First-Time Landlord? How to Find Great Tenants on Your Own (Rookie Reply)

Ashley:
Today’s rookie reply is about what happens after you decide to become a landlord. The property is only the beginning. You also need a leasing process, clean books, reserves, and a plan for the next vacancy.

Tony:
We have a first time landlord near a military installation, a house hacker choosing property management and accounting software, and a landlord who wants to handle a turnover without an agent.

Ashley:
This is the Real Estate Rookie Podcast. I’m Ashley Kehr.

Tony:
And I’m Tony J. Robinson. And with that, let’s get into today’s first question. So our first question today comes from Sergio in the BiggerPockets forums. And Sergio says, “I’m preparing to rent out my home in upstate New York near a military base, and I want to make sure I approach it the right way from the beginning rather than learning everything the hard way. For those that have experience with rentals, especially in military markets, what are some of the biggest issues I should prepare for as a first time landlord? I’m particularly interested in things I can do upfront to reduce problems later, such as tenant screening, lease terms, security deposits, maintenance and repairs, property management insurance, and handling vacancies or unexpected expenses. I’d also appreciate any advice to renting to military families or service members. Are there particular considerations with PCS moves, deployments, or the Service Members Civil Relief Act that I should understand before putting the property on the market?
My goal is to treat this as a long-term investment and put the right systems in place from day one. What do you wish you had known before renting out your first property? This is a great question, Sergio. And actually my very first rental ever was in a military or near a military base in Louisiana. And my very first family was a military family who worked at the base. So I have a little bit of experience with this, but honestly, I had a property manager who was doing all of the work for me. So my first piece of advice would be to hire a property manager. I mean, you said you’re planning to rent out your home, but you didn’t say if you were doing self-management or giving out to a manager. So if you really do have a lot of these questions and you would just feel more comfortable passing it off to someone else, then consider hiring someone to do it for you because that was my approach and that’s what worked for me.
Now that said, it’s a much different time today with the tools and the systems and the software. And as I’m getting back into the long-term rental space with my first long-term rent in a long time, we actually are self-managing. So I’ll tell you what I’m using and then obviously I’ll pass it off to Ashley because she’s got way more experience than we do. Because you mentioned a few things here, Sergio. You talked about tenant screening, lease terms, security deposits, maintenance repairs, all those different things. What I did, and actually there’s an entire episode that Ash and I just did where she walked me through the process of telling you how to be a good landlord. But once we had the listing up and ready, I listed it in two places. I went to Zillow, I went to TurboTenant. And as all those folks came in, I had just a standard reply that said, “Hey, here’s everything you need to know about the listing.
Here’s how you can go through our pre-approval process and here’s our open house.” And the first open house is actually happening tonight. So I think a lot of these questions you have, Terjo, you’ll be able to answer as you start going through the tools, the software, it’ll really guide you through this process. But Ash, I’ll let you maybe give some more detailed answers around the tenant screening and the insurance and unexpected things you wish you knew before you started.

Ashley:
Yeah. And I think there’s so many free resources, but also that can become overwhelming. But pretty much every property management software that’s out there has free guides, free blog posts, free downloads, free checklists, all these things that you can use to actually set up your own processes and kind of learn what that is. I personally use TurboTenant and within TurboTenant, they basically give you step-by-step instructions of how to do it. So whenever I go to move someone in, it gives me a dashboard with a checklist of did you create the lease? Did you send it out for signature? Did you sign it? Did you set up their move-in inspection? Did you save their move-in inspection? Did you collect their security deposit? And it literally gives you step-by-step. So it’s very hard not to do everything that you’re supposed to do because it’s right there in front of you.
And one of my favorite things is the lease generator they have that you select what state you’re in and sometimes even more specific, what your city. So when I click New York, they will say, are you in New York City or outside because there’s different laws and regulations based on that. So then it goes through and tells me, make sure you have this in your lease, you need to include or not include this and different things to think about. So starting by looking at different property management software can really help. Even if you don’t have your deal yet, it can kind of tell you the things that you’re going to need to put in place, the systems, the processes and give you a feel of what to do because as soon as you get a property under contract, you should be starting to think about your leasing process, your rent collection process, any of those things.
And having that software right away is going to make it so much easier. You can start onboarding your tenant, your property before you actually even close on it in most cases so that day one, you’re closed, you’re ready to have your new tenant set up in your portal and ready to go so they can make payments online, they could spend maintenance requests online, things like that. So my first step would be doing a demo of property management software. Sometimes it’s a webinar you can get on. Sometimes it’s actually a person walking you through, which is a great resource for you to ask questions about the leasing process and different things like that that you don’t understand or whatever. So that would be a great starting point is doing demos of property management software that actually handle all of these systems and processes for you.

