Where to Start?

[Charmaine Alard]

My long term tenant (a family friend) is moving out and I am concerned how to make sure I pre-screen future tenants effectively without violating any laws. 

background: this property used to be my primary home and had a very informal agreement with a family friend to rent from me in the mean time. But she is moving and I will have to learn the ins and outs of being a LL. I am terrified as this is so new to me. 

What is one of the biggest mistakes a LL makes when prescreening? 

If I don’t want to use a PM company, what websites can I use to prescreen a prospective tenant? 

Where can I learn about as a first time LL? 

[Nathan Gesner]

You should consider a professional manager. They seem expensive, but they can probably demand a higher rent rate that will cover their costs. You could make the same amount of money (or more) without the time, stress, or energy required as a DIY Landlord.

If you do decide to manage yourself, you need a quick education. How do you determine the market rent rate? How will you advertise, show, and screen applications? Do you have a strong lease that you understand and can enforce? How will you handle the 1,017 problems that come with managing a real estate investment?

I would first look at a proven company like RentWerx, then compare them to a few others and see which one works best for you.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Try interviewing at least three managers.

1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!