Finding a Tenant
Avoid renting to any prospective tenant that speaks in bravado, or brags of their
accomplishments, their history, employment, or the amounts of money they have. This person will eventually abuse you.*
Beware of any prospective tenant that is a, lawyer, accountant, property manager or former
police officer. These people have the knowledge, skills and ability to bend the laws and will
screw you when it comes time for them.*
Soldiers have the right to break the lease, when they’re assigned elsewhere.
Thoroughly check-out any prospective tenant that wants to pay you only with cash, money
orders or Cashier’s checks. People with no bank accounts [usually] have something they’re
hiding.*
We do not rent to Section 8 tenants because I don’t like “gooberment” being between me and
my business.
We never rent to anyone with a dirty car. My reasoning is if the car is filthy, the house will
end up the same. If the car is clean, ask if it’s their personal car or a rental.
Ask each prospective tenant if they’ve ever been evicted, have they ever been sued or have
they ever sued someone else. You can do a hit and miss check up by going to the county
courthouse websites where they lived before and put their names in.*
We always do a credit check with the AOA on prospective tenants, and check to see if
they’ve ever been evicted. Lately, it's a good idea to see if they have a criminal record and a
record of suing. If there are millions of layoffs, you can make allowances, like we did from
2011 to 2014. Never rent to anyone who gives you an emotional sob story – who fails the
background check.
Every prospective tenant has to fill out an application that includes lots of financial
information, so we can do a credit check. Note that falsehoods on the application are grounds
for eviction. Keep the applications with the lease.
Take pictures of each prospective tenant’s driver’s license or government ID and compare
the information to the application. Keep hard copies of both in your file. Let the prospective
tenants know your requirements, credit above 600, an income equal to three times the rent or
more, no felony convictions that could affect neighbors, no sex offenders, no evictions, and
an acceptable debt level.
Make an addendum to the lease and list your requirements not listed on the lease, like no
marijuana growing on the property. No smoking on the property includes smoking drugs.
This is one more reason to do inside the house checks three to four times a year. Check for
butts, ash trays, and odors while you’re in the house and on the front and back yards.
Pets
Ask if they have any pets. Explain you will not allow pets if your insurance company will not
cover them – like Dobermans, German Shepherds, Dalmatians, Pit Bulls, wolves, etc.
Demand a $250 non-refundable fee per pet, [if the state’s law allows you to] because of the
hassles you will have to deal with: Barking, peeing on carpets, chewing window sills, scratching
walls, moldings, doors, windows, feces in the yard, chewing the heads off drip irrigation
systems, cockroaches, etc.* [AOA’s Application form asks if they have animals, not pets. They
could have a service animal which is not considered a pet.]
Do not accept large dogs that shed lots of fur – that stuff goes everywhere, including into the air
conditioning.*
A small continuous water drip in the walls, along with dog poop, and dog food left in the back
yard, will attract and maintain thousands of cockroaches and crickets!!!*
Signing the Lease
We meet with the prospective tenants for a lease signing. During that session, I read the entire
lease to them page by page, signing as we go.
Explain that only the people listed on the lease are allowed to occupy the property. A description
of pets’ names ages, breeds, size and weight and color are to be listed as well. That prevents
adding pets without approval.
We require a security deposit equal to one month’s rent in advance. We keep that deposit after
the tenant leaves, until I can come up with an itemized list of repairs required to put the place
back to original condition. We have 21 days to come up with the expenses and then I deduct the
costs of repairs from the deposit, and refund the remainder. Of course, normal wear and tear is
not deducted, because carpets normally wear out in high traffic areas in four to five years. I
suggest that the tenants and you make a list of damages to the house before they move in and
make it a part of the lease. Otherwise, it's left to memory and good faith.
We also get the first month's rent in advance, with extra days in advance prorated. We usually
give the tenants a one-year lease, with month-to-month after that. If the economy takes a dive,
you can negotiate the rents down.
You can ask for a $150 non-refundable cleaning fee [some states allow this – but not
California]. Be careful not to pile up the fees so high, that your property becomes out of range.
We have in the lease, that the tenant is responsible to get renters’ insurance. The landlord's fire
insurance only covers the house, not the contents of the renters.
Make it the tenant’s responsibility to obtain a key to the mailbox from the post office.
List all the accessories that it takes to operate the house in the lease, like door keys, gate keys,
garage door remotes, fan remotes, and we charge a fee if we don't get them back. We also like to
make note of any new items we've put in like dishwashers, garbage disposers, stoves, air
conditioners, heaters, painting, carpet, etc.
Each state in the U.S. has different rules governing landlord tenant relationships. They all
have a pdf file that can be downloaded and printed, laying out all kinds of rules governing
evictions, deposits, and what constitutes a habitable place, (rats, bugs, trash, etc.)
We make the tenant responsible for all the utilities. Turn off all utilities before the tenant takes
possession of the property. Once the tenant moves in, turning off the utilities has some legalities
associated with it.*
If the house already has a satellite dish, or cable company hookup, we request that they use that
company because we don't want more antennas and cables run through the walls, and roof.
