I have always wanted to rent to all of the people that have applied, but I have had to make a few tough decisions and turn people down in the past. Most notably was the couple who applied a few years ago — the girl was fine, but the guy had no checking account (red flag #1), terrible credit (red flag #2), and his landlord reference was “oh, he always pays, but I usually have to hassle him about it for a while… if I show up at his door he pays…” I sent out rejection letters, and the girl was able to piece together that the boyfriend was the one with the issues… she actually called me to ask about it (all I could say, really, was that the negative references were for a member of her “party,” but not her). The incident may have broken them up - she told me she was having second thoughts about moving in with this guy after finding out more and more about his finances… I liked them both, but the guy simply wasn’t going to work out.

The people who recently applied — I like them both too, but there are some iffy things that I found during the screening process, which I won’t go into in the event that someone were to be able to put together who I am and what property I’m writing about. However, both pay their landlords, have good employment references, and seem like nice people. The guy (perhaps in a ploy to make me pick him over other applicants) even offered to help out with lawn mowing and whatnot. They’ve been very quick and thorough with sending back the applications.

I waffled. I considered cosigners. I showed the apartment to other people, while still waiting on some calls to be returned, and have not yet gotten any more applications. I wrote up rejection letters, but put off sending them out. They don’t seem ideal, but they don’t seem bad enough to reject flat out. I went out for lunch at Subway, and looked at the people in the store, and on the street — most of them looked like far worse candidates for my upstairs neighbors. I considered the negative items I found while screening past applicants, all of whom turned out to be perfectly fine renters. One of the applicants emailed, asking if I had received their apps, and told me that they were still really interested in the apartment.

I decided to go for communication. I called each one of them, asking for explanation on each of the negative items, and they were up-front and reasonable with their answers. I sent them a cosigner application. They tell me it’ll be no problem to get a parent to cosign, and I told them that they’d be accepted with a cosigner. I hope that that was the right decision!

A friend of mine, who rents a house, doesn’t do credit reports, because he figured that anyone renting a house in his part of town has bad credit anyway. True, perhaps, but I’ve always been adamant that he should be pulling credit reports anyway, just to know what he’s getting himself into. And here I am, waving people through, despite some not-so-good marks… really, though, the landlord reference is the most important one. And the negative stuff was from a couple of years ago… It did give me the head’s up that I might want a cosigner… I guess we’ll see soon enough if I made the right decision or not!

Meanwhile, I’m continuing to take calls and show the apartment - nothing’s really a done deal until you have a signed lease…

I get a lot of calls from families and single parents with several children — the low cost of the unit, and the large backyard are attractive to them. Most simply accept my limit of persons, but some people get quite angered by it. “I thought this was a 3 bedroom!” “The kids are small!” Others simply assume that it must not be very big, or ask my reasons for limiting the number of people. I of course answer simply that the unit isn’t very large, and there is one water heater for the whole duplex. Some people answer that that’s fine, and the kids don’t use much water, etc…… but my limit is still 3 people….

Some people who’ve called have actually wanted to fit 4, 5, 6, or 7 people into my little apartment. A mother with 5 kids; a woman, her boyfriend, her cousin, and 3 kids; a husband and wife with two school age children, and infant, two cats and a dog; a group of 5 college students… I understand that these people all need to live somewhere, but it won’t be in my upstairs. Sorry, folks, I am not running that kind of operation here.

I was actually discussing some of these calls with a friend, and he responded with “Shouldn’t you think about where you’re going to live before you go and have 5 kids?” Um, yes. Yes, you should.

My limit on the number of people isn’t completely in left field — the city has actually zoned all rentals in my area for no more than 3 unrelated persons (which would make the 5 college students scenario a violation of housing codes). There is no limit (that I’m aware of) for number of persons in a family structure.AND, sisters don’t count as “related” persons. They’re talking family unit only (so I guess if I had 4 sisters, and their mom wanted to move in, it would be cool with the city).