Tony:
Ash, are you at all familiar with the Service Members Civil Relief Act?

Ashley:
I am not. I have to say that I’ve never heard of that, but I would say your best bet is to… There’s a group called, I think it’s Military to Millionaire or something like that, is find Facebook groups or even go to the BiggerPockets forums. And there’s a lot of different groups for veterans or active members or retired members of the service with these real estate groups that I’m sure could help with that better than Tony and I could.

Tony:
I just looked it up really quickly and I’m learning a lot here, but basically it says it’s a federal law that provides legal and financial protections to active duty military personnel, reservists and National Guard members help them focus on defense without facing severe disadvantages at home. So the things they get, there’s a 6% interest rate cap on things like debit cards, credit cards, auto loans, and mortgages. I wasn’t aware of that. Lease contract and termination so they can early terminate residential leases without penalty. Same thing for automobile leases, even things like cell phones, internet, gym memberships, home security. So it looks like there’s just a lot of things that if someone gets moved because of their commitment to national defense that they have a legitimate reason to get out of those things, which I totally agree with. So yeah, I would agree with Ash trying to connect with some of those folks.
But I think also working with someone who knows a good property manager again could be a resource for you here as well, even if you don’t necessarily hire them. Hey, can I pay you for an hour of your time to talk through some of this? Or an attorney, real estate attorney in your market, pay them for an hour of their time to the ins and outs of how this applies for your specific area.

Ashley:
Okay. Coming up, a new house hacker wants software that will still work at 20 doors. We’ll talk about what must scale and what can stay simple. We’ll be right back. Sergio’s question is about designing the landlord process before the first tenant. Mike is doing the same thing with technology after closing on his first small multifamily. So question number two is, what is the best property management software for a beginner who’s planning to scale? I just closed on my first property, a small multifamily. I’m house hacking and I’m trying to set up my systems right from day one so I’m not ripping everything out and switching platforms two years from now. My goal is to buy roughly one property a year and build a real estate portfolio over the next decade so I care more about what scales cleanly than what’s cheapest this month. Right now I’m leaning toward RentReady with the REI Hub accounting integration.
RentReady for rent collection, leases, screening and maintenance and REI hub underneath it for the actual double entry books, balance sheet and schedule E income tax time. The flat unlimited units pricing on RentReady appeals to me since it shouldn’t get more expensive as I add doors and having real accounting in place early feel smart from when I’m sitting in front of a lender for the next deal. But I keep seeing TurboTenant coming up too and I don’t have hands-on experience with it. So I’d love to hear from people actually running these day-to-day. If you’re managing a growing portfolio, what are you using? Would you pick it again? For anyone on Rent-Ready and REI Hub, is the integration actually seamless and at what point did adding REI Hub become worth it? So for TurboTenant users, how does it hold up as you scale and how do you feel about the tenant side fee structure?
Anything you wish you’d known before committing to a platform, especially around clean books for financing future deals. Just trying to get this right once so I can just build on top of it. Appreciate any real world input. Thanks. Okay, well this is a great question. I think it leans into my previous answer, do demos of all the software. There is lots of different property management software, especially when you have smaller, fewer deals. I will comment on the seamlessness of the actual bookkeeping. I used AppFolio before when me and my partner had over 130 units combined. We were using AppFolio where everything is integrated. You don’t need anything else, but it’s very, very expensive. So I would not even consider AppFolio unless you have a hundred units. But with that, it was so much easier to have it all together and integrated. So I do like the fact that you want to use something that integrates with the property management software for the bookkeeping.
With RentReady, if you are a BiggerPockets Pro member, you actually get RentReady for free. So I would definitely check that out. If you’re a BiggerPockets Pro member, you also get to Baseline, their smart bookkeeping for free too. So it’s not directly integrated into TurboTenant or RentReady, but it also is free too. So I’d look into that. But also they are a banking platform for landlords, so I would look at that as your banking piece because REI Hub doesn’t have that actual bank account piece that Baseline does have too. So the nice thing is they do have multiple options and I think a lot of these property management software, they’re comparable apples to apples, especially TurboTenant and RentReady. I feel like they competed in the same exact space, have a lot of the same features, but I would do the demos on each of them to see which one you like to use easier, but also make a list of what you actually want from the property management software.
What are the things you need? Do you need messaging? Do you need them to submit maintenance requests? All of these things, and then actually go through each platform and see what their process is for each of those different things. This I think is something that’s often overlooked is how long does it actually take? Once your tenant pays rent, how long does it take for them to process that rent payment and for you to actually get it into your own bank account? Because if this is your only property and you’re depending on that rental income to pay your bills or whatever for that property and it’s rental income’s coming in by the fifth and then on the 10th you’re paying the utility bills or something from that payment, you want to know exactly how long that’s going to be. Then any additional fees that… So with AppFolio, when I use that, there was additional fees to add on all these different things that made it very expensive.
So when someone does pay the rent, are they getting charged? Are you getting charged to actually process it or is it included? Is it free? It makes you look at all of the additional fees, but then look at the customer side of it too as far as your renters. Is the app user friendly for them? Are they going to get frustrated with it? Because guess what? If your tenant has an issue making a payment, submitting maintenance requests, they’re not going to call up TurboTenant or RentReady. They’re going to come to you first and that’s just going to cause more headaches for you too.

