When a family member passed away a few years ago I inherited an apartment building and suddenly found myself with a new career as a landlord. It is a great job gives me a nice steady income but there are a few downsides and I had to learn them as and when they happened.
You can't trust everybody, no matter how much you want to. As a landlord, you have to protect not only your property, but you have to protect yourself and your family. It's also just as important for you protect all the families that rent from you.
A good way to protect people and property is to run a tenant background check before you rent to them. There are many types of screenings or background checks that you can run before you rent to somebody.
My personal choice is to run a tenant screening process as well as a criminal background and social security check. For all my screening processes I utiltize the services of MacDataAdvantage.com. They are a great online screening company that provide all of the screening tools and information that I need.
A tenant background check is an important process before a rental agreement is signed. Personally I would not want a sex offender living in an apartment next to a family with young children. I also wouldnt want someone who had a history of destroying property.
I know I wouldn't want someone with a known history of destroying property to live in my building either. I have also found that running a social security background check is useful. If I have someone who constantly runs out on their rent, then I'm probably not going to take the risk of them running out on me.
Let me give you an example of when running a simple background check or tenant screening has helped me avoid what could have been a bad situation. Here I had a young couple who wanted to rent one of the apartments in my building. They looked good, the application that they filled out looked good and I was sure I was going to be happy with them.
Then I run the screenings and all the warm fuzzies I had with those two went right out the window. Not only did they have a history of nonpayment of their rent, they had forfeited their security/cleaning deposit twice before for breaking things in the home and for leaving things very dirty.
The Top Ten Things To Consider Before Selling And Rent Back
By: Bernard Higgingson
1) How much will you receive? Companies all offer different amounts, from as low as 70% to as high as 100%. Companies which offer 100% usually give you 70% upon completion of the sale and 30% at the end of the tenancy, however the average offer tends to be 85%
2) When selling any house, the best tip is to try and make the process as simple and easy as possible as selling your house can often be far from a relaxing process. To make sure the process is as peaceful as possible it's important know who the sell and rent back company you are dealing with. Are they reputable? Ethical? In good financial standing and will still be around at the end of your tenancy period? All these questions are very important and make sure you do plenty of research on a sell and rent back company before you enter into any agreement with them. The best advice will come from an independent personal recommendation from someone who has gone through process, but as sell and rent back is still an emerging sector of the property this may be tricky. Searching internet forums and message boards may also reveal some more information on the range of companies entering the sector.
3) What happens when you become a tenant? Are you guaranteed long-term rental? You are best looking for companies which offer a long-term contract. This will give you peace of mind that you cannot be evicted after a short period. When you become a tenant you will generally have to pay for council tax, gas, electric bills as any normal tenant would who rents a property.
4) Who will pay the valuation costs and legal fees? Usually the company you sign with will pay the valuation costs and legal fees for you. Most will do this to make the offer seem more attractive but only buy the property for a lower percentage. Although there are exceptions as some companies will pay for the costs and fees whilst offering a high or full percentage. Aim for these!
5) Will my details be kept private/confidential? All of the sell and rent back companies should keep your details private and confidential although ensuring the company is reputable beforehand should eliminate any risk of breach of confidentiality. Unless expressed otherwise, the only people who will know about what happened will be you, the company you dealt with and the solicitor handling the case, and a "sold" sign will not be put up outside your house.
6) Will rent stay at pre-agreed levels? Some sell and rent back companies will offer a fixed rate for the first few years, after then the monthly rental payments may increase. Others will not guarantee a fixed rate and leave you open to increased payments later on in your tenancy. Often the best deal will be the sell and rent back firm who will offer you 10 years (or whatever the length of tenancy agreed) at a single fixed rate which is signed into the contract.
7) Will the valuation be independently calculated? Always choose a sell and rent back company which offers an independent valuation, especially by a member of the Royal Institute of Chartered Surveyors (RICS).
8) How long is the process likely to take? How quickly can you receive your money? The entire deal can take 24 to complete if that is what is needed but most will take 3-4 week to get everything sorted. Your money is usually released after the transaction has been completed.
9) Who owns and maintains the property? After the transaction has completed, your landlord will generally be the company who bought the property from you and they will be responsible for taking care of any maintenance or emergency callouts that occur. This is why it is essential to ensure the landlord is reputable or are using an experienced and reliable property management company to quickly address any issues you have. The "moveable furniture" (chair's, tables etc) is typically still owned by you, unless you negotiate a deal with the company to sell them the furniture as well.
10) What if you want to buy your house back? Some companies offer a deal where you can choose to buy your house back off them at the end of the tennancy period. This is very useful for those who are having a difficult time financially but expect things to improve in a few years when they can afford mortgage payments again.