When you are a landlord, you need to rent to good people. Screening tenants for your rental property will be the key to your success. The tenant can be of any race, religion, nation origin, etc. Screening tenants will determine the experience that you will have and how much money you have the potential to make regardless of any protected class. After all, making money is the goal of a landlord. Providing housing, is secondary.
I would say that almost all people with a credit score of 625+, and a household income of $45K a year with a rent of ~$1,125, with a minimal criminal background and a clean rental history will make for a decent tenant. Of course, a decent deposit will also be necessary.
Here are a few instances I recently came across with screening tenants, that shows what a landlord is up against in regards to tenant screening.
A few posts ago, right about last year, I wrote about my plan to pay off rental mortgage debt. I had laid out several of my options, and I ignored all of them. Instead, I continued to pay my regular payment, bought a new rental and paid cash for it, and paid extra on my current mortgage that is targeted to be paid off next. If I would have skipped the new rental, and put that money on the rental mortgage, I would almost have this rental mortgage debt paid off. Instead, I have that money as a 15%+ income producing asset.
There are many reasons to pay off rental mortgage debt, those reasons are all against the many pundit’s advice to stay leveraged. Here are my own personal reasons and what I have accomplished in the past twelve months.
I get asked quite a bit whether a real estate investor should buy out of state rental properties. When you do not live in the same state, or even within a few miles of your rentals property, things can get very complicated. You have to learn how to manage out of state rental property, or learn how to manage them when you are out of state.
How do you turn and show a property? How do you check to see of a simple repair is needed? Can you just flip a circuit breaker, or do you need to call in a electrician?
My rentals are all within about 10 miles of my own home, most are within 3 miles. Now that I no longer have a full-time job, I do not want to be tied to my home base. There are business meetings, and conventions in out of state areas that I may want to attend. I may want to set up an off-site corporate meeting for my own company, and yet still manage the properties myself.
Here is a recent example of how I handled several repairs while I was on a trip to Branson, MO. Continue reading
That’s right, I quit my job to be a landlord. Are you prepared to give up your job and be financially independent?
It takes more than just a vision of what it is like to be financially independent. For me, I was planning on this for several years. And when you have a goal in mind, you shoot for the goal. The problem comes when the goal is near at hand, sort of like when a dog is chasing a car. Pretty soon, you catch the car.
So here is what went through my mind in deciding the day, how the time went by, and what I gave up.
A garage door needs a garage door spring, either a torsion or an extension spring, to help you lift the weight of the garage door. Even the most heavy-duty garage door opener cannot match the lightest garage door and power the door up to the top to allow you to get out of the garage.
When a garage door spring breaks, you are stuck either in, or out of, your garage. You can pull the manual door release, but you are still obligated to lift a garage door that could be as much as 300+ pounds. It is no small task, and a renter doesn’t want to do it. Nor should they have to. And they may need to get their car out of the garage to go to work, to get you your rent.
I recently had to replace a garage door spring in two different units recently, here is what I was able to do.
I get asked all the time by potential real estate investors how much they should invest in a rental. They do not want to be a line item on the “Why Real Estate Investors Fail” sheet. Some want to take a 401K loan out. Some want to bypass their 401K contributions to save money for real estate investment. For some reason, saving money seems to be difficult for many potential investors.
I say, do not do anything that may run you short of capital for your own life. Make sure your own life is secure, before you risk it all.
Here are some thoughts that I have written down.
One of the ways I am able to turn an apartment so fast, is the way I have my painting method set up. I know how to paint a rental property, and paint it efficiently and fast. When I first started with my rental properties, I hated painting. I hired a guy to paint for $20 an hour, and it would take him a week to paint. I now paint an entire apartment, in about 16 hours, including the trim. Often even less.
If you are afraid of painting, or just do not like it, fear not. It is not that hard. Here are some tips for landlords, and even home owners, to help make the job easier.
Here is how I am able to do it quickly and efficiently.
I did not start off as a rich kid, far from it. You could say I started in poverty. As a kid growing up, my mother and father were divorced when I was seven. That was in 1967 or so, and women in the US were just starting to begin working careers. Few women at that time worked outside the home. Divorcees could be discriminated against, and credit could be denied to divorcees. It was not an easy life for a single mom.
So how did I wind up being financially independent?
I am in the middle of a somewhat major remodel on a rental property. It will require a few thousand dollars to get it back in shape. The renter was not too bad, and they lived there for over six years. They had good income, always paid on time, and left with proper notice. Unfortunately, they were big-time slobs.
Although I was not able to show the unit while they were in there, as it was a bit messy, I was able to rent it for June 1st. I rented it at a price $100 more to tenants without a pet, than the previous tenants rent that included a $25 pet fee.
Here is what I am doing to the property to turn it and prepare for future rentals.
A few months ago, I wrote a piece about another investment property purchase I was considering. If you want to make money as a landlord in real estate, you must be able to purchase rental property at a discount. As it turned out, that property never materialized, probably for the best. I was going to be a partner on a $1.4M property, put up $100K+, and be a partner on a $1M loan. I did not want to get stuck on a large loan, with limited mechanisms to get out.
As it turns out, all good things come to those who wait. Here is a recap of my recent investment property purchase. Remember, if you buy via the MLS, you are probably paying too much.