Category: Realty

IKEA Reno #2

This was our second full gut job of a rental unit.  It’s been 6 months or so now since we completed it I just haven’t had a chance to post.  We chose many of the same options that we chose in our last gut job because those are still all my favorite options.  That’s one thing that’s hard in renovating real estate is that you want to update to what will appeal to anyone and not make it too custom so I try to pick neutrals. Anyway, even in my own house I try to pick neutrals because you can always add color in other ways but it’s expensive to replace thing more permanent things like a counter top, etc.

With this unit we tried to be better at working on all the rooms at the same time since that’s where we got so delayed on the last unit – mainly because we were trying to do all the work ourselves.  This time, we decided to hire out most of the larger items like flooring, kitchen, and bathrooms and we just worked on some of the smaller items which is still time consuming enough.

Flooring:

So, the first thing we had to figure out in this unit was the flooring and not just the flooring but the subfloor as well!  This was an upstairs unit and I literally felt like I had to tiptoe around up there because the floor was so squeaky.  It turns out the people who constructed the building in the 60’s didn’t not use 3/4″ plywood for the subfloor as is the standard today.  They actually used 1 inch think soundproof fiberboard for the subfloor which would’ve been great if they’d put plywood under it.  But the fiberboard flexes and caused a bunch of the nails to come out which was causing it to be super squeaky and flexy.  I literally felt like Tigger from Winnie the Pooh up there bouncing around every time I walked.  It just didn’t feel solid to me.  I wasn’t at all comfortable with it.  The people who have lived below this unit must’ve been super annoyed with all the noise.  We also had a section that was not level by about 2 inches which could’ve just been caused by not having the proper subfloor support – who knows.

First thing we did was hire a contractor to attach sister joists to the joists that were lower to raise them up.  We made sure there was no other damage before doing it and we couldn’t see any.  Then, we had the contractor put 1/2 inch plywood on top of the entire subfloor over the entire unit and secure it through to the joists with 3 inch screws.  He also glued the plywood to the existing subfloor which I was honestly nervous about because I’d rather not use glue since taking it up will be a nightmare, but he insisted it would be better so we just went with it.  We don’t ever plan to take up this new subfloor combo so it’s fine.  It made the biggest difference.  The floor is no longer flexing and moaning.  Then, we put some wood laminate over the top of it with a sound barrier rubber layer underneath it for extra soundproofing.  I think the people downstairs will be much happier now.  We ordered the wood laminate from Lumber Liquidators.  It’s a dark brown wood look color – Farmland Hickory Engineered Vinyl Plank flooring 7mm thick.  But the best thing about it is that it’s water proof.  It was $2.40/sq ft and $2/sq ft installed, which is pricey but we’ve started going with Vinyl Plank in all our units since it lasts so much longer than carpet and people just like it alot better so it’s easier to attract good tenants.

The kitchen flooring had gotten water on it at some point so it was kind of squishy.  We had to pull that up and saw a layer that looked like it could be asbestos.  I sent a piece in to get tested and it turned out not to be – woohooo!!!!!!!!!!!  You have no idea how much of a relief that was.  I had nightmares about that.  So, we were able to get that taken up and we put the same Farmland Hickory EVP down in the kitchen.

Electric:

The building had old electric panels which we had started to upgrade with each renovation since they were Zinsco panels which are no longer up to code.  With this unit though, we needed to upgrade all the panels for the entire building and Ameren was requiring us to move the meters from the garage to the outside of the building.  All we could see was dollar signs on this one.  But AMF electric company really came through for us.  Don Kentch was the manager on the project and he really gave us an excellent price and made quick work of it.  I literally got about 13 companies to come out and bid on this and so many of them just didn’t want to do the work which was shocking to me because we were willing to pay.  They just came and told us don’t do it – it’s going to be too expensive and take too long. But, for us, it was important to get it done so that the building is safe and up to code and that’s not what we wanted to hear.  AMF came in with a quote and wasn’t scared of doing hard work. I was very impressed with them.  And this way we were also able to get more lines run to the kitchen we were about to redo because modern day kitchens need more electrical than kitchens did in the 60’s.  Win-win.

