Some other thoughts on renting houses

JD Seller

Well-known Member
I do not want to jump Greg's post below. so here goes. I think that too many landlords create their own problems when renting. What I mean by that is that they do too little before renting. If you as work hard at finding good tenants as you do repairing destroyed homes then you will be better off. Many of you are writing about how you spent days/weeks repairing the house after a bad renter, how long did you look for a "good" tenant???? I bet not that long.

To those renters that do not want to fill out an application or allow a credit report to be ran, move on and find some other sucker. Not wanting to do either of these things tells me right off the bat that they are hiding some thing that would make me not want them anyway.

There are much worse things than a house setting empty for a while. Try doing things differently and see if you get better tenants.

If your in an area that has low rents and low priced house then sell an get out of that market. There is no money there to be made. You can't get blood from a turnip. Renting to low income people is a fool's errand. They do not have the financial capacity to hardly pay rent let alone pay for any damages. So your asking for trouble renting to them to start with.

It is kind of like selling equipment. You sell junk and you will have hard time making money and are always dealing with people that are unhappy with the deals/equipment. IF you sell better quality equipment of any brand, you will be able to make better money with fewer problems.

So here is what many of you need to do before renting to anyone. Check references, do a credit report, verify income, get first month and last month rent PLUS a security deposit and then do not allow any wavering on late rental payment. If you do these things or even most of them you will have better luck renting.

The days of walking a person through the rental and shaking hands based on a "feeling" are long gone. Research and verify just like you would buying your herd bull. LOL (I was going to say picking your wife but I then remembered what really "picked" most of them out) LOL
 
JD, You must be a landlord too. I've been one for 46 years. No section 8, no low income for me. The more you change the better the tenants. You have to have nice place too. My lawyer charges me $10 to run them through Fox pop. Do criminal check, proof of income. Lawyer approved my contracts.
 
Sounds great but for more than a few there is no getting around low income renters. People with good incomes usually buy and own their homes. Where I live the economy has been dying a slow death for decades so fewer people have more than a minimum wage or government benefit to live on. Even in Rochester or Buffalo it is pretty much the same deal so landlording from a distance does not work. If I wanted to get into renting houses I would have to find a market hundreds of miles away where people have good incomes but for various reasons do not want to own a home there.
 
i used to be a landlord. Thank The Lord, I never had a bad renter. My process was all utilities in renters name, first months rent and security deposit (equal to one months rent) all up front. If you didnt have around $12-1500 on hand, you couldnt move into my house. Fix it nice enough that I would live in it and raise the rent. These conditions did most of my screening for me. I told them id rather my house set empty than be torn up. If they wanted to work for the deposit or pay by the week, keep on looking. I know the less fortunant need a place to live too my experience has shown me that most peoples condition are of their own doing.
 
JD, in general I agree with what you say. But the fact of the matter is that renters are renters for a reason, usually because they can't handle money or take care of business. We have been fortunate enough on occasion to get renters who were renting because they chose to, for the most part you have to take least bad of the worst. That means ALL the applicants have bad credit, making a credit check a waste of time and money. Likewise, most of them have other problems that are not always obvious when you're screening applicants.

We have three properties in middle-class suburbs of Detroit. And we have one in the fine city of Pontiac. The Pontiac house is more aggravation than the other three combined, and we would like to get rid of it, but doing so would entail a big loss. So we press on, hoping the next tenant will be better than the last. The house has a very good cash flow when it's rented, but if you have to evict a tenant it takes a long time to make up the lost cash flow. The pool of prospective tenants in Pontiac includes people who WANT to live there, and people who HAVE to live there. Neither kind are the sort of folks you want as tenants. So we show the house to fifty or sixty prospects, about twenty of whom fill out applications. From there, we get to pick between the convicted felons, deadbeats, welfare moms, and other assorted individuals who want desperately to rent a decent house in an OK neighborhood in one of the poorest and most dangerous cities in America.
 
Geo-TH,In: Yes my wife and I do own rental property. I learned what not to do from my Grand Father. He was a great man and farmer but a terrible landlord. He ran his rental house like you would an old mule. Feeding it little and wanting the sky out of it. LOL He would do few repairs and then would just lower the rent to get some one to rent it. HE was always getting beat out of rent. He really asked for and deserved it most of the time. When you lay with dogs don't be surprised by fleas. LOL

I bought my Great Aunts' houses when they went into nursing homes. That would be back in 1989-1990. I fixed both houses up and charged a good rent. I still have yet to do anything other than normal maintenance on those two houses. None of the torn up houses by dead beat renters.

