We're thinking of buying the house next door and renting it out...it actually has a guest house and a main house. The price is reasonable. is there such a book as "Rental property for dummies?"

http://www.biggerpockets.com/ is a great resource. I have a rental property and this site was a wealth of information for me...should still be free.

My wife and I own a triplex. Live in one and rent two, all connected.
The best piece of advise I can give you is to find good renters. I have lived here and have done all the maintenance for the last seven years, and we have two of the best we've ever had. It all comes down to the fact that you have the right to choose who you rent to. Check everything and get good renters. I can't say it enough.

You have the absolute right to choose who you rent to, if you have 4 or fewer units in one home or property and you live in one of those 4 units.

That is not true in most other circumstances.

If you own and rent out the house next door or across the street on a different property at a different address, then Fair Housing Act laws 91968) and Landlord Tenant Act (1954)laws, apply to you.

You can accept the more qualified of two equal applicants, but you cannot refuse to rent to one or the other, based on quite a few other things.

You are required to follow federal law and cannot discriminate, whether it is in renting to, considering qualifications/references/credit and income for renting, or in showing or allowing a property to be shown to a prospective renter.

Fair Housing/Equal Housing laws, and city ordinances in many places, state that in regard to renting, you must review references and income status equally; advertise using non-discriminatory language, including not using certain code and buzz words designed to attract or repel certain protected classes.

Fair Housing Act laws cover 5 protected classes of people: race, creed (religion), national origin (ethnicity, country of birth or cultural identity), disability, and familial status (whether or not you have kids or will have them).

If you have rental property you do not live on, or in, yourself, all of these equal housing statutes most likely do apply to you. The house next door or across the street does probably fall under those rules where you live. Please check.

If it does, it means you can't just refuse to rent to single moms with kids, or families whose only income is public or disability assistance, alimony or support from other than standard wages/standard sources of income; to people you think might be foreign or non-citizens; might be of a religion you do not like, etc. Not if they meet the income ratio and credit requirements you have already set for all other persons who have rented, or to whom you would rent, that same property.

You cannot charge extra security deposits or fees, except set asides for pet or physical damage above normal wear and tear, and must apply that extra security deposit requirement to all persons living there and refund it under the same rules for all.

After two years in most states, you must give all earned interest on that deposit money back to the tenant and must do so for all years 2-?; all deposits must be kept completely separate from rents, and separate from and not intermingled with personal or other commercial/business interest funds you may have.

You cannot apply differing standards or set higher amounts for deposits, to families with kids or people with disabilities.

For the disabled with companion animals of any kind (even ferrets, yes FERRETS) you cannot charge a pet damage deposit above the norm, or charge extra for their requiring handgrips to be screwed into the shower wall thru the tile, or railings down the stairs or hallways, etc. They will have to pay to install these items for their own use, but you cannot charge them with that work having been done as damage, when they leave. Those things fall under "reasonable accommodation for the disabled".

If their ferret damages all your wallboard by eating it up, because they let the critter run loose, then yes, when they leave you can assess penalties above the norm for that damage--but you cannot ask anyone in the 5 protected classes to pay extra when they first rent, for their being part of that class.

Keep records of all phone calls regarding requests to view the property, paper copies of all notes pertaining to actual visits to the property, copies of all ads placed (and make sure your ads do not only appear in religious or ethnic/social or private club publications)--use the city paper that everyone reads, too; and always, always, always use a written lease which your lawyer has vetted first.

Lots of books have this stuff outlined for you, and community colleges and institutes of real estate management (IREM) all over the place offer low cost courses, too.

Check with your local township office to see if you need an occupancy permit for the house you plan to rent, or an inspection first; make sure that the house has a smoke detector, and the proper, allowable door locks on all exit doors. if a basement or guest house not originally intended to be counted as bedroom in your county, is now to be used as one, I doubly insist you get that inspection. Don't wait for an elctrical short or fire to prove it isn't safe to occupy.

Get extra liability insurance for both your rental and your private property. Consider setting up a PLLC limited company to process your rentals thru.

Ignorance is not a defense if the equal housing office or permits office gets hold of you--or one of their undercover testers comes to your property and discovers you or your manager is not doing things properly/within the law.

