First Time Landlord Questions

[Marie Rufty]

Hello!

My husband and I are about to be first-time landlords and couldn't be more excited. We just bought our second townhome (we close in 10 days!) and plan to keep and rent out the townhome that we have lived in for about seven years now. Our rental has now been listed on Zillow, Apartments.com, Craigslist, and Facebook marketplace for about three weeks. We are confident that we will eventually find good tenants and there has been a lot of interest but only a handful have completed the application process. The quality of applicants hasn't been great so far so we have started to consider short-term rentals through Airbnb and Furnished finders. What advice do you have for us? Here are some specific areas that we would love your perspective on:

-What is the best way to accept money (application fee, deposit to hold, security deposit, etc.) from applicants if our business accounts are not set up yet?

-What types of expenses are associated with Airbnb that we may not have considered? 

-What do you think about short-term vs. long-term rentals? (our property is located in Charlotte, NC between Pineville and Ballantyne)

-What types of insurance policies are mandatory and what are nice to have?

-Major legal considerations?

-What were your biggest challenges with your first rental property?

-What mistakes do you remember making on your first rental property?

Thanks so much in advance for your advice/feedback/experiences!

Marie Rufty
 

[Colleen Goldstein]

@Marie Rufty

Congrats on taking the first step and diving in! Charlotte is an awesome market, happy to be a resource for you on the journey.

- Deposits - I don't do application fees. I pre screen and only do background credit once I have selected them as the tenant. Cuts out the headache and having to meet a ton of people IMO. Business account is good but fine to deposit in any account UNLESS you are an LLC. Then comingling funds is a big No No and definitely set that up before depositing anything.

- I do long terms in Charlotte but have a short term in the mountains. Short term is a lot more work, overhead expense, and volatility. You are subject to HOA (be careful here), town regulation, and neighbors. It is a job in itself and hospitality which is a different skill set. Long term rental is up front work on the screening but more set/forget/ad hoc than managing a hospitality business. Less expense as well as you're not supplying consumables, paying cleaning, paying for broken furniture glasses, etc.

- Rental policy is required. Umbrella is nice to have. With only one property, it depends what else you have to insulate from it in case of liability. Can't hurt to have umbrella, state farm has good rates and if it makes you sleep better it's well worth it IMO. If you're an LLC others choose that instead of an umbrella sometimes depending on risk aversion and assets.

- Use a standard real estate lease, follow fair housing laws. A better question is what clauses should you add to standard lease. I would have a inhabitable clause that terminates lease.

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