Buying a house for rent is not an easy task
Buying a house for rent in the United States is not an easy task. You must consider all aspects. If you rent by yourself, the landlord must understand the laws of the state, otherwise, trouble will come to your door. To give the simplest example, renting a house cannot be discriminated against, and you cannot refuse to rent a house because of your skin color and gender. For example, if you write "rent to women only" in an advertisement for renting a house, calling it "sex discrimination" in the United States will lead to lawsuits.
If you are afraid of trouble, you can find a specialized house management company. Each area has a specialized house management company. Many people buy an investment house and are too lazy to manage it by themselves, so they entrust the management company to rent out. Of course, like buying and selling houses, the management company must also A Broker license is required, and real estate agents can also conduct house management through a practicing company (Broker). Generally speaking, the order is as follows: first, find tenants through real estate agents, and then manage the company.
Let's talk about the things that need to be considered when renting a house and the things that need to be considered when looking for a housing management company. The former must invest more time and energy. Although the latter is convenient, most housing management companies do not guarantee your income. They will not be held responsible for not receiving the rent. We will discuss this in detail later.
I. A list of things to do and do all the rental houses for individuals
1. Understand the dynamics of rent
If the rent is too high and no one comes to rent, the vacancy rate will be high and money will be lost. The rent is too low. Although many people want to rent, they still lose money. Many websites can understand the rent market. The most popular one is Craigslist. This website can publish classified ads for free, which can collect the new and old, layout, area, and rent levels of investment houses in the region.
Under normal circumstances, if you have not rented out for 3 months, then there is a problem and you need to adjust the rent. If it is a popular city, if you do not rent out for a month, you should be vigilant and make corresponding adjustments.
2. Screen tenants
In the United States, landlords cannot be based on the tenant’s skin color, race, gender, age, physical condition (such as disability), family status (such as a large number of children). This is for states that do not have relevant policies. Some states have the highest population requirements for renting apartments. For example, one-bedroom and one living room can live up to 2 people, and two bedrooms and one living room can live up to 5 people. If there are more people, it is illegal. These are illegal acts. If these words appear in the rental advertisement, you are likely to be listed. defendant. But you can refuse tenants to bring pets, and you can also refuse tenants who have bad credit or you think their income is unstable. Before renting a house, the landlord must conduct a small background check on the tenant, that is, ask the tenant to fill out a rental application form with a bunch of questions for him to answer, such as his work unit, income status, family members and Contact information, etc., and he must provide you with an SSN (Social Security Number), through which you can check his credit status online. If his credit score is very poor, it means that he is more likely to not pay the rent after becoming a tenant.
3. Clear rental contract
In the event of a dispute over the rental contract in the future, the contract shall prevail. In the United States, the cost of utilities such as water, electricity, and gas is called Utility. Whether the rent includes utility, whether it includes garbage and grass cutting fees, whether it is allowed to bring pets in, how many adults staying in, and their names, etc., are required It must be stated in the contract. In some old-fashioned apartment buildings, since the water meter is not set separately, the rent usually includes the water fee. In the newer apartment buildings, the water meter has been set up separately, and the rent does not include the water fee. The advantage of investing in a detached house is that utilities, garbage fees, and grass cutting are basically paid by the tenant, and even the maintenance costs of some indoor facilities (such as refrigerators and washing machines) can also be agreed to be the responsibility of the tenant.
The length of the lease period also needs to be negotiated. Generally, the shorter the lease period, the higher the cost of cleaning the carpet and painting the walls, and the higher the vacancy rate, so, Landlords hope that the lease term is as long as possible. Generally, investment housing requires a lease term of at least one year. After the lease expires, if the tenant continues to stay, he can no longer sign the contract after the landlord agrees. The previous contract still applies, but the nature of the contract has changed from the previous year-to-yearly to monthly-to-monthly. The difference between the former is that the former cannot arbitrarily change or terminate the contract during the lease term, while the latter only needs to notify the other party 30 days in advance. Both the landlord and the tenant can terminate the contract. Do the math, some states give 60 days' notice in advance, so they are optimistic when signing the contract).
Another important content of the contract is to stipulate the liability for breach of contract and the circumstances under which the contract can be terminated. For example, the rent must be paid in the first 5 days of each month, and a deferred payment fee will be charged for a certain period. After a certain period, the landlord has the right to suspend the contract and request the tenant to move out. The original guide to immigrating to the United States, please indicate the source for reprinting.
Another issue that needs attention is the housing deposit, which is called a Security Deposit used to repair the damaged house after moving out. If it is a personal rental, it is usually a month’s rent (the renter sees it, the rental company’s deposit will be less than the personal rental, but as long as the condition is maintained, the deposit can generally be Take it back, of course, if you run into a bad rental company or landlord, there are also deductions for carpet cleaning, etc.). If the tenant brings a pet, a pet fee can be charged. This fee is not the same as the deposit and is usually non-refundable. The price of pet fees varies from state to state. There are dozens of pet fees per month, and even higher.
