The Book on Managing Rental Properties

417 Pages·2015·6.52 MB·English

by  Brandon Turner

The Book on Managing Rental Properties
Copyright © 2015 by BiggerPockets Inc. All Rights Reserved.
Written by Brandon Turner and Heather Turner
Published by BiggerPockets Publishing LLC, Denver, CO
This publication is protected under the U.S. Copyright Act of 1976
and all other applicable international, federal, state, and local laws,
and all rights are reserved, including resale rights: you are not allowed
to reproduce, transmit, or sell this book in part or in full without the
written permission of the publisher.
Limit of Liability: Please note that much of this publication is based
on personal experience and anecdotal evidence. Although the author
and publisher have made every reasonable attempt to achieve
complete accuracy of the content in this book, they make no
representations or warranties with respect to the accuracy or
completeness of the contents of this book and specifically disclaim
any implied warranties of merchantability or fitness for a particular
purpose. Your particular circumstances may not be suited to the
examples illustrated in this book; in fact, they likely will not be. You
should use the information in this book at your own risk.Fin
Any trademarks, service marks, product names, and named features
are assumed to be the property of their respective owners and are
used only for reference. No endorsement is implied when we use one
of these terms.
Finally, use your head. Nothing in this book is intended to replace
common sense or legal, accounting, or professional advice and is
meant only to inform.
ISBN: 978-0-9907117-5-9
First Edition

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Acknowledgments
Thousands of hours go into the creation of any book, and only some
of those hours were our own. Therefore, we want to take a moment
to thank the many individuals who helped put this book into its final
form.
Thank you to Allison Leung, for your many hours spent editing our
rough text.
For Mindy Jensen, for your diligent research into numerous aspects
of this book, including the 50 state-specific rules/laws at the end.
Oophta.
For the BiggerPockets Book Launch Team who helped read this
book before the launch and helped us hone in our message!
To Josh Dorkin, CEO of BiggerPockets, for your leadership in this
book writing and publishing adventure and for taking a risk on us.
To the leaders in the BiggerPockets community who helped record
interviews in preparation for this book’s launch.
And finally, thank you to the BiggerPockets community, from who’s
shoulders we have long stood upon. Without your stories, lessons,
guidance, and advice we would not be where we are today.
And to anyone and everyone we missed...
Thank you.

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Dedication
This book is dedicated to our parents, Rick & Lori and Shane &
Rachel. Not only did you raise us to be financially wise, you also
raised us to know that there are things far more important that
money in this world. Thank you.

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Table of Contents
CHAPTER 1 - SO YOU WANT TO BE A LANDLORD? ........ 1
About the Authors ....................................................................................... 2
What This Book Will Teach You .............................................................. 3
What This Book Won’t Cover .................................................................... 5
What is BiggerPockets? ............................................................................... 6
What is Landlording? ................................................................................... 7
Landlording Tasks ........................................................................................ 8
Should You Manage Yourself or Hire a Professional Management
Company? ................................................................................................... 11
Surprise: Everything Won’t Always Apply ............................................ 13
CHAPTER 2 - THE EIGHT BUSINESS ATTRIBUTES OF A
SUCCESSFUL LANDLORD .................................................... 15
A Tale of Two Landlords ........................................................................ 15
Wrapping it Up .......................................................................................... 31
CHAPTER 3 - INITIAL STEPS .............................................. 33
7 Things to Do Before Signing Your First Lease ................................ 33
Inherited Tenants ...................................................................................... 41
What Condition Should Your Property Be in? .................................... 44
How Much Can You Rent Your Property for? .................................... 45
The Security Deposit ................................................................................ 47
Wrapping it Up .......................................................................................... 51
CHAPTER 4 - FAIR HOUSING ............................................. 53
What is Fair Housing? .............................................................................. 54
Dealing with Disabilities and Fair Housing .......................................... 58
Examples of Fair Housing Discrimination ........................................... 60
6 Tips for Staying Compliant with Fair Housing Laws ....................... 62
Penalties for Violating Fair Housing ...................................................... 66

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Wrapping it Up .......................................................................................... 66
CHAPTER 5 - ADVERTISING YOUR VACANCY ............... 67
Defining Your Ideal Tenant .................................................................... 67
What Makes Your Property Desirable? ................................................. 69
Where to Advertise ................................................................................... 69
Tracking Your Advertising Results ........................................................ 76
Taking Quality Photos ............................................................................. 77
Wrapping it Up .......................................................................................... 79
CHAPTER 6 - TENANT PRE-SCREENING ........................ 81
What Makes a Great Tenant? .................................................................. 82
What is Tenant Screening? ...................................................................... 84
Pre-Screening Potential Tenants ............................................................. 85
Setting Your Minimum Qualification Standards .................................. 91
Section 8 ..................................................................................................... 99
Showing the Property ............................................................................. 102
11 Most Common Questions Asked By Tenants—Answered ........ 109
7 Tenants We’ll Never Rent to ............................................................. 114
Wrapping it Up ........................................................................................ 118
CHAPTER 7 - THE APPLICATION PROCESS & TENANT
SCREENING .......................................................................... 119
The Application Form ............................................................................ 121
The Application ....................................................................................... 124
The Application Fee/Identification ..................................................... 134
Digital Applications ................................................................................ 136
How to Process the Application ........................................................... 136
Advanced (& Sneaky) Ideas for Tenant Screening ............................ 146
Denying an Applicant After Screening ................................................ 148
Should You Allow a Cosigner? ............................................................. 149

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Accepting a Tenant ................................................................................. 152
Next Steps After Approving a New Tenant ....................................... 152
Wrapping it Up ........................................................................................ 158
CHAPTER 8 - SIGNING THE RENTAL CONTRACT ...... 159
Month-to-Month or Term Leases? ...................................................... 160
Where to Find a Good Rental Lease ................................................... 161
Why the RIGHT Lease Matters ........................................................... 162
22 Things Every Lease Should Contain .............................................. 163
How to Sign the Lease Agreement ....................................................... 170
New Tenant Orientation ........................................................................ 172
The Tenant File ....................................................................................... 179
Wrapping it Up ........................................................................................ 180
CHAPTER 9 - MANAGING TENANTS ............................... 181
Setting Office Hours .............................................................................. 182
How to Collect Rent ............................................................................... 184
Grace Periods and Rent Extensions .................................................... 190
Raising the Rent ...................................................................................... 192
Periodic Inspections ............................................................................... 196
Communicating With Tenants .............................................................. 198
Hiring a Resident Manager .................................................................... 199
6 Ways to Keep Yourself Free From Lawsuits .................................. 202
Generating Extra Income and Reducing Expenses ........................... 203
Wrapping it Up ........................................................................................ 206
CHAPTER 10 - DEALING WITH PROBLEMS ................... 207
What to Do When Tenants Don’t Pay Rent ...................................... 208
Handling Tenant Maintenance and Repairs ........................................ 213
Bounced Rent Checks ............................................................................ 217

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