@Blender wrote:
Bought a 2nd home recently, expected close is early Nov. This is our first rental home and we're not yet married. Looking for long term renters. It will be in both of our names and we aren't putting it into an LLC. However, I'd like to open a business checking and refer P2 to open a business card to keep finances separate and for the SUBs.
I'm a reader and have been taking in as much as I can. I know I will have questions but figured I'd make this thread and like individuals can chime in with advice or suggestions, programs/apps you use for bookkeeping, etc
Where to begin with an official rental contract? Do I need a lawyer for this process at all?
Hope to get some responses from the community here
From the "renter" side, I'd say that as long as you don't get "unreasonable" people, try going easy on them if they're not in there tearing the place up or not paying their rent.
Screen your tenants well and you'll save so much money having to hire an attorney to evict them. One eviction can cost you over $2,000 for an attorney, plus all the rent that piles up that you'll probably never get even if you get the sheriff to remove them.
I would say no felonies or violent misdemeanors to the extent allowed by landlord-tenant laws, no vicious dogs, no evictions, reasonably stable employment prospects, and income at least 2.8x the rent. Credit scores are less important than all of this stuff. Some landlords go by credit score alone, but this can cause you to miss out on good tenants that have never had a problem with a landlord and got thrown into bankruptcy by a hospital bill or a lousy ex that they're not even involved with now. (Let's face it, random misfortune happens.)
I'd pay more attention to how they're managing their finances recently (past 6-12 months) and I would place more emphasis on if they have a severe debt load than what their credit score is.
Many landlords unfortunately seem to see tenants as their own personal ATM. The trend lately is making huge unjustifiable rent increases and not caring if units go empty to get them, which is just dumb. They have some "rent software" telling them to have unoccupied units and to raise the rent so high that they have unstable tenancies because "You'll make more in the long run.", but the problem is you won't. Eventually you have to have your lawyer on the phone dealing with tenants who aren't paying all the time, and a third of your units are empty and not generating any revenue, sometimes for 7 or 8 months. This is how our new landlord, who bought the building a couple years ago, treats people.
He sells a book on Amazon about how to be a successful landlord, while his building that he paid 3 times too much for is falling over into the street. People are not experts in their field just because they wrote a book.
Realize that being a landlord means risk and work. Not just sitting there waiting for money. There are so many ways it can go wrong that people aren't thinking about. My landlord left all of us without flush toilets for a week and thought he'd go off to India and ignore us, I ended up calling the city and he scrambled, from India, to get someone to fix the toilets when the city started fining him $500 a day.
He was renovating units and evicting people by throwing all their garbage into the back yard until I sent pictures to the city, which threatened to fine him, and he ended up here at 1 AM (he lives two hours away) personally throwing garbage into the back of his pickup truck and taking it somewhere.
I mean, not all landlords are lazy, incompetent, and crooks, but a terrifying amount of them are. As a renter I can say if you find a good one, you've struck paydirt because 9 out of 10 of them are more like the one we have now.
Or the one in Chicago that let herself in without warning to everyone's apartments when there was no emergency going on. (That's not the only problem I had from her.)
Basically "Don't be a jerk." and screen your tenants and this will go a lot better for you.
A note on eviction records:
My cousin has an eviction on her record and it was preventing her from finding another apartment, but the state has a law where if you pay the landlord what you owed them from the eviction proceeding, you're eligible to have the eviction removed from the public record. When I told her that, she still didn't bother doing it and now she's living with her sister. It's not that she didn't have the money. She still goes on lots of expensive vacations to Disney World and Virginia Beach, and has an eviction record.
People who do the right thing have an easier time with their life, even if they do the right thing "eventually". If a tenant isn't malicious, they probably won't have an eviction on their record. If you're living like a legitimate citizen then you have an easier life.
