Observations…6 valuable lessons I have learned through the years.
- When asking for deposits do not ask for an amount equal to a month’s rent. Basically, you will confuse your tenant and they will think that is their last month’s rent. Always ask for either 200 over or under. This way it is different, and they will naturally assume it is their security deposit and not a last month rent. The next question about deposits is how much? If your rent out a house and rent is 2000, then a good security deposit would be 1800 or 2200. If you allow pets, then and other 500 on top of that. We always go with a deposit and not a fee. This allows the tenant to take care of the property and have a chance to get it back.
Utility deposits are a MUST if you are on a mutual system. Also, if you belong to a county that takes care of your sewer, you must make that a part of your rent-but separate. These bills go against the owner not the tenant.
- I always get the question on how much to charge. There is a real estate website that gives you a suggested amount. However, they do not know what your place looks like inside. So that would be a good starting point. Another couple of things to keep in mind is where is it located. Near bases you get another couple of hundred just because the commute would be smaller for the person that would work on base and it would be worth it for them. Another big item is schools. If your school district in the house area is good, then you can get another 200 for that house versus it being in a poorer school district.
Remember, once size does not fit all. Keep in mind the condition of the place and how large. Those two items usually will be a major factor when coming up with a price. Hot tubs, yard service and other such addons, do not add to the price of the rental. Size and Location. The two biggest items.
- Shared expense. This one is big for condo’s, duplex’s and or apartments. I learned this years ago when the market started to turn, and everyone started charging for water, sewer and garbage. Tenants go in expecting to pay for utilities. It used to be a question they would ask. “Are utilities included?” Not anymore. I hardly ever get asked that anymore. We set the rent at 1200 let’s say and charge a basic charge for water, sewer and garbage at 125. This does two things. On the 1099 at the end of the year this income is not reported. It is not rent. Also, we do not charge a commission on it because, again, it’s not rent. If you are not doing this on shared utilities; you are missing out. Money down the drain so to speak.
- Leases are always preferable than a month to month. Of course, not every situation calls for a year lease. I rent out a triplex and over the years I have found 6 -month leases to be the best. This property is low income and very affordable to those who rent. If I have a problem with them, I can get rid of them sooner than a 1-year lease. Now, of course, if you rent a house out for 2000 a month in a great area, you want to do a 1-year lease. And remember, never allow a tenant to say more than 3 years. More on that later. In our state, we may only do a year lease without notarization. If you want it longer, the landlord MUST get his/her signature notarized. It does not mater about the tenant getting their signature notarized.
- Collecting rent. ALWAYS get the money from the tenant and or anyone on the lease. Never, never, never take money from anyone not on the lease. If it should bounce or for some reason does not go through, then you cannot go after them. Business names is another one. If the business is part of the lease, then fine. But stick to who is on the lease. This is a very big pitfall for those not familiar. Money is not money when it does not come from the tenant. Cash of course is fine. Give the person a receipt. Checks and credit cards must be in tenants name. Enough said.
- Explaining the move out inspection. I still believe the move out inspection should be done without the tenant there. However, you must explain everything to them of what you found and what you charged. Communication is very important. It will avoid the 1 star-rating on your website. Most of my tenants are very good. They are not perfect. Explaining why they were charged for something is better than sending them a note that mentions the charge. Also point out where in the lease it mentions they must do this or that. An example is in our leases, points out that all carpets must be professionally cleaned. No more rentals from stores. This is part of taking care of the owner’s property. Broken glass is another item we cover. That is why we recommend renters insurance. We do not know how it broke, but assume it was something that happened while they were tenants.
I hope these 6 items where helpful and will get you thinking about some of the possibilities that you never gave much thought too.