This limit on the number of people does automatically rule out a lot of families — which is fine with me. Again, I understand that families all need to live somewhere, but I’d rather not have kids banging around upstairs, crying/yelling and running around the back yard (yes, I realize that that makes me sound like an old lady). Someday I’ll have my own kids, and their noisiness will be something I’ll deal with, but I’d rather not deal with the noisiness of other people’s kids if I don’t have to. Legally, as an owner-occupant, I am not obligated to rent to families with children. However, I CANNOT tell them that that’s the reason I dont’ want to rent to them. Interesting, huh? Read this post for the full story.

Am I turning away potentially fine renters with this limit on the number of people? Yes. But I’m ok with that. This is a big city, and there are plenty of people looking for apartments. I need some bodies to fill the upstairs apartment and pay me rent, but as long as I live here, I’d rather that it be a pleasant living situation for me, as well.

So far, I’ve had three showings — two groups of two girls, and a couple that’s moving in together. Both of the two-roommate showings were one roommate only, which is always a pain, because it means another showing if roommate #1 is interested. However, it’s looking like neither one of the two-roommate groups are going to bite. One emailed me thanking me for her time, and the other I haven’t heard back from. The couple seemed extremely interested, however, so they may come around.

My tenants weren’t home for most of the showings; however, they were home for one, and something happened that I didn’t expect. The prospective renter asked me how much heat usually ran, and I told her that last time I’d checked, it was about $65/month on the “budget” plan — this was two years ago, before the current tenants moved in. But then, as the showing was ending, the prospective tenant asked my existing tenant how much she paid for heat — she said she’s paying $110/month! Still on the budget plan! At first I was shocked that they were paying that much (after all, they’re upstairs, and the attic is uber-insulated. I pay only $65/month DOWNSTAIRS, with a furnace from the 1940s). But secondly, I was put in a place where I looked like a big liar — quoting only half of what the actual heating bill would be….

I do happen to know that the current tenants keep their heat VERY high during the winter. The few times I was upstairs, it felt like it was almost 80 degrees. They don’t seem to be using their programmable thermostat, either, because this was when no one was home…

So, at the risk of looking like a ninny, I followed up with the prospective tenant, explaining that the previous tenants were extremely environmentally conscious, and the current tenants used the heat a bit more, so perhaps it should be looked at as a range of $65-$110, depending on their usage…. That’s what I’ve been saying to new tenants, and truth be told, it’s probably more realistic. As much as I want to sell the upstairs to people, I don’t want to get someone in it only to have them not be able to afford the heating bills…

I have a few more showings this week, looks like a group of two male roommates tomorrow, and then two groups of three female roommates that seem very young, later in the week. I am still expecting, though, to get applications from the couple… they seemed to be moving in already… but I can’t really stop showings until I have a signed lease. Even if I get applications, you never know when something could fall through.

Hello,
In responce to your Apartment for rent. My company is posting me to on an official assignment in this MONTH.I will like to rent your Home for the period i will be staying. Pls do give me the following information.
1.A brief discription of the Home
2.Monthly rent and deposit
3.The address of the Home
4.Pictures of the interior areas of the house
I will be staying in the Apartment for a year pls do send the total charges for this period and the initial deposit required of me to pay before moving in. Pls do let me know if you will accept check as payment.I will be waiting for your responce on this.Hope to hear from you in earnest.
Alexander Lee.

First of all, Alexander’s questions about the monthly rent and deposit, description of the home, and pictures of the interior areas of the house are all answered sufficiently in the ad itself. So the message is immediately suspicious. I knew it was a scam of some kind, but wasn’t really sure how exactly this person intended to scam me.

