Pre-screen your rental inquiries to save time and effort

Prescreening defined:  eliminate time wasters!  Improve your odds of closing a “deal” with an applicant.  This means getting them to apply, get approved, pay the funds, and move in!

 Know your 10 second commercial:  Mine is “we screen for credit, criminal, eviction, employment, and landlord verification.  The screening fee is $40.00 per adult over the age of 18.  All parties that will be on the agreement apply.”

 After you have given your commercial you can explore the caller’s reaction.  “Do you have credit, criminal, eviction, employment, or landlord issues you would like to make us aware of prior to renting?  Will any of these screening areas be a problem for you?”  Have a conversation.  Be aware that tenants will tell a story.  The screening facts matter. 

 Don’t try to define your criteria or establish if a caller can pass it.  Offer to provide it in writing and invite all callers to apply.  Treat all parties the same.  “We provide screening criteria and lead based paint disclosure and photos prior to booking an appointment to show.  Do you have email?”

 “Have you driven by the property yet?”  Explore if they are familiar with the area.

 Next you can move on to your property rules.  Questions such as the following are helpful.

 “Do you have pets of any sort? – reiterate your pet policy.  Ours is “we do not accept any aggressive breeds.  Pet visit at your home may be required prior to approval of a pet.”

 “What date are you interested in moving?” – reiterate your move in policy.  Ours is “we do not hold homes more than seven days once an applicant is approved.  Upon approval you will have 48 hours to pay an execution deposit and sign an execution agreement.  These are certified funds.”

 “Do you have any “musts” for a property that we should know about before showing you the house?”

 “This house has __________________ heat.”  “The tenant pays for all utilities except ___________________.”

 “This house is (small) or (duplex) or has a (garage) that is used primarily for storage.”

 “We are showing the property at ___________________________.  Would you like to be present at that appointment?  What is a good cell # for you? _______________________”

 We require a confirmation phone call prior to our dispatching to the appointment.  Please call to confirm when you are on your way to the home or cancel at ________________.  We don’t go to the house without a confirmation call.

If you would like help buying or selling a home in Oregon and Washington please give me a call!

Kathryn King 503-997-9035, kathryn@kjkproperties.com

Is there a good way to live in your investment and still have it pay for itself?

Case Scenario:

You are a gainfully employed first time home buyer more interested in investment property than a home.  You would like to live in one side of a duplex and rent out the other side.

How should you go about it?  Obtain FHA owner-occupied financing, with 3% down, or by using a non owner-occupant, but related, co-borrower.  This scenario allows a gift down payment from a relative.

What are the pros and cons of this scenario?  Living by your tenant is not always easy.  Could be the best way to cash flow in the short term.  Live in for 2-5 years, save additional down payment, rent out owner unit and buy another investment property. 

I have equity in my home, now I want a multi-plex. How do I get there?

Case Scenario:

You are a single person with a home you have owned for 7 years.  You have roughly $100,000 in equity and you would like to buy a four unit multiplex.

How should you go about it?  Take out a 2^nd with a mortgage broker or a direct lender bear in mind that the higher the loan to value ratio on your home will be, the higher your rate will be.  That becomes your down payment and you can purchase a 4 unit rental in the price range of $400,000 to $500,000.  I would be inclined to go higher and get larger units with nicer amenities such as 3 bedrooms in combination with 2 bedrooms, garages and fireplaces.  This makes the units attractive to a higher priced tenant and gives you ability to push rents as a nicer unit.

What are the pros and cons of this scenario?  Borrowing the equity in the form of a 2nd could increase the debt service “against” the 4 plex so that you do not have any cash after debt service.  Benefit in foreseeable future would be write off and increase cash flow with pushing of rents at turnover or on an annual basis.  4 doors require more energy than 1.  Harder to sell a multi family in a pinch.  Harder to tap the equity of the rental, if not impossible, without refinancing first mortgage.

What if you want to turn your home into a rental?

John and Diana own their first home.  It is a 2 bedroom and they have outgrown it.  It is in an up and coming part of town that is close to transportation.  They have grown to like the area but they can’t stay, they need something bigger.

Solution:  Qualify for a new owner occupied loan with lender.  Take any equity necessary from the existing home for the down payment on the new house and potentially additional reserves. 

Once qualified for the new home, begin shopping for it.  At same time ready existing home to become a rental.  Fix all maintenance items and attend landlord classes.  Become familiar with the landlord documents.  Meet with an attorney and create an LLC.  Once moved in to the new home, clean and advertise the prior home.  Taking applications, until one passes screening criteria.  Transfer title of prior home into newly established LLC.  Meet with tenants to accept rents and deposits in verified funds.  Do paperwork and take photos at move in.  Follow up in a week for a punch list and get with the mentor for guidance along the way.

In a matter of years John and Diana will have the opportunity to revisit additional leverage to purchase additional rentals, if desired.  They will have landlord experience to qualify for investor homes, or they can repeat the process, buying another owner occupied residence.

Learn more tips like these by attending Landlord Study Hall www.landlordstudyhall.com.