I guess I am living in an area that there are good renters to be found. This area is slowly growing. If your in many states in the rust belt your screwed on finding good renters. People with good incomes are leaving in droves due to taxes and poor local job markets.
 
All that is good yet obvious advice any renter should know or I as an attorney might advise, but unfortunately in some locations there may not be ANY such suitable tenants lol as if they have money and are of good character and ethical (like you would want in a tenant) then they dont need to rent in the first place. But letting it set (if the landlord chooses or can afford) can be better then letting a bad tenant trash it. Also unfortunately, in some locations some abundant progressive activist do gooder attorney is waiting to scream DISCRIMINATION and haul the landlord into court and expensive litigation if you dare refuse rent to their client grrrrrrrrrrrrrrrrrrrrrr Being a landlord in todays litigious society in SOME (NOT all) can be a real hassle.

Oh well, if it were easy everyone would be doing it. Theres no free lunch and no easy run in business

John T Country Lawyer
 
JohnT Your correct in that you can be sued. That is why you have to have a approval process. If you apply income and credit scores evenly to everyone that applies your pretty well set against any suit. I play by the numbers. Income and then credit score after checked references. I had a white couple madder than heck at me a few years ago when I rented the one house to a bi-racial couple. The bi-racial couple had a much better credit score and income level. I do not see color in these cases. I can and do see financial worthiness.

A better idea than renting if your in a lower income area is buying and selling the cheaper houses. The repairs needed are similar to what you do when fixing a trashed rental house. Then sell it and buy another. Even then I am not sure you can make money in a local depressed housing market.
 
I agree with everything you said. Renting has to be a win-win for both parties - when you find a good tenant, treat them like a valued customer.
 
Geo,I will have to disagree somewhat with you and JD Seller.In our local area,the higher the rent houses will have more maintenance,damage problems then modest priced homes.There are people with 75-100-$150,000 incomes that will never own a home,because they are never happy in staying in any one place and do not want to put up with maint.-taxes and what ever.(same as some farmers that won't own any land)Plus most landlords will not give a bad report on a renter, so they can get rid of them.In over 60 yrs.we never got stuck on rent until a few yrs.ago ($8000 in bad checks,which I won't get into,but the sheriff used to it get them out.The other one was MESSEY Divorce and children services wouldn't the court or us get them evicted for 9 months of no rent being paid.)But in both cases the houses were left in near perfect shape.The only people making the good money seem tobe what you might call slumlords,who plan on replacing things and repainting each time.
 
One of the happier days of my life was when I sold a farmhouse I used to rent out.

The best renter I ever had was a young divorced man and a fellow Marine. He was employed by a financial holding company and spent at least all week, and sometimes two weeks, on the road at a time on company business. Always on time with the rent. He had three small children and he had those on weekends when he was home, but he was a good father. Played outdoors with the kids, cooked good meals for them, etc. Kept the place cleaned up. If he ever drank, it wasn't while he was at home. We had a cordial agreement that I could check the house every few days when he was gone, especially in winter.

After several years, his company offered him a promotion to a Vice Presidency of a facility in Colorado, and he couldn't pass it up. He'd grown up on a farm, and he hated to leave as much as I hated to see him go. But, renters like that are few and far between.
 
Last house I had for rent was old place on small farm adjacent to main farm. Single lady just begged to rent as it was quaint, isolated. Just what she wanted. After a year or so she lost job and got 2 months behind (on rent lol). I had small field wanted in beans then wheat in fall and back to pasture. Started planting on far side from house. After 3 or 4 rounds she came out, placed blanket on grass at end of field. Removed most clothes. As I planted closer to her top came off then bottom. I continued planting , however the rows did get a bit crooked. When I got to the round where tractor was headed straight for her she stood up walked to tractor and asked if we could go in house and DISCUSS the back rent.She did move out couple months later still not paid up.
 
I rented out a farm house on the second farm we bought (1982) for about half of the 17 years before selling the farmstead. Half good renters, half bad. Couple of them stayed 3 years apiece. Some couldn"t finish the school year- cut off by power company. Worst "applicant"- told me he wanted to rent a house in the country cuz you couldn"t be rough with a house in town. Told him I"d have to check his references....still haven"t gotten around to that! TG the third farm we bought was bare land.
 