Kitchen:

We chose to do another IKEA kitchen.  The thing I like about IKEA for rentals is that if the tenants damage a cabinet door or something then all we have to do is get a replacement door from IKEA which is significantly cheaper than all new cabinets.  This time though we hired IKEA to do the installation instead of doing it ourselves.  That was a great call.  It took them 3 days vs us taking 3 months.  The installation cost about $2,000.  So. Worth. It.  For the backspash tile, we chose a longer subway tile from Home Depot and they installed for us.  We also got a black quartz countertop from Home Depot that they installed.  We opened up the doorway to the kitchen by removing the cowboy doors and door frame.  For information on our DIY IKEA install, see this post: IKEA Kitchen Install

Bathrooms:

We had the same contractor do our bathrooms again and chose similar tile for the wall and floor.   This time we got a combo fan light put in place for extra lighting in the hall bathroom.

Before and After Pictures:

Dining Room/Living Room – Before
Dining Room/Living Room – After
Dining Room/Living Room – Before
Dining Room/Living Room – After
Kitchen – Before
Kitchen – After
Kitchen – After
Kitchen – After
Kitchen – Before
Kitchen – After
Kitchen – Before
Kitchen – After
Master Bedroom – Before
Master Bedroom – After
Second Bedroom – Before
Second Bedroom – After
Third Bedroom – Before
Third Bedroom – After
Hall Bathroom – Before
Hall Bathroom – After
Hall Bathroom – After
Master Bathroom – Before
Master Bathroom – After
Common Area – Downstairs Front
Common Area – Upstairs Front

To Show or Not To Show Is the Question

When a lease comes up and your tenant decides they are moving, you have to make a decision on whether you will show the place to new potential lessees before your current tenant’s lease runs out. I’ve always opted not to simply because I don’t want to disturb the current renters while they are living there, but here recently I thought maybe I’m being too nice and I should try to turn the unit over quicker. Big mistake!

We had a tenant that had mentioned they had fish when they applied to rent. We have a no pet policy, but we thought, fish? – no big deal. Well, when he said fish, he meant FISH and then some! But he always kept his place up really nice and he was a super nice guy and great tenant. Bryon had been over there and he’d offered us dinner before, etc. So, we thought, well maybe we could show the place at the end of his lease to see if we can find someone sooner – his place is always so nice.

Well, when people are moving – the place is not so nice. Boxes are going to be everywhere, etc. Moving is stressful, right? Didn’t think too much about that at the time. I asked our tenant in advance if we could bring someone by on Monday at 1pm. I told him on Friday so he would have plenty of notice. He was very nice about it – he’s a very nice guy like I mentioned. He even left us a frappuccino in his fridge when he moved – how nice, right?! And he’s given us brats for dinner (best brats I’ve ever had, by the way) before while we were fixing up a unit. I love tenants like that. Makes this whole landlord thing worthwhile. He did mention there might be boxes, but he’d try to clean the place up, etc. Ok, no problem.

I was planning to show the place to a granddaughter in her 20’s and her grandmother who was in her 60’s. They were very nice. I met them at the front of the building and walked them up. Rang the doorbell a few times. He’s not there which is fine. I told him he didn’t need to be there. Unlocked the door and we entered into the Costa Rican jungle. It was muggy as heck. There were aquariums all over the dining room floor – like 10 of them. The granddaughter says, “Does he have fish?”. I say, oh yes, he has fish but I didn’t look inside any of the aquariums – we just kind of walked right past them.

Already I’m having a bad feeling like we should turn around and walk out but there seemed to be no turning back – we had momentum. The grandmother was already moving towards the bedrooms. Then, the granddaughter gets ahead of her and we are all walking down the hallway towards the master bedroom. Granddaughter is in the front, then grandmother, then me watching it all unfold like we are in a horror movie. It actually felt like that for some reason. I think because I could almost feel their trepidation – it’s almost like they knew something that I didn’t.