Tony:
Ash, obviously, you’ve got so much more experience than I do. I will just say again, as I get back into the long-term rental space with this first rental that we’ve in the last, gosh, six years since we’ve had a long-term rental or five years maybe, I’ve been using TurboTenant and it’s been actually a pretty good experience. Even when we had o own long-term rentals, I didn’t self-manage any of it. So going through this for the first time as a self-managing long-term rental landlord, a lot of experience on the short-term rental side, first time on the long-term rental side, it’s been pretty intuitive and I like that everything is kind of housed in one place and I can market it, invite tenants to apply, screen folks, build the leases, do all those things. So to your point, Ash, I like the idea of doing demos, but I think the bigger takeaway or the bigger lesson I want to share with Mike is, and this is really for everyone, is that sometimes you do have to switch software.
And while obviously we want to make sure that we choose the right software to begin with, as your portfolio changes and grows over time, maybe the software that you started with doesn’t work for the portfolio that you have when it’s five years down the road. For us, when we first started bookkeeping, we were using Cessa, and I still think Cessa’s a great tool for investors as they’re initially getting started, but as our business matured and growed or grew, we realized that we needed QuickBooks. Now we switch everything over to QuickBooks. So sometimes your software does need to change. So I think the bigger goal is like, “Hey, can I find something today that works where I’m at? Let me learn that tool.” And if I do get to a point where I need to switch, that’s okay because it’s probably a good thing. It means the portfolio is growing.
So I think all the tools work well. I don’t think you’ll necessarily go wrong by using a RentReady, a TurboTenant, basically any of these guys. They all are great products. It’s just which one do you like more? Which one’s more intuitive for you? Which one do you feel like you can get the most value out of today?

Ashley:
Yeah. And one thing to add onto that, Tony, about having to switch is make it easy on yourself to actually switch. I pretty much keep two sets of everything. I keep the lease agreements, all the documents stored in TurboTenant with the tenant, things like that, property information, stuff like that. But for all the stuff that I’m adding or even receipts in my bookkeeping, I keep them separately in a Google Drive folder because when I’ve switched before, I had a huge headache of pulling all of that information out of the software and AppFolio did not make that easy at all because they didn’t want people to leave. And so they made it so difficult for you to actually offboard from them. So make sure you’re setting up something where you are able to actually, if whatever software you choose, if it’s going to be super difficult and you have to go one by one by one to actually download documents that you had saved in there, just take a couple of extra seconds and just throw them into a Google Drive folder or something like that also.
But yeah.

