All pertaining to single residences. 1. Do you provide a lawnmower? 2. Do you enforce the late penalties, even if they always pay, but are 3-4 days late every month, like clock work? 3. Pets? Smoking? I know the answer, but want to see what some of you say. 4. How much consideration do you give to school district? 5. Are you buying strictly cash, or will/have you financed properties? Thanks
I always regret responding to these threads but I learn slowly so... 1. No 2. ABSOLUTELY 3. No pets. We haven't figured out how to prohibit smoking. 4. Not a lot. Established families here tend to buy instead of rent. 5. Both. If you are financing you need to be careful or your profit can get pretty low.
1. Yes 2. Depends on tenant 3. Not a fan, but everyone seems to have them so you limit the customer if you don't allow. Smoking doesn't matter. 4. None 5. Same as Steve
5. Mind if I ask what you consider a safe margin? I know there are a ton of conflicting variables, but I'm reconsidering the school district thing, and know that can impact rent, if only by a couple hundred a month.
I'm not answering that directly anymore. It's not worth it. What I will say is that you have some easy to figure expenses. -interest 5% -taxes 2% -insurance 1% -maintenance 1-2% -advertising, legal, office, etc about 1% -standard vacancy in the US is generally considered 7% of the time available Add all of that together and you need to take in about 10-12% of your total investment per year to break even not considering appreciation. On the cash side you have to plan for principle payments if you are going to run at those margins. If you are not good at managing your property those costs above can skyrocket.
1. NO 2. Depends on relationship with tenant. (if they pay like clock work but late i would cut them a break) 3.NO Pets and NO Smoking 4.NONE 5.I have financed the 2 i just bought My properties are rental...with hopes of selling as value goes up...etc
No worries, and good info, thanks! I'm new enough at it that I still have a hard time believing the math. This is a ~20 year plan, so I'm not necessarily looking to get rich at it today, but you don't want to piss it away by being stupid. Thanks all.
Just put my 3rd house under contract. Its always nice to hear their realtor say "Oh, I'm SURE she'll take that offer!" And I low balled. Sonofabitch!
1. I have in the past and stipulate on the conditions part of the lease whats expected. I have a lawn service at a couple and thats part of the rent. If the tenant wants to do yard work... Id give em the lawn service credit. Cuts both ways. 2. Yes... I counsel them on the first late payment. Sometimes if the 3rd falls on a weekend... Ill let it go til that Monday. If no payment is made... they get a 5 day notification to vacate and what they need to pay to be current. Make it abundantly clear you expect to be paid in a timely fashion or they will be served with eviction notices. (eviction process starts 15 days after no payment). Get the required paperwork and put it in the rental folder. Time is of the essence. Evictions probably require about $600 of your own money to get rolling. After you waste time getting them served ... youre going to be on the hook for obtaining the judgement which is worthless and will cost you more $$$. If you find yourself constantly doing evictions... review your screening process. 3. Pets require additional deposit. Smokers get additional deposit assessed. If you have a smoking pet owner... well be prepared to keep the deposit plus sue for the needed refresh to turn it over. 4. not sure... dont really care about schools. I only care about the location of the home. Selling the school district means there isnt much good about the property location. 5. I wouldnt know where to start. It would depend on price and how much rent you could collect. Also if it needs rehab... it may suck up all your cash doing to necessary repairs to qualify for a mortgage.
As far as late payments. My brothers cap the rent increase to 2-3% and give a $100 refund at the end of the year if all payments are made on time. If there is one late payment the rent increases 5% the following year with no credit and late fee for that month. They have been extremely successful with maintaining the same people for some time now.
1.No 2. Situational but contract states $10 a day late fee. 3. Yes pets, no deposit instead I increase the monthly rent charge. No smoking option, I list it as a evictionable offense. 4. None 5. Both
If they always pay, but always 4 days late, maybe is due to when they get paid at work? I would talk with them and change their due date to 4 days later, reduces the stress on both of you.
My answers are the exact same as Steve's. I wouldn't consider anything less than 10% and even then I know it's not going to be a goldmine.