I'm going to be a new landlord help me set my policies.
Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
Those of you guys that have been at this I am curious how you handle the following situations. Everyone says to set your rules and keep them.
Smoking:
Pets:
Credit:
Felons:
Age:
First time renters:
Previous evictions:
Rent Collection:
Lawn Care:
Maintenance issues:
Late Fees:
Breaking a lease:
Using security deposit for repairs:
I have developed what I think are good guidelines for these but figure I would see how folks with more experience have their business set up.
Here is what I say/do:
Smoking: NEVER inside the house! I do not want smokers! You do not have to allow smokers to rent your places!
Pets: If someone has a well behaved pet, I allow it. It does open up the rental pool. Pets are not a protected class so you do not have to allow pets. You can allow pets in one property but not another. (For example, if a place has a lot of carpet, you can not allow pets whereas a place without carpet you can allow pets.) Collect a pet deposit, but remember that a "pet deposit" termed as such can only be used for pet damage and not just any damage. You may also think about a larger security deposit in general so that the whole deposit can be used for anything.
Credit: I don't want people who have large outstanding judgements.
Felons: No
Age: Remember that a lease is a legal contract and therefore anyone who is 18 years and older can sign a contract. If you try to sign a lease with someone under 18, it will be automatically void.
First time renters: I've never had this myself but you can require a co-signer.
Previous evictions: I go back 5 years for no evictions. Some people say never evictions, but I'm willing to believe that sometimes people are young and stupid.
Rent Collection: I have the tenants get the rent to me. I don't drive around the city collecting rents.
Lawn Care: I have the tenants take care of it unless there is no garage.
Maintenance issues: I have the tenants report any maintenance issues and we coordinate a contractor to get things fixed.
Late Fees: My tenants usually just automatically include a late fee if they are late.
Breaking a lease: I do month to month rental agreements so I don't have lease breaking issues.
Using security deposit for repairs: Go with "home run items" - rent, late fees, etc.
I hope I answered all of your questions. @Ryan Dossey
Hi Ryan - there are tons of valuable resources out there. Check out the free how to guides under "learn" at the top of the BP webpage and listen to the podcasts on landlording.
This, combined with classic books like "Landlording on Autopilot" by Mike Butler were helpful to me. Also - I would encourage you to check out the websites of the most successful property management companies in your area. Often they have their applications and rental criteria listed - a great starting point.
Smoking: Depends on the type of property. We do say no smoking indoors on two of our nicer properties.
Pets: Separate addendum with a pet deposit of about 1/3rd the rent.
Credit: I look over the credit report and ask questions about anything that had poor payment history. Require 3 times the rent in household income. I put that in my ad so they know up front that this is required.
Felons: Haven't run into that yet. Wouldn't say "no" automatically but would certainly want good references and to be able to talk to the person and their references about the situation.
Age: No restrictions here. Be careful how you screen. Don't violate any protected classes.
First time renters: I don't have a policy for this. We did rent recently to some younger folks who may not have rented a full house before. As with all our renters we sat down at the start and went through the lease page by page and also got them to initial each page of the lease, not just sign at the end. That would be especially important with first time renters.
Previous evictions: We do have someone who had a previous eviction. They disclosed this on the application (that's a point in their favor actually). I spoke to his boss and to him about the situation. Part of the requirement is that he continue to make good on the previous amounts owed. I got 2 month's rent as deposit.
Rent Collection: I use erentpayment to get direct deposit.
Lawn Care: Renters is responsible.
Maintenance issues: I prefer not to have them :) I have had good success with arranging for a local company to do up to $200 in repairs/fixes without getting pre-approval from me. So the renters can just call them directly. Gets me out of the middle and I don't have to be available to meet the repair person.
Late Fees: $80.
Breaking a lease: This is a tough one because technically they are on the hook for the entire term of the lease but that's barely enforceable. I've heard some folks say that month-to-month favors the landlord because you can give notice more readily.
Using security deposit for repairs: YES! That's what it's for. You just have to document each item with the amount withheld and do that very soon (ie within a week) after the person moves out.
What you're really after is a property management policy and procedures manual.
You might consider Landlord Source. You can fully customize their manual and they already have many default policies in the template that you can use.