I showed it to a friend, and he quickly found some relevant information about scammers on the Craig’s list site:

distant person offers a genuine-looking (but fake) cashier’s check

* you receive an email (examples below) offering to buy your item, or rent your apartment, sight unseen.
* cashier’s check is offered for your sale item, as a deposit for an apartment, or for just about anything else of value.
* value of cashier’s check often far exceeds your item - scammer offers to “trust” you, and asks you to wire the balance via money transfer service
* banks will often cash these fake checks AND THEN HOLD YOU RESPONSIBLE WHEN THE CHECK FAILS TO CLEAR, including criminal prosecution in some cases!
* scam often involves a 3rd party (shipping agent, business associate owing buyer money, etc)

So…. the scam would play out like this: I respond to this email, the scammer (”Alexander”) responds saying that he’ll take it, and his company is willing to pay a larger amount than the rent — if I’ll accept a check for more than the amount, and then give him half of the difference, we can both make some money off of this situation. I’ll think that this sounds fantastic, accept him as a tenant, and then he’ll pay me with a fake cashier’s check. I’ll cash the check, and then wire him his share of the overpayment. Only after I’ve wired the money, though, will I find out from the bank that the check didn’t clear. Then, the scammer will have made off with the money that I wired to him, and I’ll be stuck dealing with the responsibility for the fraudulent check (and a still-empty apartment).

I find this sort of thing interesting — it must sometimes work, otherwise these sorts of scammer emails wouldn’t be so prevalent.

Just for fun, here are some actual scams that Craig’s list has posted on their site, for educational purposes:

Hello ,
Thanks for your mail back concerning the inquiry mail i sent to you.
The price,condition also the pics i viewed is okay by me .And my client
confirm there is no problem about the price($975 ) ,my client do pays with
a {USA}cashier check,he has agreed to mail out as bank cashiers check of
$3500. to you on my behalf to cover the shippment fees.About the shippment,
that we be taken care by my me & my personal assistant,my personal assistant
will be using his shipper to do the quick processing of the shipping of
the(1987 Toyota Celica) to my client.
So all you are to do after you will received the check in your mail,
Just take out your sale amount and refer the remaining money to my shipper
immediately through the westernunion or the money gramm outlet so to get the
money fast and start the fast arrangement for the pickup of the
(1987 Toyota Celica).Since you are the original owner of this item,and i
am buying the item directly from you i will like you to write your full name
to be on the check,with the mailing address which my client will be using
to issued out the check to you.I do wish to trust you by refering the rest
balance back to my shipper and also your fast doing to this transaction.
I will like to hear fromyou if this is okay by you and you are ready to
process ,if you aready to sale your item and promise refering the rest
balance to my shipper immediately you received the check so can start the
quick arrangement for the pickup. Any body that want to buy this item
this item just tell therm that it as been sold. I will like to copmplete
this transaction befor the new year. I be at my computer waiting to see
your epky to my payment method mailed.
THANKS AND MAIL ME BACK WITH YOUR DETAIL AS SOON AS POSSIBLE.

##########

> Thanks for getting back to me,i will be
>purchasing the motorbike Like i said earlier i am based in the
>netherlands(holland).there won’t be any probs about the shipment,after
>payment ,the pick up will be made at your place. i have made arrangements
>with the prepaid shipping company. As regards payment,this is what i am
>going to do;I have a client in ENGLAND who is owing me 5800POUNDS i would
>instruct him to make out a money order/certifiedcheck to you in that
>amount and as soon as it clears your bank. you can now deduct your money
>from it and send me my balance,i will using use part of the money to pay
>for the shipping and other expenses .you will then send my balance by via
>western union money transfer.Although the value of the check is more than
>the asking price but i think i should be able to trust you with my
>balance. The reason why i am doing this is that it would take a check
>sent from over here in HOLLAND 21days to clearover there,whereas a check
>sent from the US would clear tops within 48hrs. So i would like you to
>deduct the western union charges from my balance.So if my terms are
>acceptableto you,i would like you to give me your fullname,address and
>phone number so that i can instruct my client to make out the check to
>you. Pls get back to me as soon as you get this mail so that we can
>round things up in a timely fashion..i willbe trusting in this business
>transaction.