"That is why you have to have a approval process. If you apply income and credit scores evenly to everyone that applies your pretty well set against any suit"

VERY GOOD PLAN Good evidence and a paper trail of past approvals and a track record of approvals and disapprovals and unbiased reasons why with FAIR AND EQUAL treatment regardless of race or creed or ethnicity or nowadays ****** orientation provides an excellent defense against claims of discrimination. If landlords used your wise methods and policies they would have less worries. I see so many landlords that dont really have such a plan or policy in place and those are the ones who get themselves in trouble. Still with Civil Libbers lurking out there it could get expensive to defend against questionable claims which are just above the threshold of frivolous grrrrrrrrrrrrrrrrrrrrrr

Happy Thanksgiving to you and yours

John T
 
(quoted from post at 11:35:19 11/22/15) JD, in general I agree with what you say. But the fact of the matter is that renters are renters for a reason, usually because they can't handle money or take care of business. We have been fortunate enough on occasion to get renters who were renting because they chose to, for the most part you have to take least bad of the worst. That means ALL the applicants have bad credit, making a credit check a waste of time and money. Likewise, most of them have other problems that are not always obvious when you're screening applicants.

We have three properties in middle-class suburbs of Detroit. And we have one in the fine city of Pontiac. The Pontiac house is more aggravation than the other three combined, and we would like to get rid of it, but doing so would entail a big loss. So we press on, hoping the next tenant will be better than the last. The house has a very good cash flow when it's rented, but if you have to evict a tenant it takes a long time to make up the lost cash flow. The pool of prospective tenants in Pontiac includes people who WANT to live there, and people who HAVE to live there. Neither kind are the sort of folks you want as tenants. So we show the house to fifty or sixty prospects, about twenty of whom fill out applications. From there, we get to pick between the convicted felons, deadbeats, welfare moms, and other assorted individuals who want desperately to rent a decent house in an OK neighborhood in one of the poorest and most dangerous cities in America.

I am surprised that you can make any money renting, especially paying non homestead taxes on rental property. I know out here in Howell township, the taxes and water bill are really high. My 401K & IRA accounts have done much better than our rental property. And much more liquid.

I think Michigan has a simple problem - no growth. Or very little growth. To get a customer in any business here, you have to take them away from another business. I agree with you, renters all have issues.
 
Here in Michigan we have pretty good landlord/tenant laws. My wife worked for the attorney who helped write them when he became a district judge. I have a number of tax clients who rent numerous houses. In Michigan you can send a tenant a 7 day or a 30 day notice. 7 day are for people who have not paid rent and they can ante up with the rent and then are entitled to stay unless you also sent them the 30 day notice. With a 30 day notice you do not need a reason, they are evicted. You can just evict them or you can ask for a money judgement also. Collection on the judgement is going to get handled the same as any other court judgement. You can get your money if you can find it, but that is why you get a security deposit and first and last months rent in advance. You protect yourself and your property by getting a credit report, checking at the courthouse for eviction history, and getting references from prior landlords. It is important to follow up on all references before you turn over the house. The fact that someone wants to rent instead of own does not make them disreputable. Some people simply prefer to rent even though they could easily get a mortgage and buy a home. I do not have a lot of sympathy for landlords who do not do their homework up front and check references. I have a house I will be renting in the Spring. I am not a registered charity and don't care about hard luck stories. They will provide deposits, references, etc or they will move on down the road.
 
(quoted from post at 15:09:29 11/22/15) Here in Michigan we have pretty good landlord/tenant laws. My wife worked for the attorney who helped write them when he became a district judge. I have a number of tax clients who rent numerous houses. In Michigan you can send a tenant a 7 day or a 30 day notice. 7 day are for people who have not paid rent and they can ante up with the rent and then are entitled to stay unless you also sent them the 30 day notice. With a 30 day notice you do not need a reason, they are evicted. You can just evict them or you can ask for a money judgement also. Collection on the judgement is going to get handled the same as any other court judgement. You can get your money if you can find it, but that is why you get a security deposit and first and last months rent in advance. You protect yourself and your property by getting a credit report, checking at the courthouse for eviction history, and getting references from prior landlords. It is important to follow up on all references before you turn over the house. The fact that someone wants to rent instead of own does not make them disreputable. Some people simply prefer to rent even though they could easily get a mortgage and buy a home. I do not have a lot of sympathy for landlords who do not do their homework up front and check references. I have a house I will be renting in the Spring. I am not a registered charity and don't care about hard luck stories. They will provide deposits, references, etc or they will move on down the road.