Regards,
Nate
Disclosure: I have no relationship with them, just a satisfied customer. The owner and author of the manual is a very experienced property manager and long-time member of NARPM.
No water beds...just my opinion !
Shera did a great job of covering most items. The tenant screening can be the most crucial to your success. Background checks and credit checks can help you avoid problem tenants. One thing not mentioned that I have found: if someone tends to complain a lot before they move in...they will continue after they move in. If you do a walk through ask the potential tenant their opinion. If they pick at everything they will probably be nothing but trouble. Also...if they don't have any issues or questions...that might be another red flag. If you choose not to use an automated rent payment system (I don't)..make sure and get a cashier check or money order. One last item: most states have requirements about security deposits, where they are kept, etc. Google your state laws on handling them and make sure and comply. The pros tell me there are two types of landlords: those that have been sued ( ME!)...and those that are going to get sued. Know your laws and what is expected of you as a landlord. If you do find yourself in court you will usually fare better if you dotted all the i's and crossed the t's.
Hi again .. John's post reminded me of something else. If you have to chase down an applicant to get additional info, etc and they don't get right back to you that's BAD. One of the few tenants that I had to evict was someone who I was chasing right from the start. I had been determined to get a house rented in "X" amount of time after the repairs were done so when someone showed up at the door and was really excited about the house before we were even finished I thought I had it made. Then I spent two weeks trying to get her to get all her paperwork to me. That was a huge red flag!
Here is what I say/do:
Smoking: NEVER inside the house! I do not want smokers! You do not have to allow smokers to rent your places!
Pets: If someone has a well behaved pet, I allow it. It does open up the rental pool. Pets are not a protected class so you do not have to allow pets. You can allow pets in one property but not another. (For example, if a place has a lot of carpet, you can not allow pets whereas a place without carpet you can allow pets.) Collect a pet deposit, but remember that a "pet deposit" termed as such can only be used for pet damage and not just any damage. You may also think about a larger security deposit in general so that the whole deposit can be used for anything.
Credit: I don't want people who have large outstanding judgements.
Felons: No
Age: Remember that a lease is a legal contract and therefore anyone who is 18 years and older can sign a contract. If you try to sign a lease with someone under 18, it will be automatically void.
First time renters: I've never had this myself but you can require a co-signer.
Previous evictions: I go back 5 years for no evictions. Some people say never evictions, but I'm willing to believe that sometimes people are young and stupid.
Rent Collection: I have the tenants get the rent to me. I don't drive around the city collecting rents.
Lawn Care: I have the tenants take care of it unless there is no garage.
Maintenance issues: I have the tenants report any maintenance issues and we coordinate a contractor to get things fixed.
Late Fees: My tenants usually just automatically include a late fee if they are late.
Breaking a lease: I do month to month rental agreements so I don't have lease breaking issues.
Using security deposit for repairs: Go with "home run items" - rent, late fees, etc.
I hope I answered all of your questions. @Ryan Dossey
http://www.reluctantlandlord.net/writing-a-kick-as...
That is what I put in my leases and all the quarks. I personally allow pets and absolutely no smoking.
On the age policy - I require that anyone living in the dwelling 18 years or older to be on the lease. It allows a bigger pool of resources to be responsible in case of an eviction. It has paid off for me when the parents were deadbeats and the son became responsible to pay the debt. It made his parents feel guilty so they paid the outstanding rent so that their child did not have to.
In Indiana, as long as they are 18 and listed on the lease, I am allowed to choose who to collect from. I put the paperwork in on the son (21 years old) and the parents came to court and made arrangements to pay the debt. It created leverage in may case.
Congratulations! I won't speak to every issue, but here's my two cents on a few things. The smell of cigarette smoke can be hard to eradicate after your tenants leave. I have a no smoking policy.
My worst experience with a pet involved a dog who was left outside several hours a day and barked the whole time. I got complaints from neighbors and ended up way too involved with my tenants. I also felt bad for the dog. I screened pretty well, but still got burned on this one. Was not worth the hassle or extra pet deposit.
Enforce late fees first time, every time. If you've got multiple rentals, you can be accused of discrimination if you're not consistent across all rentals.
Good luck!
