Anyone want to tell me about refinancing and being a landlord?

Persa · February 2012

If you'll remember, we've decided to look for a house more centrally located. We were planning to sell the house originally but now we've received some info about rental rates in our hood and we're thinking of going this route, which would mean we would refinance our house.

My husband rented out his house previously but I personally think his approach was a lesson in what not to do... the whole thing was a complete disaster, start to finish ( tenant who unknowingly rescues cats for a hobby, then left town and subleased it without his knowledge, and so on....you get the idea)

If we do this, I want it done right, which to my over inflated sense of self, means I need to take the reins on this

Any words of wisdom, links to useful websites, etc, on refinancing and/or being a landlord would be appreciated.

ETA email address if you want to email me: texas persa at gmail dot com (no spaces)

Thanks!

JayandJack · February 2012

A friend of mine recomended a management company. They take a fee each month out of the rent but take care of everything else. They do the marketing, screening, repairs, cleanup and searching for a new renter in addition to being in charge of rent or collecting the rent. So far I've been really happy with him and he is charging less of a management fee than others.

I'd be happy to give you his number if you'd like.

Mrs.Purdue · February 2012

If you're willing to be a little hands-on with the refinancing part, then I'd definitely recommend Austin First Mortgage. We've refinanced with them twice now and have saved ourselves a ton of money. They aren't native english speakers though, so I've found it best to communicate via email and only ask 1 question at a time. Other than that, they're definite pros and gave us better rates than all the other mortgage brokers in town. I've recommended them to many people and we found them on the recommendation of others as well. The process is easy, especially now that I've gotten the communication thing figured out with them!

sweetdreams2000 · February 2012

We've used Aff ilia ted M ort gage for all of our loans and find them really easy to work with. They've been able to close our loans SO much faster than our previous loan provider.

As far as the rental goes - we have 2 rentals, so we've been learning the ropes. Here's some advice:
1) make sure to do a full background/criminal check, tenant history check, SS check, etc on them. You can do this online, and I charge the cost of it back as part of the application fee (I think it is about $40). I require an application check on EVERY person over 18 living in the house, OR cosigning. I also call their last 2 employers, all landlords for the past 2 yrs, and get as much info as I can about them. For employers, I have a doc that they sign as part of the application that allows the employer to confirm salary, etc with me.
2) I make them sign full lease docs, any pet agreements, as well as a "rules of the house" doc which basically has all of the little things that a lease might not have. I have a unique one for each house. things like no smoking inside the house, yard must be maintained, no pets allowed on property unless expressly agreed in pet agreement, no guests for longer than 7 days, no abandoned/unfunctioning cars on property, no oil changing on premises, etc.
3) for pets, we charge a non-refundable fee for duct/floor cleaning, and a refundable portion. I allow a max of 2 pets in the house, and I require description, picture (or meet the pet), age, pet's name, etc. as part of the agreement. Pets must be spayed/neutered, over the age of 1, and not on my insurance's list of viscious breed dogs.

We maintain the properties ourselves. Usually when you first rent the house, there's as period where they call as they find issues, and then it kind of dies down. I'm the primary contact, and they have DH's number and email in case I am traveling and they have issues. Our properties aren't far from us (all in central austin), so I drive by every few weeks to check and make sure everything looks okay. At rent collection time, I usually call the tenants to see if there's any issues, and to remind them to check their smoke detectors and change their air filters. We have 1 tenant set up on direct deposit, and 1 tenant who drops off checks to us.
I will say, make sure you have clear rules on what is considered late payment, and make them know you're serious if they are late. You dont want them to think its okay to pay on the 10th every month. . . Our cutoff is on the COB on the 4th, so if on the 3rd, I still havent seen anything, I send them a reminder that I haven't received payment and that it is required to be in my hand by the next evening or they will incur late charges.

hope that helps! feel free to pm me with questions if i didnt make sense !

atlantic · February 2012

We have a proprty manager...but, we're also not local to our rental. Sometimes it feels like a waste of money because nothing will go wrong for a while. But I must admit that it's soooo nice not to ever have to mess with it, something breaks, it gets fixed, rent is late and late fees are handled. It's totally non stress for us, we just get the check each month. Every time their lease is up I start to get stressed that our tenants won't say and we'll have to pay the mortgage indefintely...but we've been lucky and have had the same tenants the whole time. The other advantage to a manager s if there are issues where the must be evicted, he would handle all that. Good luck!

Mrs.Purdue · February 2012

I have a friend that is looking to get into the property management business. He's already a landlord of 2 properties that he owns (he buys cheap property, fixes it up, and rents it out), so he has the experience, and he's looking to expand to properties that he doesn't own.

Since he'd be new to it, it might be cheaper than an established property management company, just in case that's interesting to you. I'd be happy to get you guys in touch with each other if you want to talk it out.

brooke152 · February 2012

You've gotten good advice re: being a landlord. We used to use a management company to lease our places only, but then we decided to do it ourselves again. It's not that difficult. We had to us a management company when we were traveling and honestly, it sucked. It was so expensive! We were charged $1200 for something that wasn't even completely fixed. DH fixed it with WD-40 when we got home.

Refinance the house while you are still living in it. You will get a much lower rate than if you are refinancing it as an investment property.

Persa · February 2012

Thanks y'all! Any reading material folks recommend? Landlord for dummies?

Jay and Jack and mrs purdue, i'd love to get the info on the management companies, if you can email me (texas persa at gmail dot com, no spaces)

I'll look at those mortgage companies. So far I've spoken to a bank and a credit union but I suspect I can get a better rate with a private company. The guy at the credit union said something about that we would have to sign a note that we would live in the house for 6 months after the refi but the banker didn't mention that (I spoke to him before i spoke to the CU guy) and said we could even look for a house while we did our refi, as long as we closed on the refi first. Anyone know anything about that?

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