Then, the daughter peeks her head into the master bedroom and says, “Is that a.. Is that a.. Oh my gosh I’m out of here. I can’t be in here with a snake.” Then, her grandmother screams, “SNAKE!!!!!”, and literally pushes me against the wall and runs past me. I run after them both because they have me sufficiently freaked out. They proceed to run their way completely out of the building and I am chasing after them apologizing. The grandmother was so nice. She was breathless and said, “Don’t you feel bad! Don’t you feel bad!”. And I just kept saying, “I’m so sorry…”.  They quickly walked to their car.

So, the moral of the story for me is: don’t show the place before the current tenant is out. They have no incentive to make it look nice and especially if they are in the process of moving and especially if they have a pet snake. It felt like we were in a bad movie when we walked into the place. Little did I know, we were on the set of the movie, Anaconda. It was muggy in there because he had so many aquarium pets. That was just one.

I’m sufficiently traumatized that I don’t think I’ll ever bring myself to show a place before the tenant is out again! And probably that’s for the best. Because also people don’t want to see how someone else has lived in the place they are about to rent anyway. They want fresh paint, no smells – they want it to feel like new. Real Estate lesson 101. Too bad we literally scared away the best potential tenant we’ve had thus far. Oh well, back to the drawing board.

One good thing, this tenant left the place spotless and with no problems. It was beautiful after he moved out which I was a tiny bit worried about after seeing all the aquarium pets. He even spackled all the holes in the wall from wall hangings.  Fish and reptile owners get a thumbs up in my book. Dogs and cats tend to do more damage. So, now it shows really well. If only I had just waited.  Unlike most horror movies, this one has a happy ending.  🙂

Screening Tenants

Most screening is intuitive.  You go with your gut on this, mostly. How do they talk to you on the phone?  Are they nice, bossy, demanding, already negotiating about the rent?  True character shines through in those first phone conversations.  These are some of the questions I like to ask:

When are you looking to move in?
Why are you moving?
How many people will be living in the rental?
Where do you work?

Though we use a screening company to verify employment, credit, landlord history, etc, we don’t always go with their suggestions.  Screening companies are good for providing information though (b/c sometimes your gut is wrong).  We’ve gone with a person that the screening company recommended and not had the best experience and we’ve gone with a person that the screening company didn’t recommend and they turned out the be great tenants.  It’s important to take the screening companies advice and combine it with what your gut tells you.

The screening company is great at digging up information that you might not have access to so I still recommend using them.  And the screening company has their own rental applications, etc so you don’t have to worry about coming up with your own (not that it’s that hard, but just another plus). We use Credit Verification, LLC: http://www.creditverification.com/  The application fee is $55 for singles and $65 for a married couple – you need to have them pay you the application fee up front when they fill out the application.

Note: If you do decide to do the screening yourself and not use a screening company, then I highly recommend that you have access to CaseNet – this reports any previous landlord judgements or actions. This has saved us tremendously from bad tenants!

I also like this article on screening tenants:
http://www.reiclub.com/articles/lease-to-jerk

Have qualifications for the tenant. These are some of ours:
1.) Tenant should have a gross income that is 3 x rent.
2.) Credit score > 600, preferably – some exceptions can be made based on situation.
3.) Good debt to income ratio.
4.) Good rental history – current and previous landlord (beware of them using a friend as a landlord – there are ways to check this out).
5.) Let them know that you use a screening company, if you do.
6.) No cats or dogs. (we don’t allow pets b/c of the smell that lingers sometimes)
7.) No smoking.

Usually a tenant that you don’t have a good gut feeling about will fail one of these qualifications.  But sometimes a tenant fails one of these qualifications (credit score, for example), but you still want to take a chance on them b/c they seem like they have good character.  I usually don’t overlook the rental history though – that rule is hard and fast – we don’t want any drama.  :-/

Move Out Letter/Email to Tenant

Here’s an example of the letter we send the tenants about a month before their move out date.  How you send it depends on how you normally communicate – we tend to communicate over email where possible but some of our tenants never check their email so in those cases, we have to use snail mail.

Dear Tenant:

Please keep the following in mind for your move:

  • Please make sure you do your best to clean up the apartment after you move your belongings out.
  • We will need an address in which to mail the security deposit.  You should receive the deposit within 30 days as long as the apartment is in order.
  • Don’t forget to transfer the utilities out of your name on the day you move so that you don’t continue to get billed
  • Send the post office a change of address form.
  • You can leave the keys (including the mailbox key) and garage door openers in the apartment.