###########

> Good day
> i am an auto dealer based in TAIWAN,i am interested in buying your
> ( 1989 Jetta GL 4 door )I will like to know if you would accept
> acertified cashier check for the payment of the,i also need to
> know the price and your full name and address including your
> phone is also needed in which payment will be sent to . i have a
> shipping company who takes cares of my shippment .So don’t bother
> about the shippment.I will also like to know if is still in good
> condition and
> shape.urgent response is needed for procedure of payment of the (
> 1989 Jetta GL 4 door )
> REGARD

#############

> Thanks for your mail,Since the cost of your bike is $800 i just contacted
my client about the cost of your bike and it present condition and he said
there is no problem about that.So my client said he will be issuing you a
Certified Check of $4000 while you wire 3000 to me through Western Union
Money Trasfer and you deduct the cost of your bike $800 and keep the
remaining $200 which my client said you should take for the terms of
Transaction and Agreement between you and my client.So i will like you to
send me your full contact information to where my client will be sending you
> the Certified Check like this:
> name………
> full address………….
> city……………
> state………….
> country……….
> zipcode…………
> cell/office/home phone number…………………..
> I will look forward to the requested information as soon as possible so
that the check can be sent out to you immediately And do get back to me
with the Pics of the bike so tha! t my client will be Able to see What he
is paying off.Get back to me immediately. Looking torwards your
> respond,
> Best Regards.

###########

Good day
i am an auto dealer based in TAIWAN,i am interested in buying your
( Comic book collection - 500 comics )I will like to know if you
would accept acertified cashier check for the payment of the,i also
need to knowthe price and your full name and address including your phone
is alsoneeded in which payment will be sent to . i have a shipping
company who takes cares of my shippment .So don’t bother about the
shippment.I will also like to know if is still in good condition
and shape.urgent response is needed for procedure of payment of the (
Comic book collection - 500 comics )
REGARD

Why the information overload? To cut down on the number of showings. A lot of people will oversell, or be purposely vague in an ad, in hopes of getting as many showings as possible. The idea being “once you get them in the door, you’re halfway to a sale!”

I tried this strategy the first year I was renting out the apartment, and found it to be a colossal waste of time. Of everyone’s time — my time, the prospective renters’ time, the current tenants’ time… I don’t do property management full-time, and can’t wait around on the front stoop all day for two weeks out of the year.

Thus, the information overload online. I’ve found that by giving people answers to pretty much every question they could possibly have, I get fewer calls and fewer showings. But, the people that I do get in the door are already really very interested. Last time I used this strategy I only had to do a few showings before I got a couple who applied on the spot.

Also, in the interest of saving time (i.e. giving showings to qualified applicants only), I pre-screen everyone on the phone. I make sure they’re looking for the right month, ask how many people they have, and whether they have any pets. (I have a no dog policy, and a limit of three people for my apartment — due to it being a 2.5 / 3 bedroom, I get calls from a lot of people with 4-6 people.)

Let’s hope that it works this year, because my day job is keeping me crazy busy…

I first called Landlord2Landlord, the agency I’d been using to pull credit reports before they changed the laws, to find out what needed to be done. First, they sent me some paperwork to sign and fax back, stating the address and nature of my business, and authorizing them to charge $75 to my credit card. They then had a third-party inspection party contact me to set up an appointment. In order to make sure that I could pass the inspection, I asked them some questions about what to expect.

The basic requirements:

• A locked door on the office (commercial space or home office)
• A password-protected computer
• The computer should not be facing outward - so clients could accidentally see an on-screen report
• A lockable filing cabinet
• A paper shredder

TransUnion requires that there is a sign on the door, the other two do not. I don’t really have an official name for my rental “company,” so I decided to just skip the sign… two credit agencies are more than enough.

The actual inspection was a piece of cake, and didn’t take more than 15 minutes. The guy showed up, asked for the building owner/manager’s name and phone number, the web address of my rental business, and how many units I manage. He took photos of the locked filing cabinet, password-protected computer, and asked if I had a shredder. He left his card, and was off.

The next day I received an email from Landlord2Landlord saying that I now have access to full credit reports.

Nice! Why was I so worried about this?

Now I just have to get myself some applicants…

But…. today, the 1st of the month, I got a call from my tenant, saying that they wanted to move out. They want to save up some money, and have decided that moving to a smaller space in a cheaper neighborhood was a good way to accomplish that. They’ll be moving out in 90 days, per the terms of my lease agreement.

