living in the home seriously helps. Let your tenants think you are just the super, not the owner. That gives you another level of threat if need be. I learned that having a job and a car often was a good qualifier definitely check credit. If lower credit, ask for TWO months security. if they are even late ONE day, show up and request the rent there and now. Never let it slide. Ignore the sad stories. Stay away from people recently out of AA, recent divorce, etc. People who look for a place are often in crisis, and it will become YOUR problem also. Look for people who are new to the area, or are coming to your place because of school or a new job Stay away from people who have a rental history of short stays. Demand past landlord references. Remember the most recent landlord may be nice to get rid of them. look at the prospect's car when they come to look. How they treat their car is how they treat your apt. If it is beaten up and/or full of junk, well... People with pets have a harder time finding places, but are often more loyal to you. Just have a pet clause and a small pet security deposit ($50-100) Although I honestly had more problems with blacks, I always treated the next one with respect. No one should experience discrimination because of the action of others. Just do proper screening Always do checkin and checkout procedures. It is ok to put a few holes in the walls, but carpet stains, blocked drains and damage is the tenant problem. Give them a screen (dollar store) for the kitchen and shower/tub drains to keep out hair and weird garbage from drains. Consider getting satellite TV for whole building. Bill them for a share. Will save them $$$. Remember, the cheaper it is for them to live there, the more your rent seems reasonable and the longer they may stay. Put compact fluorescent bulbs in all the sockets. You can get them cheap at dollar store, and keeps THEIR bill lower, and less electrical load on YOUR old wiring. When they leave, all sockets must have working CF bulbs!!! Make sure heat, gas and electric is in THEIR name. Smart landlord only pays for cold water! Students can be harder on the nerves, but there was something nice about having young people - brings out the parental instinct in you, especially if you don't have your own kids. Just make it clear that excess noise is not tolerated. renting to senior citizens is often a pleasant experience. The parties are few and they usually have a regular income (job, retirement pay, SS, etc.)
As a margin of saftey I should assume that i'll be renting 9-10 months of the year. Traderzones, from your post I can see how to better protect myself than just running someones credit. What I am a bit nervous of is the level of difficulty in renting, finding prospective renters. If six weeks goes by and I havent found anyone and someone comes along that is a borderline candidate should I take it or leave it? If there is a queue of people out my door I can screen them as you say. I hope thats the case.
the only thing worse than no tenants, is bad tenants. The best way to find people include: 1) putting an ad on Craiglist, go to your state & area, look under apartments. Keep readding your ad every day or two 2) put an ad on a couple of sites like Rent.com for your area. Usually people who come via internet are likely to be more desirable. Newspaper ads are doable, but don't be the cheapest. You will get problem people coming out of the woodwork. ESPECIALLY do not do "apartments to share" or "room for rent" !!!!!! Read other ads in these media, and try to make an ad that presents your place in a positive light. Things like "offstreet parking" or anything else. Is there a yard? school nearby? studying other ads will show you what people are looking for. read DOZENS to understand them... Does not hurt to mention "credit check & references" in ad - may weed out some problem tenants. One idea - rent on a biweekly basis. You can make a little more money that way. Many people do not realize a month is longer than 4 weeks. So instead of "800 a month" you say "200 a week". In reality, you will earn about $868 a month that way! Also, people have less time to fall behind in payments. Then, you request first and last 2 weeks rent, plus security. That way, you not only have the security deposit, but 2 weeks extra rent as well. You can get creative about this. Then ask for rent every 2 or 4 weeks - whatever... Also keep in mind, annual contracts lock you in as well as the tenant. Make the contract for 6 months, and then it converts to month-by-month. Tenants appreciate landlords who don't strangle them with complex, 7-page contracts. A concerned, good-hearted landlord will get more cooperation than a landlord who just wants to collect the rent. Also, when they have problems (plumbing, toilet, etc.) attack the problem immediately. Let them know you are concerned. You CAN build loyalty by being loyal to them.
Ok ok seems like a plan. Seems as though you been through this a few times. Are you a landlord and a trader? I'm impressed. Have you accumulated any realestate this year? If the deal goes through I'll know better what I'm doing now. If not I'll keep throwin my offers in, I don't think this slump is over soon. Thanks tradezones. -Ray
Buy and hold a stock index ETF like DIA, SPY; or a leveraged one like DDM or SSO, and hold it for two or three years. Stocks are attractively priced right now. The "income" flow may not be smooth, but so are bonds, they pay interests every six months.
Check out a site like gurufocus.com and piggy back on what the successful investors are buying....You can duplicate Warren Buffett's portfolio and you'll have a pretty good start.
Got a little update here. I bought a 2 fam house at the end of October '08. After low balling a few houses I scored this one which was a short sale. The average selling price of homes going back three months from the time I closed in that town was $402K. The appraisal was $410K but that doesn't mean much when the market is not liquid. My house was in average/good condition and the property was 25% bigger than the average property, detached oversized one car garage. It was listed for $429K and I purchaced the home for $385K. FYI it was bought for $575K in Dec '06. As for tenants I have found a young couple who are moving in June first. It took so long because I opted to separate the utilities which meant running new baseboard heat and installing a new boiler and hot water heater. There were other issues that needed to be dealt with but all said and done. Being that the tenants will be responsible for their own gas and electric is a big relief and well worth the effort IMO. As for screening the tenants I met with countless prospects and finally settled on a couple who both have good jobs and credit scores above 800. They asked if a small dog was ok sometime later on and I said no problem. Next is analyzing the lease and making sure I add in any necessary clauses. For instance if rent is not paid by the 5th its a 5% late fee (of one month rent). Each successive day on will be an additional $20/day. I was wondering if I can add something such as upon failure to pay rent landlord can cut off all water supply. I don't think I have to worry about that kind of stuff cause I went the extra mile in finding the right people but you never know. Who knows if overall home values will decline any more. Even if prices continue to fall the dynamics may be very different in different areas. Regardless of home price speculation, when I was looking for a home in '07 leading up to '08 I couldn't understand how people could afford to buy homes at those prices. Even upon consulting with mortgage brokers who were pushing interest only and all types of magical loans in which I didn't understand... it all came down to affordability. With a transparent loan, ie fixed, and given a certain income, just solve for x. It is not hard to come up with a purchacing price which is feasable. These prices weren't available when I first started looking. Finally I think I'm going to hold on to this rather than "hope" to sell for a profit at some later point in time. If I can get this place paid for and rent out both units I'll be much better off I believe. As for "good investment" returning more than your typical 5%, well I am netting in the negative territory as of now. But the pay off will take more time but less dependant on "hope" as this is a tangible asset in which I control. I am the master of my fate. So far so good... -Ray
And I know this is "elite trader" and just for the record I have still been very ambitious with regards to trading. I trade options on an infrequent basis yet keep up with the market daily. Currently reading "trading and exchanges" by Larry Harris and on deck is Natenberg's "option volatility and pricing". Who knows maybe i'll become good one day. LOL
I would tell you, but that would be individualized advice. You'll figure it out. I'll tell you what it is not: currency, futures, options, stocks, and etfs. I'll leave you to fill in the blank, b/c I know of only one asset class left without explicitly saying what it is.