Ten Realizations from my First Year as a Landlord

by | BiggerPockets.com

I rented my first property in September of 2009.  Over the last 12 months I rented over 20 more as an owner/landlord.  These opinions might be a bit skewed as my sample size is only about 25 units and most of our tenants are interested in entry level single family housing.

Here are 10 realizations I made during my first year as a landlord:

10. Most Tenants in my Demographic don’t have the Internet at Home
Before I started I had a website built that showed all the available properties we had, allowed tenants to give maintenance requests and even on occasion had virtual tours of our properties.  But after doing some inquiring, I realized that most of our tenants do not have regular access to the internet.

9. Cash is King
I would say 60% of my tenants pay in cash and handle most of their finances in cash.  This came somewhat as a surprise to me, but I really appreciate the fact that cash cannot bounce at the banks (unless it is counterfeit).  Some landlords force their tenants to pay with money orders or cashier’s checks, but as long as I am the one collecting it, I am happy to take cash.

8. “Bad Luck” follows Certain People around
There are some people out there that seem to be extraordinary unlucky.  One month they get arrested, the next month their car breaks down and the next month they get laid off.  These are the people you want to try to avoid by any means necessary.  One of my landlord friends writes down every excuse he gets from a tenant, so when they try to use the same excuse again he can remind them they’ve already tried used that one.  Poor decisions make for “bad luck.”

7. Extreme Weather Causes the Most Maintenance
From now on I am counting on mild summers, mild winters and no rain.  It seems like when it is 100+ degrees air conditioners start breaking and when the rain storms come, things start leaking.  This is just a fact of life as a landlord.

6. Almost everyone has a Pet
A different landlord I know, said his pre-qualification question has changed from “Do you have any pets?” to “What kind of pets do you have?”  I think that is pretty accurate; we probably have small dogs at 50% of our properties.  We don’t allow big dogs or cats though.

5. Set the Precedent or the Tenant Will
Early on, I wasn’t as good at this.  I would give tenants slack and now some of them expect it.  Saying rent is expected on the first is one thing, but showing up at the door wondering where rent is at is another thing.  Once they know you mean business and will hassle them, you start getting paid first!

4. Two Bedroom, One Bathroom Houses are Okay for Me
I know a lot of investors that stay away from smaller houses.  I have a couple and they make the perfect rental, you have fewer people living in them, less area to fix and not that much less income.  Obviously, if there are very few two bedroom, one bathroom properties in the area, you should probably stay away from them, but some areas are full of them.

3. Shared Walls are more difficult to Manage
I have one duplex and two condos in my rental portfolio.  They come with a different set of issues.  They fight, they complain about each other and we don’t get that much more out of the income of the duplex (combined) as if we just rented a single family house.  I stay away from them unless I get a good discount on them.  Some landlords make a living here, which is fine.

2. Signs on the Property are my Favorite Method of Advertising
Since I am an avid internet user; I thought 90% of my tenants would come from CraigsList and maybe other online methods.  Boy, was I wrong!  My new strategy is, I put a sign up for 1-2 weeks before I do any other advertising.  I do this because those people are the most qualified, they know the area the house is in and they know they want to live in that area already.  For my last 5-6 rentals, I haven’t needed to do any other advertising.

1. Trust your Gut
Credit scores, pre-qualifications, references are all very important but I have learned that my most important indicator is my own gut.  I had one tenant that tried to move-in two weeks later than we originally agreed on. When I said that would not work for us, she told me that if this is how you work I will make it a rough 12 months but she would “deal with it” and move in on the agreed upon time.  I told her that I would give her the deposit back and she could find a landlord she could work better with!  It works both ways. On occasion we have let people move-in only after paying a portion of the deposit if my “gut” is okay with them.

About Author

Steve L.

I am a buy and hold and fix and flip investor in Southern California. Right now, I buy mostly bank owned homes that need major repairs or repositioning. Every property I hold I manage myself.


  1. I am just getting started as a real estate investor and am looking to fix and flip as opposed to rent, however, this info is very useful if I get into a situation the will require me to rent. Thank your very much!

  2. Jonathan Brein on

    Do you really want to be collecting cash? After a while there are people who will know you as the landlord who is picking up money. You place yourself at risk needlessly. I know of a landlord in Los Angelis who was murdered when the killers knew he regularly was collecting rents in the form of cash.
    My cash paying tenants send us the ‘cash’ in the form of a money order (so widely available) to a UPS box we maintain. Many of them bring it to the UPS store and it gets placed in our box. I tell the tenant to hold onto their money order receipt in case the check goes missing. It also gives them a paper trail. Like your, the majority of our tenants do not keep checking accounts for various reasons.

  3. I agree with Mr. Brein. Cash is king sounds great but makes you a target on rent collection day. Also know of a landlord who was killed collecting rents in Washington DC. Again, Mr. Brein hits the nail on the head with his UPS mailbox solution.

  4. Steve L.

    Thanks for the comments guys. My realization is more that so many people operate without a bank account or on a “cash budget.” Sometime early next I am going to setup a savings account for each house and let the tenants go to the bank and deposit the rent directly to the bank for me. I can close each account at any time, so that should work well.

  5. Not a bad first year! I’m in complete disagreement with your comment that you occasionally allow tenants to move in after paying only part of their deposit. If they can’t come up with the money to move in, they’re starting off as a risk. I always require a full deposit and first month’s rent (prorated if they’re moving in during the month).