Tony:
You could probably use your favorite AI tool today to do a lot of that manual data extraction for you now. So if you have built up really a lot of your receipts and PDFs and all those different things you’ve saved inside of some tool, give it to Claude or ChatGPT and it could probably download it pretty quickly for you and organize it inside your new Google Drive. All right guys, after the break, we have the Maryland landlord who wants to turn over a rental without using an agent. So we’ll map out the DIY leasing process and the mistakes that can erase those savings. We’ll be right back after this. All right guys, our last question today comes from Paul and his first tenant is moving out and he wants to market, screen, and place the next tenant himself to improve cash flow. So Paul says, “I’m a new landlord over the past two years and I’m looking to turn over a property in Montgomery County, Maryland when the first tenant lease ends without the assistance of a real estate agent.
Can you all provide some recommendations for marketing, advertising? For example, where’s the best place to list and the best application/screening tools available? Look into DIY this time to help with cash flow.” I think first, Ash, obviously again, I’ll defer to you here because you’ve got way more experience than I do, but let’s just talk about the timeline a little bit around what that looks like. So he didn’t say, he says when their lease ends, so I’m assuming that it’s sometime soon, but the general timeline is that once you get their notice that they’re actually leaving, you do your pre-move out inspection, you get an ability to give them a chance to make whatever repairs they need to make before they move out. And you also get a chance to say, okay, what am I definitely going to need to replace once this person leaves? You start building out your scope of what that looks like.
If you’ve got a handyman or whoever, go get some bids, make sure that they’re aware of what needs to be done. And then once they move out, you start tackling those things, repairs, the cleaning, take good photos. We can talk about the photos really quick, Ash, because I’m curious what your take is on this, but I’ve been seeing a lot of, in a negative way, a lot of chatter on social about these AI generated listing photos where it has the photo, but then it’s like, what’s possible with AI? Are you seeing any of that in your market where people are enhancing their listing photos with AI and just what’s your general take on that?

Ashley:
I think people are still using phones from 2005 in my market to take pictures of their properties, to be honest.

Tony:
I like the old Razor flip phone taking pictures on their Blackberries.

Ashley:
I guess for me, it might be hard to tell if it’s AI generated unless I’ve actually gone to see the property. So I’m not seeing as far as a MLS listing, I haven’t seen anything that stands out to me as like, oh, this is super AI generated or whatever. What I have seen is this virtual staging, which we’ve seen for a while, but they’ll do a virtual staging and then the empty room of what it actually is, and then the next room virtual staging and then what it is actually empty. But no, I haven’t seen a ton of that. When I just listed a property, we were having the house power washed and the agent just said, “Just make sure it’s done by showings. It doesn’t matter for the pictures because we can just touch up the pictures or whatever.” So we’re seeing that, I guess, a little bit of Photoshop, but I feel like that’s probably always happened.

Tony:
Yeah. I’ve just been seeing headlines over certain cities or even states that are talking about maybe not allowing for some of these AI enhanced photos. I’m looking at an article right now where they’re talking about it in Detroit. Should we have these over-enhanced AI photos and should that be fair to the tenant? So anyway, Paul, just something for you to consider is getting the photos taken. Then we move through the photos, you create your listing, you do your showings, then you screen all the folks that have come in, start the lease process, then you move in. Again, given that I’m going through this right now, I’ll tell you what process I followed for the listing that I have. First, I called Ashley and talked to her for an hour and said, “Hey, tell me everything that I need to do.” And then we went out –

Ashley:
Also a side note, he FaceTimed me and we were eating the same exact thing for dinner.