Once you have finished cleaning and removed all of your belongings, let me know.  Thanks for taking care of the apartment and let us know if you have any questions.

We have set up landlord agreements with most of the utility companies so when someone moves out it automatically switches back into our name and gets billed to us.  This is important to double check because it can be costly if something gets shut off and you have to get it turned back on.

 Also, this website has a great, more formal move out letter:

https://www.nolo.com/products/move-out-letter-noe3-pr123.html

 

 

Non-Renewal of Lease Letter

If someone does not pay rent on time or is not following all the rules outlined in the Lease agreement, you can choose not to renew their lease at the end of the term by sending a Non-Renewal of Lease Letter.  Just make sure you give proper notice.  We have had to do this.  For many of my forms, including our leases, I like to use:

http://www.ezlandlordforms.com

Steps to prepare a house/apartment to be rented

When a tenant moves out, these are the steps we take to get the place re-rented:

Spackle the walls.  

Tenants hang pictures and leave holes – these will need to be spackled and sanded before painting.  I like to buy the spackle that starts out pink and turns white when dry.  The type of spackle that you use makes a difference – sometimes the tenants spackle with rubbery stuff that doesn’t really work and looks lumpy.  I use: DryDex Dry Time Indicator Spackling.

Sanding is really important – wait until completely dry to sand or it won’t go well.  I buy sandpaper: and just sand it with my hands until smooth.  You just want to fill in the hole, you don’t need the spackle around the hole or it will look lumpy so sand it until smooth.  Then, wipe off the dust so that when you paint it, the paint will stick.

Paint the walls, doors, & trim. 

This usually has to be done if the tenant has been there for more than a year.  Sofas leave marks on the walls and just dirt and grime.  First, clean the walls, doors, and trim to see what will come off.  Potential new tenants always love a fresh coat of paint on the walls and it doesn’t cost much so you get a big bang for your buck.  It does take a bit of effort though – I’m the resident painter and I definitely feel like I walk around in a paint fog for a couple of weeks while I’m knee deep in it – all those fumes!  Luckily, they make low-fume paint now-a-days but I don’t always buy that stuff b/c they say the stinkier the paint the longer it will last and you don’t have to put as many coats.

Also, paint colors change over time – today people want grays, clay/muddy colors and that didn’t use to be the case a few years ago so it’s good to keep up with the times.  If the ceiling needs painting, paint those too – though I try to avoid this if it’s only a little dirty.  Painting the ceiling is not fun though it is nice that you don’t have to fret over the color, etc – there’s just one type of ceiling paint and it’s labeled ceiling paint in the store – no fuss and indecision required which is half the pain of painting, isn’t it?

I use eggshell paint for the walls b/c I don’t like the glare of semi-gloss, but satin/semi-gloss might be better for kitchens and bathrooms b/c it’s easier to wipe off.  Doors and trim don’t always need to be painted – you’ll have to try to clean first and evaluate – maybe just touch up if you have the original color.

Evaluate the flooring and replace as necessary.  

Unfortunately, carpet frequently has to be replaced if the tenants have been there over a year unless you have some really good tenants.  We have chosen to put Allure vinyl plank flooring down more recently in hopes that we won’t have to change it out so frequently – a little more expensive, but could be worth it – time will tell.  Home Depot has great rates for carpet so again – big bang for your buck.  When it comes to carpet, people really appreciate new.  If you had good tenants though, you may be able to get away with just cleaning them with a good carpet cleaner.  I wrote this post on our experience with different types of flooring: Best Flooring For Rental Houses (Our Experience)

Determine if there is anything that is an eyesore and fix or replace it.

In one case, the whole kitchen was an eye sore so we decided to update it.  It was original to 1969 and the cabinets seriously looked like they were made of scrap wood.  No amount of cleaning or painting was going to make it right, it was time to update.

Clean, clean, clean.  