I’m glad that I specified 90 days, instead of the more standard 60, for a few reasons. A) I’ll be out of town for part of this month, and won’t be available to show the apartment. B) There’s probably some sprucing-up to do before showings, and this way I’ll have time to do it. C) I have more time to figure out what I need to do to pull credit reports these days. Shortly after the last time I leased my apartment, the credit agencies stopped allowing landlords who work out of their homes to pull credit reports UNLESS they have a separate, lockable room for landlording (verified by an inspection from a credit agency). Sounds like a lot of work. Also, D) I don’t really know what current rents are. I have no idea if I can raise the rent, or if I’m going to have to lower it. How has the housing crisis affected the rental market, in terms of rental vacancies and market rents? If anyone out there has a good handle on this, please leave me a comment. I have some research to do.

Although I am not looking forward to finding new tenants (this is the part of landlording that isn’t necessarily “passive” income), I’m trying not to get too worried about it. Last time my tenants told me they were moving out, I actually cried. No, not in front of them, of course, but I was quite upset about going through the whole process again. But I’m more experienced now, and the apartment has been through several phases of improvements. I also have an ad all ready to go, so I won’t have to worry about composing that again. Things should go pretty smoothly this time around. Or at least so I hope.

New tenants, here I come!

Unless, of course, you’ve gotten into an owner-occupied duplex situation like me — with my tenants’ rent subsidizing my mortgage, tax, insurance and maintenance bills, I pay roughly the same amount per month as what I was previously paying in rent. I do have the hassle of fixing things now, of course, but luckily that hasn’t come up that often. And, unlike what this article says, my taxes did go down considerably after buying the duplex. Not only do I get to deduct half of the mortgage interest on my personal return, the duplex also creates a huge business loss on my taxes, after you figure in the expenses and depreciation…

The whole article, with related reading links, is here

Myth #1: Renting is Like Throwing Your Money Away

Buyers throw their money away for the first five years they own a home, because they simply give money to the bank for the privilege of borrowing money. Renters, on the other hand, pay for one thing every month: shelter. They don’t pay interest to the bank, property taxes or maintenance fees. They pay rent.

Smart renters also take the money they save by renting and invest it somewhere else. Since the average renter saves hundreds of dollars every month, they can afford to invest in stocks, bonds and other vehicles that have a better rate of return.

Myth #2: There are Tax Benefits to Owning

Contrary to popular belief, buyers do not get back the mortgage interest they paid throughout the year at tax time. Mortgage interest can only be deducted from taxable income. This essentially means that buyers pay a dollar just to save 30 cents.

Furthermore, deducting interest has no tax advantage unless a buyer pays so much in interest that the amount exceeds the standard deduction that everyone–including renters–is allowed to take.

When it comes to owning, the only guarantee is that buyers will be required to pay property taxes. Since renters are not required to pay any taxes on the property they rent, it seems downright foolish to factor the ‘tax benefits’ of owning into a buying decision.

Myth #3: It Doesn’t Cost Any More to Buy Than It Does to Rent

People can usually rent a home by paying first month’s rent, last month’s rent and possibly a security deposit. All the money that is paid initially actually goes towards monthly payment obligations, with the exception of the security deposit, which is nearly always returned to the renter in the end.

When a person buys a home, the money that is paid upfront is more significant and may or may not be seen again. For example, a buyer must pay closing costs (typically five percent of the loan amount) and real estate agent commission (typically six percent of the loan amount) before being called a homeowner. This 11 percent ‘investment’ ensures that the home must appreciate by at least 11 percent before the buyer can hope to break even.

Initial costs aside, there are also other costs a buyer is responsible for that a renter is not, such as mortgage interest, property taxes, insurance and maintenance. These costs can add up and may even increase significantly over the years.

Myth #4: Buyers Have Assets, Renters Do Not

At best, buyers have depreciating assets. Home prices are falling in nearly every area of the country. An estimated 50 percent of the buyers whose loans were originated after 2002 now owe more than their homes are worth.