Tony:
We were. What like a twin moment, right? We’re both eating Chipotle, just so happens at the exact same time, halfway across the country from each other. But I called Ashley, gave me all the insight. So what we did was we got the property ready, so we took a bunch of photos. And we actually did use AI on our photos, but we did it just to remove some of the furniture that was left over because we were still kind of moving out, but we hadn’t taken everything out and we’re like, “We don’t want to keep waiting.” So we just had AI just remove the photos. So we didn’t virtually stage, we didn’t enhance the paints and all these different things. The house looks like the house, we just had to remove the furniture. But then we listed the listing. I listed it through TurboTenant and I listed it through Zillow.
And it was interesting because Ash and I were talking and she gets a lot of interest in her listings through TurboTenant. I got way, way more through Zillow. The majority of the folks who have reached out have all come through Zillow. So it could just be market dependent on where you’re at on which one does both, but I would recommend list on both places, that way you get the maximum exposure. And then I was actually kind of going back and forth doing research because I am doing this myself. I’m like, “Hey, what are the laws in California say around the applicant screening process and how do you choose the right person?” I actually found out that California has a very specific law. You have two options. The first option is anyone that applies and meets your specific qualifications, and obviously there’s a lot of rules around what the qualifications can be and can’t be, but if you have someone who applies, whoever the first one is, the first applicant that meets all of your qualifications, that’s who you have to lease the house out to.
Or you have a second option of letting everyone apply and then you can choose amongst the people, again, within a reasonable degree of flexibility, you can choose the tenant that you actually want, but then you have to refund everyone else who wasn’t selected their application fees. So those are the two options. So I opted for the latter so I could have some flexibility on who I actually choose. And now we’re doing the first open house today to see who actually wants supply and go through that process. So that’s what we’re doing right now to lease our unit.

Ashley:
Did you give them the link to the application already or are you waiting until after the showing to send out the link? Or could people actually apply now if they wanted to?

Tony:
Yeah, I actually followed your advice where I gave them the pre-screen through Turbo Tenants. TurboTenant’s a quick pre-screen, so no one’s paid for anything yet. And then I’ll give them the application links after the actual showing today, and then we have the second one on Friday, so two days from today. And then only those folks who actually come to the open house are the ones I’m giving the applications to.

Ashley:
Now with that law in California that you have to refund them the application fee, what about the background and credit check fee? Is that considered that application fee?

Tony:
I would assume so. Anything that they had to pay for fee wise, I was assuming I’d have to pay them back for everything. I think when I did the math, it was like 90 bucks. So if I have 10 people apply and I only choose one, I got to refund nine times 98, 800.

Ashley:
And technically you’re not even refunding them because it’s not like that money is going to you.

Tony:
Came to me.

Ashley:
Yeah.

Tony:
So I’m giving them the money back. But I weigh the pros and cons, and it’s like given that this is my first time self-managing that peace of mind to me it’s worth the extra several hundred bucks, but it’s not a fun thing to do. And when you think about the profits on a long-term rental, that could eat up a good chunk of your profits for the first year, right? So you’ll have to pick and choose what makes the most sense for you, but we just wanted that peace of mind to be able to choose the right person.

Ashley:
We just did a couple showings the other day and it’s the most interest I’ve gotten in a while on… Actually, there’s been two apartments that I’ve rented, but it’s been a while since I’ve actually rented and both got a lot of interest and people are just filling out the application without even seeing the property. So then I started… Usually what I would do is do it where I don’t send out the link, but somehow I messed up on one of them where the link was still out there or whatever so they could apply. And it was just people just applying, applying. And then I would send them the invite to set up a showing and they would not even set up a showing at all. And it’s like, I’d really, really like you to see this property before I go and approve you and then I have to wait to see if you accept because then you’re probably going to want to do a showing.
So that is why I really like doing it after the showings or the open houses that you’re doing is like, okay, here’s the link and send it out or whatever. But the pre-screener is also a great thing to do first because if you say in your listing, we don’t allow pets and then they put in there that they have a pet and it’s not a service animal. Okay, sorry, unless you’re getting rid of your dog, you don’t actually fit this property or whatever. If your minimum credit is going to be 600 that you’re going to accept and they put that their credit is 450, which I’ve had happen before. I put it very clearly in my listing what the requirements are, but people don’t read the listing and that’s the point of the pre-screener of don’t waste your money applying because this is my criteria that you have to reach to actually get approved.
And if they’re already admitting their credit is 450, why pay for an application and go through that whole process?

