OK, I admit it. I have owned 3 times. This is not my chosen occupation. You see, I’m not really constitutionally ready to be a good landlord. I don’t enjoy being mean, nor do I like to make overdue rent reminder calls. I got into the real estate business because I had bought a house. My first home came with a tenant.. The tenant was actually a model tenant … neat, orderly, considerate, and on time with rent payments. If this was my only experience, I would be excited to have houses where other people live. But it was not like that. I became an owner two more times and those experiences were markedly different from my first entry into the industry.
The second time, not unlLike many homeowners, I had bought another home and had been unable to sell my current home.. Since I had a good tenant, I thought having two tenants would be great. It was certainly better than having two house payments!
My prospective tenants told me that they had lived in military housing and that they had searched their home all the time. The inference is that they were very neat people … or so I thought. I will never forget the day I walked into the kitchen to see how my house was. There was a narrow path barely visible through the piles of trash, paper, and trash on the ground. These tenants didn’t like paying for trash pickup either, so they used my one-stall garage as a trash can. There were literally boxes of pizza up to the ceiling. I ended up paying the tenant to move out of the house.
Over the past 24 months in Grand Rapids, MI, many homeowners have become reluctant homeowners. When you’ve moved or bought another home prior to your home sale, this may be the only option to deal with the looming possibility of 2 huge payments each month. Unfortunately, this solution sometimes creates unforeseen difficulties.
I have learned some lessons through these experiences that I can now pass on to clients who are investors or need to rent their houses like I did. Taking these steps can reduce the risk of going from the frying pan of a difficult financial situation to the hot fire of a house with tenants who are ruining it and not paying you!
1. Check our references.
- In my eagerness to collect the rent, I did not ask for or check the rental references. This is a big mistake. You can learn a lot from a call. Even if negative information is not shared, reluctance to say anything about a tenant may be cause for further investigation.
2. Get a credit check
- This is very important. Your past payment history will reflect what is likely to happen to you. If a tenant did not pay a previous landlord, there is a high probability that they will eventually stop paying you. Sometimes a situation occurs that has a valid explanation and an exception can be made. But this should be done only after taking into account the full picture, including past rental history.
3. Drive around the neighborhood.
- If you are renting a house that is your primary residence and you intend to sell it, it may be wise to ask to drive by or ask to see the house the person who wants to rent their house currently lives in. Your maintenance there will reflect what you may anticipate in your home. While this shouldn’t be the only criterion, it can be helpful. If they refuse to clean where they are now … well, they’re unlikely to start when they move in.
4. Join the Rental Properties Association.
- In Grand Rapids, Michigan, this association is worth every penny of the approximately $ 200 annual fee. This organization gives homeowners access to legal advice, excellent lease forms, seminars and teachings, and the opportunity to network with other homeowners. You can learn a lot from other people’s experiences and avoid a lot of headaches.
5. Be very clear and concise in the terms of your lease.
- A clearly and concise written lease can save you a lot of pain. Be clear about when a late fee takes effect and by how much. Be clear about how many tenants can live in the home and how many cars can be parked on the premises. Be clear about whether you will allow pets and what the fee will be if you have to repair the damage. Be clear about the reasons why a security deposit will be lost.
6. Collect a security deposit.
- This should cover at least one month’s rent.
7. List the current condition of your home WHEN the new tenant takes possession.
- Be sure to complete a detailed checklist for each room in your home, and have your tenant complete any issues you observe as well. This written document will justify the state of the home. Also, you may want to take pictures for posterity.
This list of 7 items provides steps that can significantly reduce the risk of having a bad experience … especially if you find yourself in the role of a reluctant landlord.
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