When I bought my quadruplex it was fully rented and I moved into the unit with the first expiring lease. It also happened to be the worst of all the units. It was the stuff you hear about - piles of dust, trash, and covered in yellow cigarette smoke residue. Lucky me..
My plan was to fix it up as I lived in it. Naturally, I was taking my time when a tenant let me know she was moving out and I now had to rent out the unit. So, how do you do that?
Just some quick information that you may be curious to know.
Where I Posted?
I used Craigslist and Zillow and found I was only getting leads through Zillow which also sends out information to websites like hotpads. When I posted my second unit, because I moved into deal #3, I didn't even bother with Craigslist.
Doing A Background Check
I used TransUnion SmartMove for the background and credit check. They provide you with an assessment of the applicant and all the information needed. I found it really easy to use since all I had to do was create an account and email the prospective tenant to be able to pay the applicant fee, which was $40.
The Big Take Aways
1. Make sure the rehab is completed.
This is obvious, but I was in the middle of redoing the counters and the applicants were not impressed. Naturally they wanted to see the project be complete before signing a lease. I also think because it is in a C neighborhood there is some distrust toward landlords.
2. Empty units may show better.
Since the plan was to move out of my completed unit into the soon to be vacant one I was showing mine. I felt people didn't like seeing the unit with stuff in it and it might have made an already small unit look smaller.
Because I was acting as the property manager that added a layer of sketchiness. I had one person ask if I was a legitimate business and this wasn't just a scam- apparently that happened to them before.
When the tenant eventually moved out I realized her unit wasn’t that bad and quickly painted, put in new floors, and changed the vanity. The next person that came by I showed both units and he took the empty one.
3. Section 8 Isn't For Me
I had a couple people ask whether I took a housing voucher. Being new to this I said 'yes' and then began to learn more about the program. There are different programs that I briefly learned about.
One, which is Section 8, requires the tenant to pay 30% of their income and the program would pay the remainder. What I kept running into was I felt the remaining income was never enough to meet my requirements.
Let’s say the tenant made $1000 a month. They would pay $333 for rent and would have $667 left. I just never got comfortable with that when you factor in things like phone, gas, electric, etc. Not to mention what would happen if they lost the voucher. Some people do Section 8 houses and love the guaranteed money from the government but I never got comfortable with it.
There is another kind of voucher for people with Severe Mental Illness (SMI) that if you are determined to be SMI and truly homeless (live in a shelter, not couch surfing) they will cover rent up to a certain amount. There is no income requirement for this, which again, would make me nervous.
4. Pet Fee
When renting out a unit you'll have to decide whether you will allow pets or not. For me, I do. The units I have aren't the nicest and have either tile or a hardwood laminate flooring.
What is common is for people to charge a pet fee, I do $25 per pet, but instead of adding that as a separate expense I wrap it into the price of the rent. I should know this, and assume since the lease is a contract for a year, the pet fee would last for the whole lease. But, I don't know how it would work if the pet passed away or they got rid of it and whether they would still have to pay.
To ease that confusion for me, and the tenant, I make them sign a pet addendum and wrap the pet fee into the price of the lease.
5. Timing Matters
I had heard certain times are better to rent units compared to others and didn't fully believe it. I rented my first unit in April and received 25% more inquiries compared to August. They both had the same amount of people making contacts the last week of the month but when the weather is not over 105 degrees I had a larger applicant pool. Moving forward I will try and work to not have leases expire in the hotter summer months!
6. Deposit To Hold
This is also an obvious one but I was not sure exactly what I should do. I had a couple that were wanting to rent out my unit but they made that decision on the 20th and wanted to move in on the 1st. Since they wanted to move in and passed all the background checks I didn't know whether to have them sign a lease, just trust that they would move in or what were the next steps.
I had them sign and put down a non refundable deposit to hold the unit that turned into a security deposit if they moved in. It was pretty easy to complete!
I'm sure there were more things I learned but it is actually pretty easy. I did showings back to back so that if no one showed someone was scheduled next. I did it this way since the unit was like 500 square feet and if I did multiple people at the same time there just wouldn't be enough space. You have to do a background check and I always called their places of employment and checked pay stubs. If you have any other questions don't hesitate to reach out!
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HELLO AND WELCOME!
I'm Jake, a dude interested in personal finance and travel creating the life I choose.
In 5 years I went from living in a basement with Craigslist roommates to paying off 90k of debt, backpacking 3 continents, getting a house for myself and 5 rental units.
Read my story in the about me section.
All photos on the blog are from my travels
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