We let each tenant know who is to maintain the landscaping, lawns, trees, bushes, plants, etc. At
one of our houses we pay for the gardener, all the rest are our duty. Tenants are not motivated to
do yard work. So to remove the hassle, we do it or give it to a gardener.
Give the tenants a copy of the Homeowners Association CC&Rs and the state rules and
regulations governing landlord tenant relationships right after you sign the lease.
These are available in PDF format.
We’ve had rent checks legitimately lost by the Post Office, so I like to get post-dated
rent checks for a year in advance. Our rolling stone lifestyle makes having the rent checks in
advance work well for us. Slowly we’re being forced into direct deposit.*
Maintaining Profitability
We do not become friends with our tenants, we maintain a business relationship until they
security deposit is settled. Then we can become friends.
During the lease signing, explain that we will go in each of our houses three to four times a
year. I’m looking for water leaks under the sinks, dead smoke detector batteries, clogged A/C
filters, dishwasher condition, ashtrays, a running garbage disposal, roof leaks, cockroaches, and
the overall condition of the house. Also, Im looking for people and pets not listed on the lease. I
look in all rooms. Never inspect when the tenant is not there to supervise. Oh, one more thing, I
pull all the hair out of all the bathroom drains on every inspection.
Make up a check list of items you inspect, with the address and date at the top, and keep a hard
copy filed away. This will give you a timeline for damages and repairs. Once every three years
or so, check the dryer vent for excess lint clogging the vent. The longer it takes to blow out the
moisture, the harder it’s on the dryer.
Every five years or so, I replace every hose leading from the wall to a toilet, faucet, and washing
machine with the metal mesh shielded ones. Plastic ones feeding the toilets are the number one
cause of flooded homes!
If you have a water supply to the refrigerator, I suggest you plug it and drywall over it. That’s
just one more place for a water leak to occur.
If you have time, learn to repair everything yourself. I personally fix everything but air
conditioning, and roofing. My methods have saved us a pile of money!
Assemble three or more three-drawer tool boxes with all the basic hand tools. Take them to
your rentals. If the house is vacant, I take an old interior door and put it on two saw horses to
make a workbench.
When the tenant lets you know there is a problem at the house, take care of it right away. No air
conditioning means the house is unlivable in Arizona.
Make a list of vendors that do good work: cleaning crews, painters, plumbers, a plaster man,
roofers, electricians and services for air conditioning, windows, screens, landscape maintenance,
etc. Keep it in your property binder.
We like to drive by our properties that are local once a month just to see what's going on outside.
Are there weeds growing, grass to be mowed, newspapers, and trash? If so, take care of them
right away.
We make a point of becoming friends with at least one long-term homeowner adjacent to the
property. We let them know our phone number and they call us if there is an issue like loud
parties, excessive traffic, or a moving truck out front. As a result, we’ve made some good friends
we look forward to going out to eat with.
Prepare a monthly financial budget for each property. Be aware of its profitability.
If a tenant is persistently argumentative or non communicative, encourage them to leave when
the lease is up.
Jack, since you are a male, never go into your rental alone, NEVER. Always take a woman with
you. When it comes to sexual harassment claims, women have the upper hand now, and you will
be viewed as the disgusting landlord with a deep pocket.
Enforce the lease – late rent equals the penalty, trash cans in the front of the house are not
allowed, and enforce the HOA rules violations. If the HOA levies a fine, the tenants are
responsible for them.
The landlord should be a firm businessman at first. Later, you can relax the rules for good
tenants. Again, you are not their friend.
Make up a binder keeping important paperwork concerning each property including, lease,
insurance policy, phone numbers, keys, expenses, proforma, etc. Wherever we go in our
Airstream, we have them with us. We never know what’s going to happen on the road.
Establish a separate checking account for each property. Keep all the receipts for every business
expense, and write on each receipt the date paid with the check number.
Keep a minimum of $5,000.00 in each account to cover expenses. Withdraw anything over that
amount and put it into a savings account that you never touch, except to buy another or pay off
an investment property.
Begin to start paying off your properties, as time goes by. The real estate crashes of 1990 and
2008 wiped out all those “Smart Landlords,” that used “Other people’s money,” to buy using
“Leverage.” When the next crash comes, we can drop the rents up to 50% if we have to, and still
survive comfortably. Greg says, “Buy and hold when everyone is selling.”
I’m 71 years old now, and 50 years out of Viet Nam and I can tell you, I make a serious attempt
to accomplish something every day that adds value to our business. When I get knocked down, I
get back up and do it right the next time!
One of the big secrets to a long and successful life that you have control over is stay in motion.
Keep thinking, keep doing. Study your alternatives, set goals, make “to do” lists, decide, and
then follow through. The whole world is out there wanting you to be a success. You can start
your day by accomplishing something every morning, make your own bed!
One final thought I want to emphasize – make all your actions safe, legal and moral.
Sincerely, Grandpa Greg and Grandma Eileen
Greg and Eileen Charles are rental property owners and members of AOA.