Make sure you get copies of The Landlord Tenant Act, the federal Equal Housing mandates, and any and all local ordinances pertaining to rentals. Then follow them.

I was a manager of a metropolitan, seniors-only high rise, a full market, boat in boat out, mid-rise and was a regional mgr for several large apartment communities; I have been a landlord myself, renting my own private properties most of my life, as was my dad before me with his own.

Lots of people do all kinds of things, and do it for years because everybody else does it and gets away with it. But those who get caught deliberately violating the rules, sometimes lose their houses and their shirts when those cases come to court.

Please take the time to learn the rules, before playing this game.

First they have to fill out a rental application, have background and employment checks, etc. You can make them jump through all kinds of hoops. And then choose between the list of people that pass your criteria.

We are talking about good renters here, not race or sex or religion.

Good renters is the key....that being said, it's always a crapshoot. I would suggest you find a good bonded property manager to run the property for you. They vet the renters, take care of any and all issues pertaining to the building itself, so you don't get a call at 3AM the morning you're flying to a holiday destination telling you the sewer is backed up or furnace/hot water heater/A/C, etc' has quite working. Not fun.

I agree, I was a property manager for several years.
Depending on what state you are in, the laws vary widely regarding property mgmt.
If you are doing this for the first time, check out a bonded, licenced property mgmt company.
They will take care of all the legal stuff, screen applicants, and take care of maintenance. The fee is usually 10% of the rental amt.
My only specific advice is :
DO NOT RENT TO FAMILY, FRIENDS, OR FORMER WARD MEMBERS.
Bad juju.
Good Luck!

I have three rentals. The above poster says it all, be picky about renters. Often their credit rating is a good indicator.

It's a plus having a rental nearby so you can keep an eye on it. Make sure to show up on the first every month for the rent and don't let them get in the habit of paying late. Charge late fees and stick to it.

Right now it's easier to get good renters because it's hard for even dependable people to get a loan for a home.

I have three cardinal rules.
-Pay the rent.
-Don't wreck my house.
-Don't cause disturbances to the neighborhood.


Realize that it's hard to get positive cash flow unless you have a big down payment. Maintenance, Insurance, property taxes and the mortgage add up. Vacancies between renters kills it too.

I've been a landlord for 15 years. Right now, I've got a condo that I rent out that is 3 miles away. At one time I had 6 units out of state and that was a pain. The PM soaked me every month, and then some, with all kinds of repair bills.
As has been said, get good renters. Make sure they have steady employment. Have a solid lease agreement in writing that is at least a year long. You don't want to have to turn over the place every 6 months, unless they are a pain.
Also, take a good look at the property. Has it been well taken care of? In what shape is the roof? Will it need to be replaced soon? How is the paint, inside and out? Does the property need major repairs? These are all things you need to look at.
You can do well if you or your SO is handy and can DIY the repairs and maintenance. If you have to call a professional every time a faucet leaks or when something needs to be replaced, you can lose money very quickly.

wow. I didn't consider all the issues that have been presented! thanks for the insight.

We've lost money every year. But with the tax writeoff, we're close to even in cash flow after taxes. If you don't count the fact that we lost maybe 100k in value with the downturn. <ouch>

Hopefully someday we'll recover something.

Now might be a better time to buy than when we did. I know in one area, they are selling units for 80k that we bought for 145k.

I personally hate being a landlord, so we hired a management company and I like them. (Miller and Co in SLC). They keep us in tenants and now we get the rent EVERY month, on time.

I can't say I recommend investing in rentals, esp. if you have to go into debt to do it. You will get more returns in rentals than on a 100k investment than in the stock market. But keep in mind that if you depreciate (which you WILL have to do on your taxes), that the depreciation will be deducted from the basis of the value of the property. When you sell, you may have to pay taxes on anything higher than the new basis, unless you invest in new property. I know people who have gotten burned that way.

And being a landlord is a JOB. Even if it's just part-time. If you wouldn't want a job as a handyman, or a bill collector, then don't do it. Or hire someone else to, but it will STILL require your oversight.

I personally wish we hadn't done it. But maybe our timing just sucked.

I just wanted to jump in on the renter side.

We've rented places from the owners and our last rental was through Miller and Co.