Our tenant was good for about 2 years. Then she lost her job with IBM, after 25 years there. She moved out before she got too far behind, so it wasn't bad. I have turned down 2 prospects so far, they just didn't have the money to start with, so I figured they were never going to get caught up. I am asking 1st and last month's rent up front. If they can't do that, I am not interested. Also I want to see proof of employment. Credit checks? Lots of folks have bad credit. If they have the money and viable job, I am willing to do business. Unless the house is in a area that is appreciating in value, I can't see renting houses in Michigan being a good investment, between taxes and maintenance.
 

Just as a observation, my wife and her girlfriend walked the Tanger outlet mall last week. She said she was surprised at how many vacant units they have. Maybe Amazon is killing them? Or just too much competition overall?
 
Mark I have to disagree with you on part of your post. I became a renter because I had no other choice. My wife had some very large medical bills. After she died I was fired for not selling enough new stuff.I had a bad habit of fixing the old when I could. Saving the customer money.So I lost my job,lost my house and had to move.

Moved in with mom for a few months. Then a local ranch had a place open. Took a chance on me since they knew my family. That was in 2009. Now they wish they could find more renters like me.Not all of us are bad. But I have seen some I wouldn't rent a dog house to.
 
Billy, as I said, most renters are renters for a reason. Now it may well be for reasons mostly outside their control. For instance, we rented to a very nice couple who purchased a home with a balloon mortgage, then got hit with a double-whammy in 2008: Their balloon came due right when the housing market crashed, and he lost his job when the auto parts supplier he worked for went bankrupt. So they did the best they could, which was to walk away from their home and rent. Two years later they were back on their feet and bought another place.

I'm not going to pry into the particulars of your situation; it seems quite sad. But a significant percentage of our applicants will tell us up front that they have bad credit and/or a bankruptcy due to medical bills. I don't know how to distinguish those whose financial problems are a simple case of misfortune and those for whom unpaid medical bills is just one symptom of a larger problem. Sometimes we believe the applicant's story and they turn out to be good tenants. Other times they turn out to be terrible renters. And I'm sure we've turned away applicants who would have been good tenants. You never really know until after they move in.
 
We rented for 19 years before we bought this house. Georgia, Newfoundland, Massachusetts, and Minn. Never left owing a dime. I was fully employed all the time except for about 5 weeks it took to find a job when I got out of the Army. Didn't qualify for GI loan because in Army at the wrong time. If I would have had to pay two months rent up front, we would have been on the street if it hadn't been for our folks.. Last house I rented, we were assured we would have first chance to buy if owner decided to sell. Ya, right, first bid is what it meant. Other house I gave full month notice after 5 years living there, left my heating stove because it was still winter. When I came back in spring to get the stove landlord complains stove burns a lot of fuel. I guess if I would have required my girl friend, now wife, to have a complete physical exam I would have known she would have to have caecerean to have babies. When ever we had two nickels to rub together extra, we just gave it to the hosp or clinic. Now, would I rent my house out? No way, I think I would burn it down first.
 
Some times you win something you lose. Learn from 46 years of experience I've won more than I've lost. I refuse to be a slum Lord. How many have had the same tenant for 18 years? It wouldn't take me 9 months to get rid of a dead beat. 40 days late and formal eviction papers are filed with court.
 
Sad thing is Mark.In today's world you never know who to trust. Nice clean looking couple could be the worst renters in history. The ones that look like bums could be the best.

A little story.Years ago there was a man in Dallas that went into the Rolls Royce dealer to look at the new cars.They called the cops because he looked like a bum. One of the cops that showed up knew him. Told the dealership they might want to call his bank. Before they throw him out.Four hours later two new Rolls were on the way to his house.The guy was worth over eighty million dollars. Sometimes you just never know.
 
Geo,We had the court filings and all,(sheriff vists-notices)but children services judges overruled everything the other court said because of joint care and welfare of 3 kids under 8.Other then money lost,everything came out fine(no damages-repairs needed).
 

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