Mop all the floors.  If you have tile floors, scrub the grout with a grout scrub brush.  Clean the windows.  Clean out all the cabinets and drawers (vacuum out and wipe down) and repaint any wood shelving if necessary or put new contact paper on them.  The newer everything looks, the better!  Clean ceiling fans.  Clean vents.  Wipe down walls.  Of course, you might not want to do the cleaning until the very end b/c you will make a mess with the fix-up.  I typically use a vinegar and water mixture to do all the cleaning – cheaper and very effective.  Goo gone also works well for any grease messes.

Take pictures.

You want to document how the house looks before tenants begin to move in.  Taking detailed pictures is a necessity, especially if you need any proof when dealing with security deposit claims.  Take close-up pictures of flooring, etc.

Check if inspection is required.

Some cities require your house to pass inspection before a tenant moves in.  And some don’t.  In St Louis, we have two rental properties in different counties, one requires it and the other doesn’t.  So, even within the same larger city, the rules are different.  And inspection is quite rigorous and you could end up with weeks worth of stuff to fix – from door stoppers, to oven-tipping prevention devices (good call), to repainting a shed (we have had to do that), to power washing the siding, to cleaning soffits so that they look prettier, to rewiring the electrical to get it up to code, to knobs on sliding closets doors, the list goes on and on.  Leave yourself plenty of time to fix up all this stuff.

Decide how you prefer to be paid.

We use eRentPayment if we can.  Some tenants won’t want to do this if they aren’t computer savvy or if they are more used to traditional forms of rent payment, but it is great when you find someone that is ok with using it.  eRentPayment automatically deducts the rent from the renters checking account directly into yours.  This is great b/c you don’t have to worry about your rent getting lost in the mail (we’ve had this happen!) or having to remind people (also, had this happen and it’s awkward).

There is a $3 charge but we usually cover that (it’s worth the convenience to us).  It’s best to communicate this up front.  This could also help with the screening.  However, if you like being paid by check or if you’d like them to set up automatic bill pay with their bank – all those things are fine ways to get paid – it’s just best to communicate up front.

List the property.  

We like to list on Zillow.  Zillow posts to multiple other sites via their postlets app so you get the most hits possible.  We used to post on Craigslist, but have found that’s not the best place anymore – not as many people use it so you won’t get as many calls.  The second I posted on Zillow, my phone was ringing non-stop and the more calls the better – you want to have your pick of tenants.

It’s up to you whether you list it before you are done renovating or after. I think it’s probably best to list before you are completely done or you will have another month of the property sitting vacant after you are done fixing it up. But it also slows you down considerably to have to show it while you are fixing it. People often need to give 30 days notice, but some people have been at their place long enough that they are already going month to month – they have more flexibility to move sooner.

Also, it’s good to post a sign out front for people who are driving through the neighborhood (if it’s in a good neighborhood).

When you make an appointment to meet someone at the rental, I recommend telling people to give you a call 30 minutes before they head over just to make sure they are going to show up.  We had several no shows and it was a major waste of my time and gas.

Screen the tenants.  

See this post: Screening Tenants

Sign the lease.  

Once you’ve found your tenant, you can sign the lease.  They’ll need to bring a money order with the security deposit and first month’s rent (and occupancy permit if it is required in your county) to the lease signing and you’ll want to make sure you have: the keys to the apt, mailbox key, garage door openers, garage entry code, lease (2 copies – one for you & one for them – highlight the places that they need to sign/initial), 2 pens, etc.

You’ll also want to have a list of the utility companies name and numbers so they can call and have the accounts transferred into their name.  Usually, it’s Electric, Gas, Water, Trash and  Sewer (we pay).

Finally, it’s best to walk them through the property and let them know the ins and outs of the place.  An extra bonus would be to provide them with some information on the neighborhood, etc.

 

 

Multiple Roommates

Renting to multiple roommates is very tricky.  Once, we rented our 3 bedroom out to 3 college guys.  They each split the rent and the utilities.  Communication is very important when it comes to renting to multiple roommates.  We discovered that it’s probably best to put everything in writing.