Homeowners who have been paying on their homes for ten years or more are seeing their equity disappear. This means that the ‘investment’ they made through mortgage payments is gone–dried up virtually overnight through no fault of their own.

Renters may not co-own a home with a lender, but this doesn’t mean that they don’t have assets. Many renters have a large and prosperous portfolio, Star Wars collectibles (just an example) and other assets that can be sold IMMEDIATELY for cash. The reason they own these things is because they haven’t been paying a lender to ‘rent’ money so that they could pretend like they own an asset.

Myth #5: Houses are a Good Investment

During the housing boom, everyone thought that housing was a great investment. Many people bought under the assumption that home prices go up, not down. The result of this madness is the biggest foreclosure crisis in the history of the United States.

The reality is that housing is not an investment. It’s shelter. That is all housing has ever been. Self-serving organizations like the National Association of Realtors like to tell people that buying a home is a good way to build long-term wealth, but this statement couldn’t be further from the truth.

Although home prices can go up (and down), the rate of appreciation on housing does not surpass inflation levels over the long-term. Between 1890 and 2004, the real return on housing was a pathetic 0.4 percent per year over the last 100 years, according to Robert Shiller, a housing expert and Yale economist.

Real estate investments aren’t that much better over the short-term. The gain in new home prices over the last 20 years has been a mere fraction of the Dow’s gain. The average person investing in stocks between 1987 and 2007 would have made more money than the average person who bought a new home in 1987.

Another nice thing about the owner-occupied duplex situation — I come out ahead on both sides. If housing prices were to continue to go up, because everyone wanted to buy, I could sell the duplex at a profit. If it becomes universally more attractive to rent, I have a larger pool or renters to choose from, allowing me to be more choosy and raise the rent.

One thing that could have helped a bit - keeping a better mileage log. Thus far, I’ve just been hanging onto receipts and tallying them all up into a spreadsheet at the end of each calendar year. From the list of receipts, I can then enter mileage to each store or supplier, and add up my mileage from there.

However, I know there are a lot of trips that go unaccounted for. For example, when I was installing a new light in the upstairs living room, I made trips to both Home Depot and Lowes to find the most attractive light fixture at the best price. With my current system, I’m only getting credit for the trip where I actually made the purchase.

Another argument for keeping an actual, current log — the IRS requires you to. If I’m audited, I need to have a mileage log to show my duplex-related trips.

So, this year I’ve vowed to be more organized. I have a spreadsheet on google documents where I’ll log all of my duplex-related trips, recording the date, destination, whether it’s for the rental unit or the whole duplex, and any special notes. For the sake of simplicity, I’m also keeping track of business mileage on the same sheet - I’ll sort it out at the end of the year. The nice thing about google documents is that I can edit the file from anywhere, and from any computer.

The trips I make are generally pretty short, so we’re not talking about serious cash here, but at 48.5 cents a mile, that added up to about $75 off my taxable income last year - and it could likely have been more if I’d been more organized.

Because of all this settling, though, my front door has always been a bit sticky. In the past year or so, it’s apparently settled just enough to cross over from sticky to the top of the door not closing all the way. This has created a situation where I need to pull on the doorknob while I lock the door - with the top of the door bending slightly toward the interior. Not ideal. I’ve been putting off dealing with it for a while, but I eventually realized that time would only make it worse, and I might risk permanently warping the door. That, and the not-completely-closed door creates quite a draft in my living room.

THE FIX
About 15 minutes with some medium grit sandpaper. I simply got on a ladder, and sanded down the top corner of the door, as well as the corresponding portion of the door jamb. I kept checking my progress, and knew that it was working when the door returned to its previous state of “stickiness.” I kept sanding until the door closed properly, and then sanded a little more to account for the swelling of the wood with summer’s humidity.

When I had finished this, I realized that once the door was closed, I could tell that the door was indeed a bit warped from all of that bending. However, I discovered that if I tap it a bit, I can get it to fit snugly into the door jamb — I think I’ll just use the back door for a few weeks, and see if this helps the door “remember” its original straightness. If I’m successful, I’ll then sand the door down a bit more so that it fits easily into its original position.