Smoking: None, $200 fine first time, eviction 2d. smoking in areas only
Pets: by approval, $400 entrance fee (not deposit), $40 per month added to rent. Cats and dogs only
Credit: We don’t always check. When we do, we'll ask questions about certain items. We tend to ignore medical and educational debt / black marks but our flags are raised when we see cc missed payments, cable, power, etc.
Felons: No felonies past 5 years
Age: Illegal in all 50 states to even ask. Although you can say during initial call, "and who else will be living with you ma'am" and the answer will probably be something like, "well my son Jimmy who just turned 9...etc."
First time renters: We do this often. If it’s young folks, 18-20 we may ask for parent co sign
Previous evictions: Not if they’ve been to actual eviction court (FED), we will often listen to a “story” if they were just asked to leave.
Rent Collection: we do not accept “in person” or “by mail” – they deposit it for us in bank, or use eRentPayment.com – 100% automated.
Lawn Care: We handle apartments, tenant handles if house
Maintenance issues: Call us. Permission to call heating people after hours if emergency. Our phones are shut off after 5 and on weekends.
Late Fees: 15 days late, 4% (most legal in Maine), I add an “unenforceable in court” $20 fee as service charge for posting 7 day notice.
Breaking a lease: we do month to month. Breaking lease other than by being late with rent usually results in “violation of lease” notice followed by eviction 2d or 3rd offense depending what offense is.
Using security deposit for repairs: Do you mean do we deduct cost of repairs after they leave (caused by them) from security? Absolutely. Do you mean we sometimes need extra money so we “use up” or “borrow” from security deposit pool?? Not telling!
Here's my two cents:
Smoking: Not inside, ever. If they do they're paying to remediate any damage plus painting the place
Pets: Depends, I'd rather not but I do. Pets make people happy. Happy tenants are good.
Credit: 700 score or better
Felons: Nope
Age: Can't be a criteria
First time renters: Same
Previous evictions: Good luck!
Rent Collection: I use automatic deposits into my account and haven't looked back. No late payments this way and I like getting alerts when they made a payment.
Lawn Care: I take care of it so that we never get any fines from the towns.
Maintenance issues: Depending upon the issue if the item is small it's on them. Bigger items I take care of so I know it's done right and there won't be any issues with it going forward.
Late Fees: 5-10% however since I initiated direct deposit I haven't collected any.
Breaking a lease: They're responsible however I'm responsible to find a tenant and not be lax about it.
Using security deposit for repairs: Yes however they'll have to restore the account to full balance right away.
Hope that helps!
Hello--
I only own one rental property, but also live on the other side of the duplex, so those are my special circumstances that may not apply to you. I've been a landlord for three years.
Smoking: I have not ever put a "no smoking" policy in my lease, but I have decided I am going to do that in the future. I haven't had any issues, as none of the tenants I have so far have smoked in the house, but I know the smoke can stain walls and ceilings.
Pets: Not only do I allow pets, but I also allow multiple and/or large dogs. I have made this a bit of a "niche" for myself and charge higher rent for this class of tenants who have a harder time finding a place. I do not allow puppies or dog breeds that would void my home insurance...those are the only exceptions. However, with all that said, I have a LARGE fully fenced in backyard and there are no carpets in the unit (laminate wood flooring and tiles). I do charge a pet security deposit, but it is refundable just like the normal security deposit if there are no damages.
Credit: I have not checked credit in the past and, although it has never been a problem, I think this is a poor idea and will do that in the future.
Felons: This would depend on what/how long ago the felony was.
Age: Just have to be 18.
First time renters: I would require a co-signer or a larger deposit, but this has not come up for me yet.
Previous evictions: Possibly if the eviction had been a long time in the past and there was a good explanation for it. Like at least 5 years.
Rent Collection: My tenants pay me with a personal check. Some have paid with a money order or cash instead, but that was their choice...not something I've required.
Lawn Care: I take care of it, but then I live on the property also.
Maintenance issues: Same.
Late Fees: I have toyed with two ideas. A previous tenant, I actually gave them a rental discount of $25 if they paid early...even if it was just by one day. They always did ;). With my current tenant, and all my previous tenants, they have a 5-day grace period and after that it is $25 for every five days they are late. However, I've been fortunate and none of my tenants have ever been more than 5 days late. If they were good tenants and something unusual came up...I'd potentially be willing to limit the late charges, but would charge at least that first $25.