    Even after a tenant is established, I refuse to accept partial payments because it MAY cause you problems. Let’s say a tenant pays 50% of their rent on the 2nd and says they will pay the remainder on the 7th. It’s now the 20th and they still haven’t paid the remainder. If you have nothing in writing and try to evict them, some states will actually side with the tenant! My state (Wyoming) is very Landlord friendly, but I still play it safe. I make them put in writing when they will pay, tack on any late fees, and we both sign. If the tenant fails to pay in full (including late fees) on that date, I issue a Pay or Quit notice and give them 72 hours to pay or move out. As you said, pussy-foot around and they’ll be pushing the boundaries every month.

  6. I agree with the other commentors about accepting cash. It sure is hard to refuse it from a tenant standing there with the money, but if you do take the cash you are now at great risk. Tenants without bank accounts are accustomed to dealing with money orders.

    Also, be careful with #1 “Trust your gut”. This is the easiest way to get into trouble for housing discrimination under Fair Housing / Equal Opportunity laws. You need to have written guidelines for accepting/rejecting tenants based on things like income, credit score, criminal history, etc. If you reject someone because of your “gut” and these people are also in a protected class you could easily be accused of housing discrimination.

  7. All my rents are in cash anymore. My routes, times and days for pickup are staggered and I carry a Colt 380. If I don’t go and personally get it when they text, they will spend it and they are honest enough to tell me that. Granted I am very careful and the majority of the folks in the hoods, know I am a former cop.

  8. I think you hit the nail on the head with ground rules. Layout your ground rules with the tenants and enforce them. I enjoyed the list. I think every landlord has his/her criteria based on experience. I think the first couple of years are real eye openers for most. I know my ideas changed significantly from my first notions within 6 months.


  9. I also have no problem accepting cash, but I’m not in Chicago, LA, or D.C. I have 21 years military experience and am always aware of my surroundings. Even when I have nothing but checks to deposit, I still alter my deposit times and remain vigilant. 17-year-old kids are accepting cash at McDonald’s, so I’m sure you can handle it for rent. Just be smart about it. If you’re not so sure of yourself, take some self-defense courses and then read up on how to be aware of your surroundings and avoid becoming a victim.

    Criminals are (generally speaking) like animals; they go after the weak in the herd. Don’t act like a target and you won’t become one.

  10. Steve L.

    Steve D – I do not violate nor do I advocate anyone should violate any Fair Housing laws. As any experienced landlord knows the consequences of these are extremely serious. No tenant is perfect, but sometimes I feel okay making exceptions, other times I don’t (it has nothing to do with the personal situation or ethnicity of the tenants).

    Nathan – A lot of landlords I know do not take partial payments. I have done it 3 or 4 times and so far I have always been made whole. I am very careful to explain and have all the paperwork show they owe me rent, not the deposit so in case of a problem I can evict them. I say now, more than I say yes…but again I trust my gut in certain circumstances.

    I am no expert at this, but I though these realizations where unique and worth sharing. I am always learning and appreciate the comments everyone has provided, although, I’m still not ready to start carrying a gun!

  11. Steve,

    Great article! I agree with others regarding cash payment… and like your idea regarding the savings account. That one is worth keeping.

    Regarding establishing the rules early… this is probably one of the most critical steps a landlord can take… and all too often new landlords don’t do this because it is in the category of “they don’t know, what they don’t know”. After this article there should no more excuses.

  12. I’ve been a landlord for 40 years, and also do not take cash. I live in a small, relatively safe area, but even in a small town, wouldn’t want word to spread that I kept rent money in cash on me, in my office, or in my home. A local farmer was killed because the drug-addled murders thought he had cash for payroll. He didn’t, but he’s still dead.

    I also never go to a tenant to collect rent. It is their responsibility to get the rent to my office, either check or money order. This way they don’t have their landlord up their butts, and I don’t have to hear a litany of miscellaneous complaints that weren’t important enough to phone about, but “since you’re here…”..

    I also agree with Nathan Gesler. Every person we rent to must have full deposit and first month’s rent before we turn over the key. You really don’t do anyone a service by starting them off already behind the 8-ball. Why would you “lend” a tenant a $50,000 unit if he can’t afford it?

  13. Mary,

    Some of my tenants need to have the landlord “up their butts”. There have been times after getting calls from the neighbors, that I have personally taken the tenant to the front yard for a good tongue lashing. I want the neighbors to know that I am hands on and responsible for my tenants. Granted, some of my tenants I only see once a month when they give me the rent. During this time, I also inspect the property.

    Low to no income tenants are like children and most of them have to be treated that way. Perhaps you have higher end rentals which sometimes means better tenants. You are correct, this also encourages more communication, which to me is not a negative.

    I like to know things ahead of time, before they become a serious issue. I hate the call or text saying, “Oh by the way, I noticed my ceiling was leaking the other day” Only to get over there and find out every time they flush the toilet it leaks down through the ceiling and it’s been going on for days!

  14. TomC, Love your last paragraph. Toilet seal leaks are one of the great mysteries of life! Often unseen from above, devastating from below.
    Seriously, don’t want to give the impression I don’t pay attention to my properties. It’s what I do full-time. But I have to say, I’ve had everything from Section 8 to high-income tenants, and I learned this through the years: class has no relation to income. I sometimes do a mental exercise in which I pick my 3 all-time favorite tenants that I’d be willing to live with in a 4-unit house. Every one of them was a Section 8 tenant. I was told by one low-income tenant who raised 5 kids without their father, and had every apartment she lived in looking better when she moved out than when she moved in: “Soap & water is cheap.”
    We sign all kinds of leases, but I always tell them verbally it all boils down to 3 things: Pay your rent, don’t damage the apartment, and don’t disturb the neighbors — not necessarily in that order.

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