I find that I preferred renting from Miller and Co more than from owners. Our landlord before that was a really nice guy, but he had a tendency to show up at random times and it would sometimes take him a while to have time to fix something because of his regular job. He also sometimes had the attitude that if he could live with something, we should too.

Miller and Co was very professional and thorough. (And we appreciated the 24 hr emergency number the one time we needed it)

I'm a landlord. :)

Much good advice has been given up thread. What I like most about being a landlord, is that someone else is paying the mortgage on the place, and eventually it will be our asset free and clear.

I recommend being able to carry both properties(yours AND the rental) for at least three months. Hubs does our taxes, but there is something about expecting the place to be vacant or need repairs in a similar value to a quarter of the income expected from it per year in a WORST CASE scenario.

Best case, it should go much better than that, but whatever that quarter of a year's worth of mortgage payments/rent checks is in $$$, keep that in mind.

We owned a motel. ie "rental property by the night"

People living next door mean they will call you to come change their light bulb at 11:30 at night. You will know each other better than you want to.

Personally I'm glad my landlord doesn't see me in my back yard studying at my umbrella patio table with my chicken white legs sticking out of a pair of old shorts!

Also this is very important, you have to treat your rental like a business. Regular maintenance schedule; clean the rain gutters, service the furnace (every year), paint the window sills, walk through the property every few months, make sure the tree limbs aren't waiting to drop on the house with the next windstorm, or that your renter isn't letting someone sleep in the garage..... you get the drift.

Also you need to maintain a backup supply of money for down time when the unit sits vacant while you're interviewing new renters.

How old are you? How much work to replace things that go wrong are you willing to do or have hired?
My neighbors sewer pipe through the front yard to the street was made of 1960s tar-paper pipe and had become a leaky leach line over the years. The 30 feet of pipe had to be dug up and replaced. Do you want to paint? or lay carpet? or replace the fridge? How about reinstall a hood vent over the oven? Or replace the windows? change out a worn out closet door?

Are you willing to charge fair market value in your neighborhood or would you undermine yourself by renting under market to give someone a deal? (often renters don't appreciate a 'deal' in rent and are very hard on property)

The last thing that a renter feels is a child/parent relationship with their landlord. The property is not theirs and they can never forget it. They cannot paint or decorate it to suit themselves and if they have no hope of ever moving into their own home they can buy, they might be resentful and less caring.

My wonderful landlord is a great guy, but it's kind of like a poor marriage; he only fixes the things he thinks are important. I have seen some things he neglected come back and bite him.

I have two houses that are rentals because I'd lose too much money if I tried to sell them. I hate being a landlord. It's really hard to get good tenants and when I finally do, they stay 6 months or a year and then move because they get a job somewhere else. It is a pain in the butt. Then I have to go in a re-paint, clean, advertise, and do repairs. I've had to take a couple to small claims court to get the unpaid rent and damages they did. I won, but haven't seen a cent. I have a lien against their property, but doesn't get me the money back. Plus, you can't collect on your own labor, only materials and what you hire done. I had to replace doors where they had punched holes in them. You never know when you meet them. And when you advertise you get calls for weeks, even after it's no longer in the paper. If you say not pets, they'll call and ask if they'll three dogs, six cats and a chinchilla is ok. Seriously. Then there's the time we drove just to check on a house and found it empty. They had shut of the power and disappered. Not a word. We walked in and found our legs covered in fleas. Of course, they had no pets! Right... We had truck loads of garbage to haul off. No forwarding address. I don't even want to remember what the stove looked like. The new. stove I had just bought them three months before when they told me the old one had a heating element go out.

And we live in a town where rentals are in demand and we can be picky. Like I said, sometimes we luck out. I have good renters in one house. However, I have renters who sent me a text message that with a one week notice that they are moving out of the other. The lease says to give 30 days notice. Instead I got one week, the day after the rent was due.

I hate being a landlord.

I love the tip of the week I get from this place. Anything else I could say has been said above :)

https://rentalprop.com/

to evict somebody, if it comes to that.

Check out eviction laws in your state.

The duplex a couple lots away from me was forced into foreclosure because a tenant quit paying rent and they couldn't make her get out for I don't know how many months.

Having rentals was looking pretty attractive to me until I saw what could happen.

After careful consideration and all your great insights I've decided I don't want to be a landlord after all. Thanks, RfM friends!