BiggerPockets

So after closing on my first property in February (a duplex that I bought FHA and will owner occupy for three years since I got the tax credit before doing another one) and spending the past 6 weeks doing rehab on the rental side (16 gallons of paint, refinished all ceilings, replaced missing trim and installed trim where there wasn't any, a new coat of finish on the hardwood floors, custom closets (thanks to dad working for a closet company), added a washer and dryer (craigslist), new light fixtures, etc), I found renters and they are signign their lease tonight. Not sure if maybe I underpriced the unit a bit, but its a 3/2 with a garage, dishwasher, and decent amenitites in a less than perfect neighborhood and I have it rented for $1100 (tenant pays own utilities except water and garbage). I posted it on CL and had about 20 responses in the first two days and 3 showings the first day (one of the showings are the accepted applicants and I pulled the ad on the thrid day to stop the responses). I think I have a good lease (from the state multi-housing association), non-smoking addendum, drug free/crime free addendum, have screened my renters and met them twice. We will be doing the condition walk-through and report together and taking lots of pictures.

So with the long prelude over, my question is this - looking back at your landlording experiences, what is the biggest thing(s) you wish you had done differently? Any advice for things I should make sure I do/don't due?

Thanks for all the guidance the posters to this site have provided through the forums on this site - you guys really have driven my interest in REI to a new level and provided some good tools to take tangible steps toward achieving my REI goals.

Too late to change anything now, but.

I agree with Jon about no washer/dryer. However the dishwasher/garbage disposal are pretty standard these days. The only house I ever owned and lived in withou those I sold in 1971.

We used to say about living in one side of duplex, "the good thing is that you're right next door to your rental, the bad thing is that you're right next door to your rental".

Yeah, you "may" be a bit low on the rent, that much response shows a possibly tight market?

If I were starting out today I would begin with something that I didn't start until I'd had rentals for over 10 years; A MINIMUM of a two-year lease! If they're not stable enough to commit for 2 years, they're not stable enough to be my tenant. The lack of a rent increase after one year is more than offset by the loss of rent during turnover and the cost and hassle of make ready.

16 gallons of paint seems like an awful lot. I used to buy my flat in 5 gallons and it seldom took all five for an average house. Did you use a different color for each bath and kitchen. I understand the ceilings took some extra with primer, but it seems like a lot.

Congratulations though, it sounds like you're on your way.

Frank

Just to keep the conversation going and provide another perspective, I do provide a washer/dryer in our rental condo, but not in our rental house.

The condo is a more upscale property than the house and I have never had a tenant abuse the appliances (well I did have one bachelor who never ran the garbage disposal and it rusted shut, but he paid for a new one). And it has a refrigerator only because it was there when I bought the place. (it's still going strong after 18 years - that's Amana for you).

Also, the condo has a laundry closet that will only accept a stacked unit. I don't want some tenant trying to shoehorn their full-size washer and dryer into there. Finally, the included washer/dryer is a selling point and I probably get $25-50 more a month in rent because it's there. The current set is the 3rd in 18 years of ownership (13 years of renting). FYI, unit #2 was a cheap refurbished job that burned out after 2 years (buy new).

However, the rental house only has a gas range (I only had one applicant who had their own), a garbage disposal, and a dishwasher (I never met a tenant who carried their own around). The refrigerator and washer/dryer is all them.

Congratulations on your early start in REI, Tylor. You will now get a full course in landlording.

You'll learn a lot living next to your tenants, and if you can succesfully overcome the diverse challenges that entails, you'll go far in this field.

Good luck and keep us posted.

Thanks for the motivation Mark. And Wayne, I actually considered Section 8 (before I decided to put in all the work and make the place look nice), but the horror stories here and elsewhere deterred me. Also, I definitely get enough gov't interference already (the only thing the inspector found was an outlet with reversed polarity, but since it was electrical I was not allowed to fix it myself and just handed the electrician 50 bucks ten minutes ago for taking off the cover and switching two wires.)

Well, lease signing in T-minus an hour. I have reviewed the lease, my (6) addenda (overkill maybe but at least all my bases are covered) and my tenant screening results and just got the final OK from the inspector (showed her the bill from the electrician). Also my tenants just called to verify they are coming at the time agreed upon (stole that one from the forums here, thanks guys). Its pretty exciting that this one is almost done (rented) and I am really excited to work on finding a way to get the next one going (won't be as easy financing wise b/c no FHA, but I already have my eye on another property - see the deals forum for info about that one and let me know if you have any advice.) Thanks again for the guidance and encouragement BP community. This is a great tool for anyone interested in REI!

Biggest thing I do in my property management company is refuse to accept personal checks or cash. It's money orders and cashier checks only. We also make them attend a real closing at our office. Their is no signing of the lease on the back of the car at the property or at Burger King down the street.

As you've read on here already, it's a business - run it that way!

Chris - I like that suggestion a lot. While it wasn't a huge issue, it did feel kind of amateurish signing the lease on the kitchen counter rather than across a table at an office (as my college landlord did). I just saw a mixed use (MF with a small commerical attached) on the mls an was thinking how useful that would have been and how much more professional it would appear.

I will definitely need to work on the running it as a business in the future as I was probably more friendly with the showings than a strictly business person might have been. There is always plenty to work on I guess.

At the risk of hi-jacking my own thread (mod let me know if i should put this somewhere else, I just didn't want to start too many) - is there any strategy/advantage that anyone knows of/has achieved from having a friend/ business partner working in a bank in a fairly low level mortgage processor type role? Obviously I am only talking about legal/ethical stuff here. The only thought I had was that he could try to get in good or get info from people who handle foreclosures and short sales, but I am not even sure if that would be acceptable. Thanks.

In my TX rentals, any appliances are a mistake! Garbage disposals are not normal and mostly unused. No washer/dryers. They won't take care of them and you get the repair bill. On houses, no fridge- just stove. Rich

I got the pro-rated rent and security deposit taken care of before handing over the keys (I remember my LL being a stickler about that), but I did take a personal check. Hopefully that ends up being OK as I planned to take checks for rent monthly as well (the check they gave me the the background searches,etc cleared).

Obviously you guys have been burned with bounced/forged checks before?

So i guess I didn't pro-rate exaclty right (copied my old landlord). Rent is $1100 and the lease starts on 4/10, so I collected 1100x (20/30 days) = 733 and the full rent for next month is due on the 1st. I can see how your way is better though because then you are getting more up-front (all about minimizing the risk).

Thanks again for all the input Jon, there is a lot more to this business than what you see on the surface and I am pumped to be getting involved and have this site as a resource/sounding board.