After the tenant signs the rental contract and moves in, the landlord also needs to pay attention to check whether the name of Utility has been changed to the tenant’s name in time, You can call the Utility company, if not, you have to urge the tenant to apply as soon as possible, otherwise, the water, electricity, and gas bills incurred during this period will be borne by the landlord.
4. Maintain the house and repair damaged facilities
The house is the property of the landlord, so the maintenance and maintenance of the house are the responsibility of the landlord. If it is not agreed in the contract in advance, the maintenance of all facilities in the house is the responsibility of the landlord following the laws of the United States. Air conditioners, heating, and water heaters, as well as washing machines, must not be faulty. If these are broken, the landlord must be responsible for repairs. If they are not repaired in time, the tenant can suspend the contract and move out or repair by themselves and deduct the cost from the rent. The labor costs in the United States are very high, and professional companies only pay $50 to $100 for inspection. It is not surprising if the maintenance cost is thousands.
In the United States, the maintenance and repair costs of houses are not small. For example, roofs are replaced every 15 to 20 years. The longest life roof is only 30 years, and a 1,200-foot house is replaced. A roof costs at least $6,000. Since the houses are all wooden structures, you also need to pay attention to preventing termites and mildew every year, otherwise, the structure of the house will be damaged and the loss will be great.
Planting trees is also very particular. Some trees have too large and thick roots, and you can’t plant them too close to the house. Otherwise, over time, it will damage your sewer pipes, and break your branches will damage your roof, endangering you. Personal safety. It costs money to trim branches or cut trees.
5. If you encounter bad tenants, you must go to court as soon as possible
The best way to go to court when you encounter bad tenants in the United States. Fortunately, the procedure for this kind of lawsuit is relatively simple. If the tenant refuses to execute the sentence, the landlord can call the police to chase him away, but do not chase him by himself.
II. What should be paid attention to by professional leasing companies/brokers
1. In the first stage, professional brokers are only responsible for helping to find tenants, find the tenants, and withdraw after signing the contract. In this case, the broker’s commission is generally 7-12% of the annual rent, and in many cases, it is the 10% we mentioned earlier. In many cases, if you sign a one-year contract, you have to pay one month's rent as a commission.
The basic procedure is as follows:
1) Sign an entrusted lease agreement with the broker.
2) The broker helps you find suitable tenants, usually through the MLS housing sharing system, release rental information, plus personal print advertisements and online media to find tenants.
3) In the application form submitted by the tenant, select the most suitable tenant, sign a good rental contract, and improve the details of the lease.
2. Some are to ask a professional management company to help you manage the rented house after renting out If there are maintenance problems and payment problems, they will all be dealt with by special personnel, and the cost will be paid by the owner. If there is a legal dispute, you need to ask a lawyer or a professional company to evict the tenant. They can also act as an agent, and the cost is still paid by the owner.
III. Matters needing attention:
1) The rent should be set in line with the market.
2) Choose the most important thing for tenants to look at credit. Good credit and stable work are very important. In the current rental market, a considerable part of houses are auctioned or short-sold, which will hurt their credit scores. Therefore, if there are no better tenants to choose from, among these tenants with lower credit scores, it depends. Whether he lowered his credit score just because of a house auction or short sale, depends on his past payment records and whether he has habitual defaults. If they have a good payment record and work stably, they can still consider accepting them. Credit is important because it determines whether the rent can be received in time. Even if a professional real estate management company is hired, if they fail to receive the rent, they will not be liable; of course, if they continue to default on the contract and violate the contract, they can be evicted, but the owner at least If rent cannot be collected for a few months, it will take time to get rid of it, and it takes time to find a new tenant. If you find a tenant with bad credit, the landlord will suffer a great loss.
3) If you encounter a tenant who fails to pay the rent on time, or deliberately defaults, you should promptly ask a professional eviction company for legal eviction Generally, the entire process of eviction takes about one and a half months. If you act early, the loss of the homeowner can be minimized.
4) Property management fees that homeowners should know
Mainly include property management company personnel, building disaster insurance, building common area decoration, ground floor access and garage day and night guard duty and closed-circuit monitoring, mail receiving and dispatching, gym and swimming pool, common area cleanliness and sanitation, greening and air conditioning, and domestic water for each apartment unit, Air-conditioning cooling, and heating circulating water, basic closed-circuit television programs and INTERNET network, etc.
In short, renting a house is generally profitable, but short-term profitability (realizing a positive cash flow) is very difficult because the capital invested has a cost. Therefore, if the real estate market is weak and the possibility of real estate appreciation is small, renting a house is not a good business. Currently in the United States renting houses, generally speaking, if you can achieve a profit of more than 7% of the invested capital (4% is the cost of capital, 3% is the inflation), the investment is worthwhile.