It worked out well for us at first. We had 3 great guys renting from us – everyone paid on time.  But then we had a situation where one moved out and another moved in and this person didn’t pay on time or in full.  They tried to pay us separately (b/c the one didn’t want to have to make up the rent for the other) and we let them know that we need to get the rent from one person.  The one person basically got screwed b/c the other person wasn’t paying in full but that wasn’t our problem.  That’s why it’s sometimes best not to have roommates – before people get a roommate they need to make double sure that person is a responsible and trustworthy person b/c they are especially vulnerable in this situation.  The landlord needs to have these rules to protect themselves – especially since if the landlord needs to evict, they have to evict everyone on the lease not just one person.  It’s costly to evict.  That would be a big hassle for the landlord legally to deal with only one person not paying if they weren’t protected in this way.  Can you imagine being dragged into roommate drama constantly?  Never.  No thanks.

This joint and several clause in the lease covers that situation:

JOINT AND SEVERAL LIABILITY:

  • The Tenant understands and agrees that if there is more than one Tenant that has signed the Lease Agreement, each Tenant is individually and completely responsible for all obligations under the terms of the Lease Agreement.

We also added a sentence in the security deposit section:

  • The security deposit is for the tenancy as a whole and will be refunded only when all roommates who are a part of this tenancy vacate and turn the premises over to owner. If a roommate is moving out, it is their responsibility to obtain their portion of the security deposit directly from the new, incoming roommate or wait until the premises are completely vacated by the remaining roommates.

The important thing to note is that when you are renting out to multiple roommates, you still want to treat them as one person.  You should communicate to them that you expect to receive the rent check from only one person and you can designate who that person is – whoever volunteers (usually the most responsible will volunteer), I guess, or whoever has the best financial credentials.  And you’ll want to make sure to let them know that you will be paying out the security deposit the same way – to one person and only after the premises are vacated – the same person that volunteered to pay the rent, preferably, but this can change if that person has moved out (which happened to us).

Where it gets even more complicated with the security deposit is if one of the roommates moves out and someone else moves in to take their place – which is the situation we had going on – the revolving apartment.  Basically, we let them know that we weren’t paying out the security deposit until the premises were vacated so whoever moved out wouldn’t get their money until then.  If they wanted their money, then they would need to have the new roommate pay them before they move in or whoever is left in the apartment pay out their portion of the security deposit to them.  This is so important for landlords to do b/c you don’t want to get wrapped up in drama between the roommates and you don’t want to pay out a security deposit before you know the extent of the damages.

You should also recommend that the roommates make and sign a roommate contract that would be binding in small claims court – who is in charge of doing what (cleaning/groceries, etc), how much rent each person owes each month (this can be split equal or different based on who gets the master bedroom, etc), who pays groceries, electric, gas, etc.  B/c you don’t want anyone getting screwed – especially responsible people.

Ultimately, if people choose to room together – it is up to them not the landlord to resolve disputes in paying rent, etc.  To the landlord, it should be as if one person lives there.  The landlord needs to absolve themselves of this as per the above additions to the lease in case of roommates.  To people considering having a roommate, choose wisely!  It’s a sad situation when one person doesn’t hold up their end of the bargain and nobody wants to see anyone getting taken advantage of.

Disclaimer: I do not have a law degree – this is just what we did to protect ourselves as landlords so take it for what it’s worth..

Tenant mail

Sometimes, when one of your tenants moves out they fail to change their address right away – this is not too uncommon, eh?  An easy way to handle the mail if you have a forwarding address is to take a sharpie marker and cross out the current address and also cross out the bar code along the bottom of the envelope (if you don’t do this, then it will automatically come right back to your address).  Then write, “Please forward: ” and then the new address.  This way, you don’t have to pay any postage to send it to them, don’t have to leave it somewhere for them, and you don’t have to just do a Return to Sender – they will get their mail faster.  Of course, you can only do this while you are in control of the place – once you get  a new tenant then their stuff will get Returned to Sender.  However, by then, they should’ve gotten their change of address straightened out anyway.  I got this information by calling USPS directly and also after a visit to the Post Office – that’s all the lady did there.  Hope this helps someone else!

Here’s a pic of the bar code crossed out:
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