Basics of managing your own properties
When screening your own tenants, always ask for their references and run a credit check. The best references are their most recent landlords. Make sure you’re able to speak to them about any possible tenant – did they pay on time? Any late payments, and if so, why? Were they “difficult” tenants – for example, people who were constantly making unreasonable requests, as opposed to requests for basic repairs or normal safety-related requests. In addition, run a routine credit check on them to ensure they have had no major issue with repaying loans in the past. If so, you could get stuck with a problem tenant.
Sometimes, even with your best screening ability, you’ll wind up leasing out a unit to a “crazy.” They may have appeared quite normal and engaging when you first met and screened them. However, after some time period as your tenant, they start behaving erratically. My worst “crazy” screened beautifully. Her references were excellent, credit great, and even had a reference from the pastor in her church where she was a choir member,. Couldn’t be more perfect. Until she became something less than perfect. Starting with her initially complaining about a bug infestation in her top floor unit of my four-family house. And none of my other tenants were complaining about any bugs. After having sent an exterminating company to check out the “problem,” and there not seeing any problem, I continued getting increasingly more calls from the tenant about the infestation situation getting worse. I asked to see the unit, and that’s when I knew I had a problem – when she wouldn’t let me in. And then she stopped paying rent – and I had to go through an eviction proceeding.
Several months later, when she left of her own accord just prior to being evicted, I was able to finally gain access to her unit. I entered to find that every inch of floor base molding was covered with masking tape. On the walls above the tape were written little “prayers” about keeping the invading bugs out. I was horrified and thankful at the same time – horrified that she was a tad unhinged and I couldn’t see it, and thankful that something worse didn’t take place while she was still my tenant!
Section 8 tenants – pros and cons
Government-subsidized housing vouchers utilizing the section 8 program for low-income families pose various pros and cons for any rental property investor. On the plus side, these voucher-approved families are allowed to rent based on the size of their family, and therefore are approved for certain minimum-sized units. The section 8 program allows for maximum rental rates for any geographical area in the country. These rates tend to be at or sometimes slightly above current rental market rates. In addition, rental payments are guaranteed, and they’re always on time.
However, on the negative side, since there is no economic reason to turn down a section 8 tenant since you’re guaranteed payment, references may be scarce. My experience with section 8 tenants has been a mixed bag. Some have been wonderful. But some have been horror stories. As a landlord, when you are having difficulty renting a unit out, and you’re faced with a potential vacancy, you tend to feel compelled to get the unit rented out as soon as possible. With section 8, you can do this, and at top market rents. The major downside though, is that tenants may not treat your building with the same respect as your other, more stringently screened tenants.
Certainly you don’t expect a tenant to treat your property with the same care as an owner of a property treats their own home. But the difference between how a tenant on section 8 and a screened tenant treats your property can be striking – and ultimately, quite costly for you. I have always considered accepting section 8 tenants as making a deal with the Devil. You get your vacancy filled quickly, at top market rental rates. But more often than not, when the section 8 tenants leave, be prepared for some major repairs…When a screened tenant leaves, you always expect some minor cosmetic repairs. When a section 8 tenant leaves though, you may need to bring in your entire crew of trades people to overhaul a unit. And the cost could run into the thousands of dollars. So be very aware of the financial trade-offs when you accept section 8 tenants.
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