Our First Multi-Family

[Marty Summers]

Well at 47 years young we have entered into a purchase agreement to by a 4500 Square foot duplex.  Value of building is 250K and we are purchasing it for 227K.  One side rents for 1295 and the other will rent for 1395 because it's just nicer but same size.  We are putting 70K down into this with our own money and we will cash flow 2000 Gross per month after the loan payment.

So in a month from now, my wife and I will be officially be landlords.  I want any advice anyone can give us here.  It's a big step.

Small Items I have been contemplating:

1.) We have a LLC set up and will be setting up a business checking account this week. Do you have tenants send a check directly to your home or should I open a PO box?

2.) If a tenant is ready to move out and I need to keep some of their security deposit (let's say I asked them not to paint or hang wall-paper and they did). Do you wait until they are fully moved out before you give them what you think is right?

3.) When a tenant moves out, do I put the water and electric in my name each time they come and go when it's vacant?  How does that work?

4.) Since we have this under an LLC, do my wife and I introduce ourselves as the landlord owners to the tenants?

5.) When vetting out new tenants, can I decline anyone I feel is not going to qualify?  How do you tell them they did not qualify?

6.) If a renter does not pay on time, how do you deal with overage charge fees?  My feeling is if they do not pay overage charges, I will subtract it from their security deposit?

Thank you all!!

-Marty

[Dominic R.]

My best advice is to search your state's website for your responsibilities. Most states have some sort of guideline for landlords.

1. Either will work.  Never thought of a P.O. box but it is a good idea since I have tenants surprise me at my house to drop off a check with no notice.

2. In CT we must provide the tenant a Security Accounting Statement with in 30 days with the whole or partial deposit including interest.  Explaining any charges. If not they can sue for double the deposit.

3. The utilities will control how you handle it. Here they just transfer them to my LLC with a phone call. If the tenant moves and a new one moves in within a billing cycle they transfer directly. We just make sure the tenant leaving is current before returning the deposit.

4. You are the Managing Members of the LLC. I do introduce myself as the landlord but I use the title on all correspondence to make sure that I treated as a business corporation.

5. If they don't qualify they don't qualify.  You don't have to rent out to just anyone.  We do credit and background checks on everyone.

6. we charge a late fee if paying past the 10th of the month.  We bill them direct as a incentive to pay on time.  If you have to after the fees that is one of the things to include in the Security accounting Statement.

Most important is to make sure you are compliant to your states regulations.  I have made many mistakes out of ignorance luckily none have come back to bite me.

Best of luck