We have likely applicants pay for their own credit check - several companies out there, cost to applicant is ~ $15. Applicant gives permission to us to go to the website and view their check.

We look for 650 or better score. Sometimes tough to find, but we mostly rent affordable one bedroom apartments.

Rent = 1/4 or 1/3 income.

We've been using Craigslist exclusively for the last 4-5 years.

One house? No property manager. Main management will be getting it rented, and if expenses = 1/2 income a 10% management fee = 20% of the profit.

Dogs will be really hard on the house - almost as bad as kids. You can't deny kids, but non-"service" animals you can. I hate the bogus service/emotional support animal applicant with a passion.

Check out Biggerpockets.com for the latest greatest rental wisdom. We are creaky antiques at the rental game.

+1

Good advice.

Our portfolio does not include SFH rentals, I use cozy.co for online rent payments and credit check.
I use zillow and craigslist for rentals, zillow posts theirs onto additional websites.

College kids would hardly have enough income to meet the requirement of rent being less than 1/3-1/4 of salary to cover rent, so it would be relatively easy to screen out.


Check if your court system allows you to search the court system for free, something that Senator tipped me off on, and it has helped a couple of times.

 

[bmcgonig]

+1

Good advice.

Our portfolio does not include SFH rentals, I use cozy.co for online rent payments and credit check.
I use zillow and craigslist for rentals, zillow posts theirs onto additional websites.

College kids would hardly have enough income to meet the requirement of rent being less than 1/3-1/4 of salary to cover rent, so it would be relatively easy to screen out.


Check if your court system allows you to search the court system for free, something that Senator tipped me off on, and it has helped a couple of times.

Thanks to both. Great advice. I think given all the negative things that he's read here and other places that he might just sell instead.

 

[haha]

And hardwood flooring wouldn't work out well in any rental as dog claws can destroy them.

I damaged a beautiful hardwood floor in my former apartment without ever being sloppy, or having a dog or cat. I rarely even wore shoes, because I enjoyed the gleaming narrow strip floor.

What happened is the rubber terminal parts that were attached to my director's chair somehow exposed a screw that secured the tip to the chair leg, and this really scratched the floor. I had to pay upon leaving. It amazed me since I had grown up with hardwood flooring and I never had seen any damage.
Now that I own my apartment, I plan to be very careful when or if I consider replacing my carpet. Carpet is not nearly as attractive as a quality hardwood floor, and real hardwood like red oak would make it easier for me to rent or sell my place if I were to move.

Still, it seems to me that carpet is likely the lower risk choice. Top of the heap practically speaking is sheet linoleum, but likely not too popular.

Ha

 

[braumeister]

I rarely even wore shoes

You're not related to Trombone Al, are you?

 

[ExFlyBoy5]

He better check landlord laws. I don't think he can turn down potential renters because they are students. If he does turn down applicants, he needs to document why and make sure everything is done legally. I own a couple of rentals and due to recent state laws can't wait to sell them once the tenants move out (which may be awhile, they've been there several years.

There is almost *always* a way to turn down a potential tenant, and it's even easier if it is a single unit...the laws are much more relaxed about it.

 

[Teacher Terry]

We have felt patches on the bottom of all our furniture so the floors don’t get scratches.

 

[Dash man]

He better check landlord laws. I don't think he can turn down potential renters because they are students. If he does turn down applicants, he needs to document why and make sure everything is done legally. I own a couple of rentals and due to recent state laws can't wait to sell them once the tenants move out (which may be awhile, they've been there several years.

It may depend on the state, but my experience is you can require the tenants be related in some way, or no more than two people unrelated to allow for unmarried couples.

 

[HI Bill]

As long as you don't say "no students" to anyone, or in your ad, I don't see it as a problem. Most students won't have the income or credit score to meet your selection criteria.

Are the hardwood floors in like-new condition? Older hard wood floors are often dinged and scratched all over....so a small dog with well-trimmed claws that's not a puppy shouldn't cause too much damage. My parents had a 130-pound golden, and a 48-pound cocker spaniel. The cocker spaniel chewed up a couple of door frames, but the floor damage was not greater than normal wear and tear from regular use (these were SOLID hard wood, not laminated or engineered). I would worry about damage from dog urine if the dog is left more than 8 hours....

 

[brucethebroker]

We have likely applicants pay for their own credit check - several companies out there, cost to applicant is ~ $15. Applicant gives permission to us to go to the website and view their check.

We look for 650 or better score. Sometimes tough to find, but we mostly rent affordable one bedroom apartments.

Rent = 1/4 or 1/3 income.

We've been using Craigslist exclusively for the last 4-5 years.

One house? No property manager. Main management will be getting it rented, and if expenses = 1/2 income a 10% management fee = 20% of the profit.

Dogs will be really hard on the house - almost as bad as kids. You can't deny kids, but non-"service" animals you can. I hate the bogus service/emotional support animal applicant with a passion.

Check out Biggerpockets.com for the latest greatest rental wisdom. We are creaky antiques at the rental game.

good advice-but check updates on "emotional care" animals. Our local Realtor legal team recently said that you can no longer charge pet deposits for those animals or deny use through "not pets allowed" policy.

 

[brucethebroker]

Renters can get their credit reports for free-have them provide them. Always ask for the first month rent and deposit in cash-you won't know the check is bad until they have moved in. (Banks used to tell landlords if a check would clear-not anymore....). Use a "for rent" yard sign with a flyer box (giving rent cost, etc.). We have received some good renters over the years from people just driving through the neighborhood. Have a good HVAC person and plumber. Those seem to be the most "emergency" repairs needed. Be sure your lease spells out no cars parked on the lawn and that the renters are responsible for plumbing clogs and pest removal. Put as long a time as you legally can on refunding the damage deposit at move out. 30-45 days is great, if legal. You can always refund earlier, but a longer time period gives you time to get estimates on clean up, paint, and damage repair, if needed. Also put in a provision that renters are responsible for professional cleaning of the carpets at move out.

On the walkthrough, remind them that the lease only allows folks whose name is on the lease to live there. If a friend wants to move in, they must get permission from the landlords. That clause is "forgotten" often when renters look for helpers to make the rent payment (or move in a lover, etc.). Good luck to your friend.