Landlord Shmandlord

I saw this link earlier today for apartment hunting tools intended for tenants.

http://mashable.com/2008/07/23/apartment-hunting-tools/ 

As a landlord, it would be very helpful to take advantage of these.  If anybody has any experience with any of the links, from a Landlord’s perspective, please share your thoughts in the comments (also, include your location).

Two of my tenants are moving out at the end of this month, so last week I started advertising in the our local circulation, which I talked about here. So as the calls started coming in and I was doing my initial screen, I realized that I had spoke with this one woman multiple times before. It seems like each time I try to rent an apartment she calls.

She doesn’t sound like a real estate agent or someone in the industry, trying to get dirt on new rental listings. She didn’t ask many questions about the property at all. I get the impression that she is genuinely looking to rent, and I suppose always is.

Anyway, she’s going to drive by the place and visually assesses whether or not she is interested, and if so call me back. I’ll let you know if she does.

I love the innovativeness of Zillow, and especially their new features (mainly Make Me Move).

It will be interesting to see how far they can take this. Can Zillow become a one-stop shop for buying/selling real estate, almost like what ebay did to the used-item market?

IE,

1. I put up a house on Make Me Move.

2. Joe is interested and responds to my offer through Zillow.

3. For a flat fee (a few hundred dollars?) Zillow acts as the coordinator of the sale, similar to what a real estate agent does now. They would verify Joe’s pre-approval and financial eligibility, schedule the inspections and closing, work with the title agent on the title search, etc. Ideally, there would be a very mechanical process that would have build-in provisions to handle the inevitable problems that would arise (ie, house doesn’t pass inspection, buyer can’t get mortgage, house blows up before closing, etc). Again, this is similar to ebay in some ways, in that ebay can handle deal-breaking issues that arise like buyers who don’t pay, items that don’t meet description, etc.

4. The sale goes through. No percentage would be paid, just a flat fee. (Also, Zillow wouldn’t collect their fee until the deal goes through)

I think one of the additional keys will be to open up their listings to other systems. There needs to be an open MLS-type site where I can go, see everything that is available, and initiate a purchase. This listing system must be comprehensive, which is why existing closed systems like MLS must be incorporated.

Obviously there are a lot of logistical issues, but it seems to me that this type of system is doable and that both the buyer and seller would really benefit (cheaper costs, comprehensive listings, standardized process).

When a potential tenant calls, there are several things I do to avoid wasting time. When they first call, they expect the landlord to lead the conversation. I usually start by describing the important details about the property. Make sure you include:

• Location
• Number of bedrooms
• Monthly price, and what’s included. Water, sewer, heat/oil?
• Required amount when they sign the lease. Security deposit? First/last month’s rent?
• Parking situation: Is there a garage? Offstreet parking?
• Date it will be available
• Are pets allowed?
• Requirements: credit check, background check, verifiable job?

The point of the description is to make sure the tenant knows what you’re offering. Very often something in the list will turn them away and this is the end.

Next, they usually either have some additional questions about the property, which you should answer, or they’ll ask to see the place. Before setting up a time to show it, there are a few questions you should ask:

1. Who will be moving in?Make sure that the apartment is an appropriate size for the number of potential tenants.
2. Do you have any pets? What type?Maybe you allow pets, but you don’t allow elephants.
3. When are you looking to move in? What type of lease are you looking for?This is good because often people are not planning to move for longer than you’re willing to wait? Also, the other day this question saved me because a guy wanted to see the place, but it turned out that he was only looking for a three month lease, which I was not interested in.
4. Do you have good credit? Do you have a job? What do you do?These things are important. Are you going to verify that they really have the job?

Now if they made it this far, it’s time to show the property. If you make the appointment a few days out, it is good to call them the morning of to make sure they are still interested (and that they remember).

At the showing, if they are interested and I like them, I usually have them fill out an application and give an application fee. Optionally, you can offer to apply the application fee to the first month’s rent if they’re accepted. The fee pays for the credit and background checks (which are now a mandatory part of the process). Also, the application fee commits them until you sign the actual lease.

I recently found this website, Trembicky.com, which is a site where “tenants can share horror stories about lousy landlords they’ve had”. Viewers email in their horror stories, which are then printed (including the Landlord’s name) on the front page. This is in hopes that would-be tenants can use the site as a resource to avoid renting from “bad landlords”.

According to the court officer in my town, the tenants that I just threw out have been evicted two or three times already, usually leaving the apartment heavily damaged. I know (from a different tenant) that they signed a new lease elsewhere a few days before moving out of my unit. I don’t know where that landlord is, but surely they’d like to know what I’ve just been through. Ideally, they would have had a similar website to look through before signing their lease.

In actuality, there are ways to look up if a potential tenant has been evicted, since evictions are part of the public record. But what about bad tenants that aren’t evicted but cause problems while living there or leave the place a disaster when they leave? These types of problems wouldn’t be recorded anywhere, though they should be shared.

My questions to you are:

1. Is this legal?
2. Can landlords do the same?
3. If so, is there something like this already?

Oh, and if you’re a landlord and your name is on the site, I’d love to hear from you.

There is an important question that you must know the answer to before purchasing an investment property in a new town:

How are you going to inform potential tenants that you have a place available for rent?

This is one thing that I was extremely lucky with when purchasing my first real estate investments. There is a popular weekly circulation which _everybody_ in the town religiously reads, and in fact is the only place I need to advertise when renting an empty apartment..

The circulation is distributed every Thursday night to quickmarts, grocery stores, donut shops, and others within a 20-30 mile range. It contains items for sale, service advertising, and most importantly rental advertisements. It has become the definitive source of pricing rentals, and is where everybody looks.

Before purchasing an investment property in a new town, I would highly recommend looking into how potential tenants find available apartments. There are towns where there is not a good source, and it will be more difficult for you to determine the fair market value, or even rent your apartments. I’m not saying that you shouldn’t buy in these places, but if you do you should deduct a higher vacancy/maintenance percentage when calculating your monthly cashflow.

Another advantage is that I can easily follow the rental market. I try (try being the operative word) to input the rental prices into a database every week. I input the # of bedrooms and rental price. I can then track the price fluctuations of the units over time (broken up by number of bedrooms). I know that this isn’t completely accurate, but it allows me to get an idea of how the fair market value fluctuates over time. This is particularly helpful when pricing a empty unit right before I advertise. Also, I can easily find renters (although I apparently don’t always screen them enough). Once I put an advertisement in the circulation (about $10 for two weeks) I instantly get 10+ calls from potential tenants.

These circulations are most important when purchasing investment properties in smaller towns. If you’re renting out an apartment in a city, there are other good ways to go (craigslist for example). In smaller towns not everybody uses the internet. You could go with a realtor, but that ends up costing a lot. Really, your best bet is to understand what the locals use.