Tony:
Ash, what about the process for setting the actual rents? There are a lot of different tools out there I think to help you do that. And what we did is I just looked… My neighborhood is very kind of unique because my entire little subdivision of my town didn’t exist prior to 2017, I want to say, or 16, maybe it was the first house. So we’re a relatively newer neighborhood. So I really kind of drilled down my search to houses in this newer subdivision and that’s how I landed on what is the going rate for that specific type of home? But what’s your favorite way to identify what you should be pricing your units at?

Ashley:
I’m watching the apartment complexes in the area because to live in one of the… At least in the apartment complexes and the small rural towns I invest in, there aren’t a lot of amenities. So it’s not like you are moving into the complex because they have a gym, they have a pool. These have none of that. It’s just the complex. One of them is an eight unit and there’s just a bunch of eight units on the property or whatever, and you have a common washer and dryer in the hallway that you use, and that’s literally the only amenity. But is that actually amenity, not having a washer and dryer in your unit and having to share it with seven other households? Not really. So I always look at those as a comp because I think that people would prefer to live in a single family home, a duplex, or even just a four unit than an actual complex that has no amenities for you and you’re having to live with all these other people having to deal with things.
So I always look at what they are renting as a good comp for me because I think I will be able to at least get what they are asking for because maybe I have a private yard or whatever, a garage that they can use or different things like that where the apartment complex doesn’t have any of that. So I basically base it off of that. I did get called out on Instagram. Someone sent me a DM and I love it that people do this to me and call me out because it does make me second guess and it’s just making me a better investor. But I put out how we had 77 leads. We had 15 applicants. We did how many showings or whatever on this property. I listed that the rent was $800. It was a two bed, one bath, and the person said, “Your rent is way too low if you’re getting this much interest, blah, blah, blah.” And that is such a valid point.
The way I framed this property is this unit is on the third floor of the building. So no elevator, you have to walk up to the third floor. So that right there, the first set of stairs is outside. It’s on the exterior. So you’re walking up one outside, then you go in and then you go up another set. Then it is a haunted house. If you buy any book on Western New York hauntings, this property is listed in there. I take all of these things into consideration. I think people don’t want to live here, so I want to keep myself a little bit below what the market rent is for a two bed, one bath. So now I’m definitely second guessing myself as maybe I shouldn’t be doing that. So really a lot for me, to be honest, is guesstimate what it should be. I’m looking all the time what’s being rented and what it’s being listed for.
Unfortunately, because it is such these smaller markets, it’s so hard to use any kind of rent estimator because there’s not enough data because there’s so many small mom and pop investors that still stick their sign up front that no software, no AI is going to know that that was rented for X amount of money. So it is gruesome, but I’m also just making sure, okay, if this makes it more affordable for someone and I’m still making money, it’s actually not a bad thing at all.

Tony:
Yeah, that’s interesting guys, because when I first listed this long-term rental that we’re working on, I literally had I think four, maybe five people reach out within the first 30 minutes. Now these weren’t applicants, but they were just people requesting more information or asking questions. And as soon as I saw that, I was like, “Man, I think it might be too cheap.” So I went in there, I immediately increased it. I didn’t increase it a ton. I think I take it by a hundred bucks or something like that. But that was my thought process. And I think that might be the only downside or thing to consider about doing it on your own is could you potentially rent it for more and rent it faster if you use an actual leasing agent or property manager to do it for you? And if your property sits empty for three months and it rents for $200 less per month, well, did you really save any money by doing it by yourself?
So I think that’s the only question to really ask before you Paul decide to do this on your own is how quickly do you think you can rent it out for and do you think you’ll actually be able to do it at a reasonable rent?

Ashley:
Yeah. And to kind of add to that though is where are they getting their information from? Is it just because they’ve rented so many units in that area is that they have that knowledge? So I would ask those questions. When I used a property management company, they had no units. We were their first units in those markets. They had other towns and stuff, but it varies from town to town specifically. So make sure if you are hiring someone because of that reason that they actually have experience in that exact market, that exact town too. Well, thank you guys so much for listening to this episode of Real Estate Directy. I’m Ashley Hughes Tony. And if you guys have a question, head over to the BiggerPockets forums. We’ll see you guys next time.