Doug, I think tip #5 & #6 are vital! I think there are too many people who don't know the rules or have the experience in buying rental properties. Using the services of a professional could really benefit someone who's interested in investing in real-estate. Property managers or buyer advocates could really help benefit people. http://www.wbpproperty.com/buyers-advocacy... more
In my rental, I have it written in the contract that I pay the HOA fees. If it's in the agreement that the renter is to pay the fees, the HOA can place a lien on the property if dues are not paid on time. Rather than chance that, I prefer to pay the HOA myself and keep the tenants out of that equation.... more
We screen with the 3C's in mind - Capability, Colateral and Character.
CAPABILITY - Do you have verifiable employment and enough income. This is simple and generally easy to confirm with a paystub and a phone call or two. We like to see 3x the monthly rent in gross income.
COLATERAL - This is the security deposit. This is another easy one.
CHARACTER - This is trickier. The idea here is just because a person can pay doesn't mean they will pay. And just because they can pay now doesn't mean they can later. Some people live tumultuous lives and find themselves in financially difficult situations way too often. The typical way for a landlord to judge the character/"likelihood that you will pay" is using a credit score. So, put yourself in the position of a landlord who is trying to figure out if you are going to pay consistently or not. If you can explain that you lost your job and went through a bankruptcy and foreclosure and that was only an aberration then that will go a long way towards showing you that you will pay reliably. Looking at a credit report I look for a string of 1's like this "11111111111111111". This is the part of the credit report that indicates the payment pattern. 1's mean paid on time and each one represents a month that the payment was paid on time. A 2 means 30 days late. A 3 means 60 days later. The worst is a 5. So a credit report with a bunch of 5's is not good. I commonly see many items with a string of 1's and one creditor with a string of 5's. This usually means the tenant was paying everything on time except that one creditor. That's generally a good sign. That means the tenant has a habit of paying on time but had to make a hard choice and neglect one creditor. I also often see medical bills with a string of 5s. I tend to discount this problem since a medical bill is not typically something the person chose. A little pet peeve of mine is when I see an unpaid bill in collection for a small amount like $34 for the library for example. Only one of these is likely an oversight but when I see a bunch of them it implies that the tenant chose to not pay them. At our agency we require a minimum 500 credit score. But, just because your credit score is above 500 doesn't guarantee we will accept you. That is just a threshold. Any credit score below that is automatically rejected. Applications with credit scores above 500 are 'scored' using our inhouse scoring system so that we are consistent and even-handed and to avoid any accusations of fair housing law violations.... more
Shop for an area/neighborhood first. Then shop for a residence.
Check out the following link for detailed information about neighborhoods in Indianapolis:
http://imaps.indygov.org/ At this link you can check schools, crime statistics, zoning, voter information, trash pickup, bus routes & schedules, government officials and jurisdictions, etc.
If you are thinking about going in with room-mates, be careful. Nearly all leases hold each tenant 'jointly and severally' responsible. This means they only want one tenant. So if you want 2 room-mates, for example, you are doing it to split the rent 3 ways as well as the security deposit. So from your perspective, your rent is 1/3. But "jointly and severally" means that if one room-mate moves out suddenly, the landlord will go after any or all of you for the entire amount. If room-mate number one skips town, the landlord might evict if you can't cover the missing room-mates rent. Then the eviction will be against you and the other two room-mates and collection action will proceed against you for the entire amount. It doesn't matter that you paid your 1/3 rent. Collection action will also be pursued for the entire amount against each of the other 2 room-mates. If the landlord can get it all from you then they won't pursue the other two. But each of you will have a judgment against you for the entire amount - not 1/3 each.
Steve Kline 317-640-3360... more
I agree with don't let your lack of credit or age stop you. It comes down to responsibility--do you want your money (rent) working for you or not. Your home you can and with an apartment you may or may not--you have to ask permission.... more