RENTING YOUR OWN PROPERTY? WHAT YOU NEED TO KNOW!
Disclaimer: I am not a lawyer or city official. Know your cities laws for rentals and Fair Housing Laws. Every county is different so know your own laws!
So you are renting your own property out! You probably have some questions:
Where do I find tenants?
How do I screen tenants?
Do I pay to screen them?
How far in advance should I list my rental?
All these questions and more will be answered! It is important to avoid certain pitfalls when renting your property out and this will cover those as well. I list my rental myself, professionally lease for landlords, and the company I work for as well on their 50 unit buildings.
First things first you should have a rental license (at least in Philadelphia) if you are renting your property out. Check your local requirements!
The Process - The company I work for and I list our rentals 2 months in advance. If the property is going to be vacant in June list it in April and start getting tours in. Between screening and showings it usually takes 2 months to get a good tenant in.
Where to list:
When I list my own rental I list on Facebook Marketplace, Zillow (still free in Pennsylvania), and Craigslist. Zillow started charging however not for PA. Zillow also will out put your property on to Hotpads and Trulia.
Advertising Your Property: So I'm sure most people do not set out to discriminate but I have seen a lot of Facebook rental postings say : "looking for a young professional to move in". There should be no mention of what type of person you are looking for. It should be solely off the application. I will get back to this later.
In Philadelphia all of these categories are illegal to discriminate against:
(The Following was taken from The City of Philadelphia Website: )
In Philadelphia, it is illegal for landlords to discriminate against tenants because of their:
Race
Ethnicity
Color
Sex
Sexual orientation
Gender identity
Religion
National origin
Ancestry
Disability
Marital status
Age
Source of income
Familial status
Domestic or sexual violence victim status
Landlords cannot do any of the following if it is based on any of the previous categories:
Refuse to rent housing
Make housing unavailable
Set different terms, conditions or privileges in the lease
Refuse to make reasonable accommodations/modifications
Otherwise discriminate
So You Have Leads Now What?
You have 50 leads in your inbox now what? What I would do is call down the list and set a 1 hour slot for everyone to come, but give them a specific time do not call it an open house. When people have an appointment for 3pm they are more likely to show up.
For example:
Me: Hi Jim I have a tour slot left to see the rental this Thursday at 3pm?
Jim: I can't make that is there any other time?
Me: No sorry I'm booked up the rest of the week.
Jim: Ok I'll make it work.
People are flakey so keeping your tours to one hr a week will save you a ton of time. What it also does is when a ton (10) people show up to a property at once it creates a sense of urgency and people want what people want so it rents quicker.
When touring people avoid this!
People will ask you what are the demographics of the area? Or are there a lot of families around here? Are there a lot of young people in this area? Is this a safe area? You cannot answer these questions. Just say I legally cannot speak to the demographics or safety but you are free to look up the crime statistics!
Also do not steer people! Steering is pushing people to other areas based on race, religion, or other characteristics. Ie: I have a rental in this part of town you might like better because you're older and it's quieter there.
Congrats the open house "appointments" went well you have people who want to apply! So what's your application process?
Here is mine - I have a paper application that everyone over the age of 18 will fill out and put your job and salary info. I will need paystubs as well. In addition to that I will send a link for the credit and background check through TransUnion SmartMove it will be $40.00 per application over 18.
One of my colleagues uses this criteria to screen and I use it now as well:
Qualification Standards:
- Gross income must be 3.0x monthly rent or more. Income verified.
- Reliable rental history w/ current and previous landlord contact information provided, if applicable
- 580+ credit score
- No collections, foreclosure or bankruptcy in the past 3 years.
- No history of violent crimes, felonies or any crime relating to minors.
It is so important to have a set screening criteria before you start the process. If you lower your standards throughout the process you have to go back and notify everyone. This could open you up to discrimination issues if you told someone one set of criteria and someone else something different. Be clear and no your standards!
Now you found somebody you like! I require one months rent as a security deposit, and first months rent upfront (this is negotiable). I will not take the unit off the market until the security deposit is received.
For everything of how to operate as a landlord ie: collection rent, book keeping, leases and other docs check out: The Automated Landlord Article
Other Scenarios:
Pets: If you choose to rent to people with pets you will have a pool of people that can't go to other places and this will give you an advantage. Plus you can charge a $25-50 pet rent and a 300-500$ non refundable pet fee. Check with your insurance company on what pets they allow and breeds when it comes to dogs.
I do not allow pets but someone has a helping dog that's a Pitbull mix and my insurance company doesn't allow Pitbulls. I'm not an insurance agent and this is not a plug but State Farm has no breed restrictions. I do not use them but if I were in this scenario I would go there.
Philadelphia and Surrounding Areas Listen Up!
If you are renting to a family with children and your home was built prior to 1978 you need to know this... The following was taken from the City Of Philadelphia Website:
Philadelphia Lead Paint Disclosure and Certification Law
In 2012, the Philadelphia City Code was amended to include the Philadelphia Lead Paint Disclosure and Certification Law. Currently, the law requires owners of properties built before 1978 and rented to children 6 years or younger to provide the tenant with certification prepared by a dust wipe technician stating that the property is either lead safe or lead-free. Beginning October 1, 2020, landlords will be required to test and certify rental properties as lead-safe or lead-free, regardless of a child’s age, in order to:
Execute a new or renewed lease or
Receive or renew a rental license.