Porc land lord guide (Rough Draft 1)

[PowerPenguin]

Hey all,

I've been working on a best-practices guide for free staters who are interested in becoming landlords. Its purpose is to provide suggestions which will enable land lords to avoid common problems, and maximize their personal benefits, both as far as money/time, but also in terms of the positive impact they can make for the movement. When this project's done, I'll begin on a renter oriented guide. Areas in brackets are places I need help with. Here it is so far....

How To Be A Land Lord: A Practical Guide

This guide will help you to be a successful land lord. I will show you proven methods of operation that will maximize the benefit you and your tenants receive, both in monetary and emotional terms. I've combined my own legal experience (1) with the collective wisdom of over half a dozen new and experienced land lords to create a simple formula for success. After all, the land lord experience should be full of fun and profit, not frustration and financial loss! Now with that in mind, let's learn how to be a land lord...

How To Be A Land Lord: Why Put Your Property Up For Rent?

Being a land lord can  be a very personally and financially rewarding experience, but it also requires a degree of sacrifice and responsibility. Below is a chart outlining the pros and cons of putting your property up for rent:

[table OF PROS/CONS]

As you can see, putting your property up for rent is a great solution for many property owners. Not only do you gain a steady stream of income from your tenants, but you'll also qualify for some valuable tax breaks, if you're kind of person that pays off the government extortionists. If you're an absentee land lord, you'll also benefit from the added theft and vandalism protection you'll get from your property being occupied year round.

How To Be A Land Lord: The Recipe For Success

[Physically preparing/maintaining the property]

Now that your property is in ship-shape physical condition, it's time to legally protect it- and you. Putting your property up for rent exposes you to legal liability, should a renter or third party try to sue you. A liable situation could include someone getting hurt or killed on your property, theft, fire, and seizure related to renter possession of contraband, etc. A calamity of this kind could wipe you out financially, and possibly destroy your credit and reputation with real estate listings agencies. Smart land lords guard against legal liability in three ways: Home/condo owner's insurance, Limited Liability Companies (LLC) (2), and a solid rent contract.

[Home Owner's Insurance: Why, how, recommendations/comparisons]

Many savvy land lords also use a Limited Liability Company (LLC) to further protect themselves from liability, and to protect their privacy. Transferring ownership of your property to a LLC creates a legal separation between you and your property, meaning you can't be personally sued for any activity your LLC engages in. If someone were to sue over an accident or theft on your property, you are now shielded from the horrors of personal bankruptcy, bad credit, and blackballing by real estate agencies. How does this work? Legally, you are simply the property manager, and employee of Your Company, LLC. The true owners of the company are anonymous, and need only be revealed if mandated by a court of law as part of a civil suit. At that time, you may choose to designate a far away, hard-to-reach individual as the temporary owner of the company, which will force all but the richest, most determined litigants to give up, should the suit even make it to trial. For more tips on how to use a LLC with real estate, see the Asset Protection Crash Course (Free) at http://www.keepyourassets.net?andrew.

Transferring property ownership to a LLC also gives you the added benefit of privacy. Your certificate of title and property tax records are all under your name by default, and can easily be accessed by anyone, often by simply getting on a city website. This means that personal enemies, stalkers, and even confused law enforcement personnel can instantly find out where you live, and what you own! When you transfer title to your LLC by putting a "friendly lien" on it (http://www.keepyourassets.net/FAQ.html#21?andrew), the name on these records is replaced by "Your Company, LLC." As long as you don't tell people that you own this LLC, no one can easily find out who owns your property, or where you live. This is a fast, easy way to avoid unwanted visits from criminals and police bent on mistakenly raiding the house of someone else with your same name.

The final piece of the legal protection puzzle is a good real estate lease agreement. Experienced land lords use comprehensive lease agreements to ensure that renters understand and abide by the terms you set for your property, such as how much rent is due, and when, what penalties exist for damages or late payment, etc. When everyone is on the same page, you can reduce the chances of damages or risky behavior taking place, and gives you clear legal grounds for eviction or issuance of fines, should violations occur. A signed written contract also limits your liability from the renter(s)' first day, minimizing the chance that you'll have to waste a lot of time and money resorting to your backups of insurance and the LLC.

The later tools are very powerful, but carry some added cost when put to use, in the case of a premium increase or legal fees. Your first line of defense is always the real estate lease agreement, and a thorough investigation of your prospective renters. Some powerful tips on renter screening follow below.

How To Be A Land Lord: Screening Renters

A proper renter screening is critical for your bottom line, and to the day-to-day operation of your property, especially in a situation where you're renting out a house that several people occupy, perhaps including yourself. A thorough credit and references check is a must, but it won't tell you anything about a prospective renter's personality. An initial interview is the logical way to get to know something more about his personality, but you can take it a step further by having him fill out a renter personality questionnaire. This will enable you to better gauge what his habits and preferences are, and therefore determine whether you and/or your other renters will get along with the new arrival.  [An example questionnaire]

A good renter personality questionnaire and a thorough interview help avoid personality conflicts and frequent disputes, saving everyone a lot of time, money, and emotional distress. If you're working with a large pool of land lords, you can help each other get business by referring candidates to each other if they'd work out better at another location.

To wrap it all up, being a land lord offers all kinds of benefits, from making (and keeping!) more money to meeting new people and becoming a respected member of the community. You can maximize your benefits, and avoid disaster, by using the three layers of protection described above: having a good lease agreement, purchasing adequate insurance, and managing your property through a LLC to avoid lawsuits, and to protect your privacy.

(1): Disclaimer- I am not a lawyer. Any legal suggestions in this article are NOT "legal advice," and should not be construed as such. The information herein is meant to inform and inspire, but it should not be used in place of a lawyer or competent legal scholar.

(2): I recommend one or two "Invisible" New Mexico LLCs from KeepYourAssets.net. NM LLCs have the advantage in that they are cheaper, require less paperwork, and afford you more privacy than similar companies formed in other states. A NMLLC can be used in any state, as long as you don't meet the definition of "doing business." Some states mandate that you must have a domestic LLC to do business, so check your local laws for more information.

Any and all suggestions and commentary are welcome, especially in the blank areas.

Thanks,
Andrew

[freedominnh]

After the recent financial collapse no one will have credit to check.  At least it will be a level playing field.

Someone on Craigslist had the audacity to ad that they were also requiring a criminal background check.

Hey welcome to NH!

[PowerPenguin]

That's one benefit of renting from porcs is that they don't do that. They probably know you to some extent, and if not, they all have guns

[Fluff and Stuff]

Andrew, have you ever been a land lord?  Do you plan on being one in the future?  I'm just wondering.

[PowerPenguin]

No, and maybe. That's why I'm asking existing landlords for their input. I know a lot about the law as it pertains to real estate and asset protection (plus privacy), but I don't know what to look for when choosing homeowners/renters insurance, for example. Any suggestions to fill these holes? I got some feedback from a realtor, but X heads are better than 2 I'll probably release draft 2 this weekend.