Breaking a lease: I've never had this happen, but this is something else I am going to put in my next lease. I haven't totally formulated what the consequences will be, but I'm leaning towards complete forfeiture of the security deposit PLUS they would be responsible for any repairs and/or rent exceeding that until the place is rented by a new tenant.
Using security deposit for repairs: Most definitely! Though, again I've been fortunate. I've always returned my security deposits in full because there have been no damages. One tenant did leave the place a bit dirtier than I would have liked and I've always regretted not charging a little something for that. But I didn't at the time.
Two caveats. Where I live, it is actually fairly quick and easy to have a tenant evicted for non-payment of rent. Though I certainly hope to never have to do it! But, as such, I will admit to being a little more lax than I probably should be about credit. It is also very easy for me to rent my unit. It typically only takes me about two weeks to find a tenant and, oddly enough, the time of year or time of month don't really matter that much. Heck, I had to rent the place in the middle of December once and still had plenty of applications. But again that makes me a little more "forgiving" of the potential of breaking a lease than other landlords might be.
Those of you guys that have been at this I am curious how you handle the following situations. Everyone says to set your rules and keep them.
Smoking:
Pets:
Credit:
Felons:
Age:
First time renters:
Previous evictions:
Rent Collection:
Lawn Care:
Maintenance issues:
Late Fees:
Breaking a lease:
Using security deposit for repairs:
Smoking: No smoking on the premises.... inside or outside. Violation fee of $50 for each occurrence.
Pets: No pets. Violation fee of $50 for each occurrence. Qualified assistance animals allowed as a reasonable accommodation only after a process of determination which requires a written and signed agreement.
Credit: We do full credit and background checks. We look for a number of things on the credit report.... previous addresses, debt to previous landlords, debt to previous utility companies, responsible debt paying, total current outstanding debt and what type, general credit worthiness and demonstration of using credit responsibly. The score is not that helpful or dependable.
Felons: We accept some depending on type of crime and how long ago and frequency. Also require proof of full restitution, demonstration of a number of years of a clean legal history, and extra security deposit.
Age: All occupants of age 18 or older must complete a rental application and be named in the rental agreement as severally liable.
First Time Renters: Additional security deposit.
Previous Evictions: One, if full restitution was made and additional security deposit.
Rent Collection: Tenants mail to our P.O. Box... money orders, personal checks, bank checks. We encourage tenants to set up automatic bill pay with their bank. Will pick up rent occasionally for special circumstances. Rent is due on the first, late on the second, late fee of $50 imposed on the 6th.
Lawn Care: Multiplexes - We take care of all landscaping. SFRs- we take care of trees and shrubs, tenant takes care of mowing, edging, and flower/vegetable beds.
Maintenance Issues: We take care of all maintenance & repair. Tenant is responsible for reporting issues in a timely manner. Tenant is responsible to keep the premises clean and clear of junk. Tenant is responsible to care/use appliances according to manufacturer instructions.
Late Fees: Yes. $50 flat fee enforced for late rent. May be waived if an unusual circumstance prevents tenant from paying rent on time.
Breaking a Lease: N/A. We use month-to-month agreements. If a tenant moves out mid-month, they are still responsible for paying rent and utilities for the full month.
Security Deposit: Stays in a trust account until we regain possession of the unit and we have completed our final accounting report. We deduct for missing items, damages, extra cleaning, unpaid fees, unpaid utilities, unpaid rent.... in that order. We don't charge for ordinary wear and tear. We refund to the tenant any amount of the security deposit remaining or bill them for any additional they owe. We don't use it to cover routine maintenance and repair. We also don't use it prematurely and we make sure the tenant understands that it is not available to them to use for last month's rent, utilities or anything else they seem to think of when they say... "just take it out of the security deposit."
Hope this helps! Also, the book "Landlording" written by Leigh Robinson is a great book for do-it-yourself landlords. I highly recommend it. Now in it's eleventh edition, but you can get the ninth & tenth editions on sale and they are still fine to use... a very comprehensive resource. It was my first book on the topic and is still my favorite!
Wow guys thank you very very much. This is a ton of great info!