House #18: Rented

October 13, 2010 · 14 comments

We’ve gotten a lot of interest from potential renters for The Haggle House since we finished the rehab and put it on the market about three weeks ago…

In total, we probably had about two dozen showings, got about a half dozen applications, and ultimately found two potential renters that met all of our criteria. After fully screening both potential tenants — checking credit, eviction records, employment, previous landlords, etc — we picked the one we were most comfortable with and offered her the property. About 24 hours later, we signed the lease and received the security deposit.

Our goal for this property was to rent between $875-950, and decided to list it at $925. This is ultimately what it rented for, with additional incentive that if the rent is received by the 1st of the month, there is a $25 discount. So, assuming the tenant pays on time each month (by the 1st), rent will actually be $900 per month; personally, I’ll be thrilled to give the discount in return for receiving on-time rent payments.

The tenant is scheduled to move-in on November 1…

14 responses to “House #18: Rented”

  1. This is a good way to keep the monthly payments coming in. Honestly, I wish we can get involved in something like this but my husband doesn’t want the headache of it all. Can’t blame him. It takes a special person to be able to pull it all together. Hard work and dedication!

  2. Ivan Jouikov says:

    I think this is an excellent strategy. It probably accomplishes the same thing money-wise, as taking fees for late payments, but it’s much more positive-reinforcement.

    Do you still collect late fees as well?

  3. J Scott says:

    Hey Ivan –

    Yup, we’re big fans of operant conditioning and specifically positive reinforcement. We’d much rather reward for desired behavior than to punish for undesired behavior…

    Our rent policy is as follows:

    – Rent is $925 per month;
    – If rent is received by 5:00pm on the 1st of the month, there is a $25 discount, and rent for that month is only $900;
    – If rent is received after 5:00pm on the 1st of the month, but before 11:59pm on the 4th of the month, rent is $925;
    – If rent is received after the 4th of the month, it is late, and the tenant will pay a $25 late fee, plus $5 per day every day that rent is late.

    Additionally, we will start the eviction process (starting with a 3-day notice) on the 5th of the month, no exceptions. While we try to be fair, I don’t want to get into a situation where we make concessions on the timeliness of rent payments.

  4. Shae says:

    Hey J, great stuff! By the way, how are you collecting rent? By mail? Deposit directly in your account?

  5. Ria Wise says:

    Great news! Hopefully they’d be able to be proper renters, and not fall through after a while.

  6. J Scott says:

    Hey Shae!

    I actually gave her 3 options to pay rent:

    1. Mail it to me (actually it would go to my box at my local UPS Store);
    2. Drop it off at the UPS Store directly and have them put it into my box;
    3. Deposit the funds directly into a bank account using pre-printed deposit slips I will provide.

    Obviously, #2 and #3 will allow her to be certain when the rent arrives, so I recommend those over #1. But, ultimately, it’s her choice…

  7. steve says:

    Congrats J Scott! Renting houses is sure easy compared to selling them…

  8. Ivan Jouikov says:

    You should consider solutions for taking these payments over the web and setting up auto-bill. You’d be surprised how many people are OK with it. Hit me up if you want to explore your options.

  9. steve says:

    Ivan –

    I got that setup through and I still have not had any tenants out of 25~ actually use it. Some where interested, but for whatever reason they prefer to mail a check. I focus on the low-end and that might be part of it…

  10. Luis says:

    J, I agree with this approach. I have used it on both of my rentals and it works like a charm. The few times when they have not made the rent payment by the 1st they have ponied up the extra $50 in rent no questions asked because I have been crystal clear with them from day 1 on this policy.

    Good for you getting it rented so quickly!

  11. Luis says:

    @ Autumn. Hard work and dedication are required for anything worth achieving, not just landlording 🙂

    My experience as a landlord has actually been surprisingly good. I have heard all the tales about the headaches and what not but that has not materialized for me…knock on wood.

  12. Harry says:

    J – congrats on getting ‘er rented so quickly! From my short experience, 6 applications from 12 showing is remarkable. We’ve had 2 from about 14 on our duplex – though I think the second one of those is going to pan out for us *fingers crossed*.
    Did you guys show it yourselves, or just act as the leasing agents, with the tenant’s agents doing the showing?

  13. J Scott says:

    Hey Harry,

    We listed the property both on Craigslist and on the MLS. For the Craigslist responses, we had our project manager (who will also be our property manager) show the property, take the applications and work with the potential tenants. For the MLS responses (which all came through other agents), we had the tenant’s agent work with my wife (our agent) to arrange the showing. In every case, my wife just gave the other agent the lockbox code so they could view the property at their convenience.

    Ultimately, the two tenants that passed our application process both came from Craigslist.

    Btw, in retrospect, I think we under-priced this one by $25-50 per month, which is why we had so much interest. Good lesson for next time; if I had it do over again, I would have listed it at $25/month higher.

  14. J Scott says:

    Ivan –

    Thanks for the tip!

    Once I build up more of a rental portfolio, I’ll probably require that my tenants do some type of direct deposit or internet payment, but for now, I’d prefer to keep it simple.

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