Looking for the must haves when Creating Landlord policies.

[Nick Doria]

Working on creating my policies for becoming a landlord in Chicago, IL before i buy my first building because of the highly ambitious goal of having 1000 rental units by the time I'm 40 (which will be in 13 years from now) i understand the fact that i will need to have multiple systems and processes in place to be able to expand at this level.  I have been reading Brandon Turner's book on managing rental properties to help me gain some insights to what are the bread and butter things i should have in my policies. 

I have some questions that i would like to see how they would directly apply to the chicago market: 

1.) How do you deal with section 8 tenants-  If you don't accept them when they apply what's your method as a protected class i would want to avoid any possible discrimination but i also don't want any unqualified tenant that won't meet the minimum requirements set for approval. 

2.) Would $50 per screening of background and credit checks? I have seen some higher and lower charges as an leasing agent in the city but i want to be reasonable. 

3.) Accepting pets- do you charge just a deposit or do you also charge pet rent as well? what have been your experiences pros and cons of allowing pets? If you don't allow pets could you give some insight on why?

4.) Creating a lease- i will be working with a real estate attorney but what are some things that you wish you would have had in your looking back after being in the business for a while? 

5.) Things that you wish you would have known when first starting off as a landlord that would have saved you a lot of money and time? 

Thank you all for taking the time to read this and looking forward to hearing from everybody.

[Dana Dunford]

@Nick Doria - I love your ambition to own 1,000 units and I have confidence that you can do it (you're going the correct route by asking such questions). Here are my responses. 

• Section 8 Tenants: 
  • In CA, you can legally write "no Section 8" in your CL ads, and it's not considered discrimination. I believe it's the same for other states, but you'll want to check regulations.
  • I did a lot of research on Section 8 when we were considering them for our units. Here are some comments (incl. my own) from another BP post.
• Screening Fee
  • It's illegal to charge over $42.41 for screening in CA. Other states have regulations on the max you can charge as well. They don't want landlords to be taking advantage of tenants.
  • I agree that you should charge enough to cover your costs, as the most costly expense is a bad tenant. However, most likely, you con't cover your costs because calling past landlords / employers (30 mins of time) is already $42. So it's a balance.
• Pets
  • It depends on the unit, size of pet, etc.. For nicer units with white carpets and expensive materials, you may want to not allow pets. For hardwood floor unit in a less desirable neighborhood, it may allow you to get increased demand. 
  • I typically don't call it a pet deposit. I just call it part of the overall security deposit. Because, at the end of the day, it's illegal to hold onto that money ... it's just part of the amount held in case the property is not brought back to its original state minus normal wear and tear.
• Creating a Lease
  • Make sure your attorney is a real estate attorney, who knows residential rentals. There's a big difference between an attorney and one who knows how to write a state-specific contract for you.
• Other Items
  • Vacancy is better than a bad tenant. If a tenant doesn't fit your qualifications but is the only one to apply, don't accept.

Good luck