I am new to this site and wanting to begin my journey into real estate investing. I am currently a business owner and in order to prepare myself for that I made sure to self educate in areas from marketing, retail, customer service, etc.
I am wondering what areas would be good to self educate before diving into real estate investing? I am thinking of doing a refresher course in Quickbooks so I can manage my accounting on my own. What about getting my realtor license to avoid all the closing costs? I want to be very hands on (minus some of the handyman jobs).
What skills do the seasoned investors have that they swear by and which did they wish they had when they first started off? Where should I focus my education for the next few months?
When we are little we say to others….”When I grow up I want to be a….”
Then when we grow up, we realize that in order to be all the above we need to have a plan. We just don’t happen to be a whatever- we- want to be just like that. It takes a plan.
Do we attend College?
How many years?
Do I need a college degree?
Where will I get the money to fund my dream?
Yet in the Landlord Business (our Industry) people don’t view it as a business. The media, courts, tenants, family and friends, feel we are just money hungry people who care nothing about our tenants but only the money. Do they say that about Bankers, Grocery Store Owners, Doctors (well maybe doctors..bad example) plumbers, etc? Not so much. They view these industries as companies, businesses, but….. not us. And even some of us DON’T VIEW OURSELVES AS A BUSINESS!!!
I have people contacting me all the time wanting me to help them solve all their problems because they didn't have a plan. And, I try to help them as much as I can, but there is only so much I can do. Which lead me to writing this blog.
Many investors, see a sale, hear about the landlord business from others, and they get excited and so they buy a house. But they don’t know anything about being a landlord. And...most of us fit into this group, when we first began as well.
So here is my tip for those who need, want it, and glad they have it. So...here it is.
1.Location, Location, Location .
2. Check out the neighborhood before you buy. Is it a money maker neighborhood, or a bad one?
3. Check the area to see how much rent you can charge for this home in this particular area.
4. As a Realtor, when I sold properties to investors, I would tell them, from my own experience, how much money they could get in rent for this home. In return they would ask me….”Well what if I did this to the house and that to the house (spending thousands of dollars in extra’s to the house), how much could I get in rent then”, and it never ceased to amaze me, how they looked at me when I told them that they would still get $750.00 a month. They wondered how they could still only get $750.00 a month when they spent so much money on extra’s to make the house super special! The answer is this. Location, location, location. What is the market value in that area and neighborhood! It is just like buying a house. What is the market value in that area? What are they selling for?
5. Check your Landlord/Tenant Laws before you even buy a home! Very Important
6. Sit in some Landlord/Tenant Court Sessions to see what goes on.
7. Study the City Ordinances of where your properties are located. If you don’t …..be prepared to receive several tickets for things you didn't know your tenants were supposed to (you really since you are the landlord) do.
8. Get your OFFICE ORGANIZED!! I can’t believe how many investors are so focused on buying and not how to KEEP THEIR PROPERTIES or KEEP TRACK OF THEIR PROFIT AND LOSS. You can't possibly do that if you are not Organized or have an Organized Office!
9. Therefore setup a good filing system
Get a good answering system…Vonage Phone is one good example
Stamps.com is great for keeping track of letters you send your tenants.
QuickBooks is a Landlords best friend. Buy it and learn how to use it.
10. Keep in mind that this is a business of people management. You must get a feel for people and their personalities.
11. Learn what words are Legal to use in advertisements. There are many no-no words. (See my blog on What you can say and not say) to avoid discrimination lawsuits.
12. Learn how to setup your properties to have good curb appeal
13. Learn how to do open houses. Plan for them. Makes applicants excited. Competitive
14. Prepare a legal and good application form. Set a criteria for qualifying applicants.
15. Prepare a legal and good Lease Agreement. Take pictures of the home prior to renting it out and have that day's paper somewhere int he picture to depict that the photo's are current.
16. Setup a website Wordpress.com is free to advertise your rentals- generates interest.
17. Learn how to screen your applicants.
18. Learn how to do a credit report and read them
19. Learn how to choose a tenant. Beware of Testers How you speak, words you use, how you choose an applicant will make you or break you. There are testers. Do things right and you won't have to worry.
20. Don’t allow applicants to pay for their application fee by check or money order. They can cancel the checks or money order if they don’t get the place.
21. How much money do you charge for an application fee (Credit Check) $25 per person is what I charged. If they qualified I applied it to their move in fees. If they didn't qualify, it was non-refundable. Have that on your application form.
22. Only accept cash or a Cashier’s Check for credit checks and if you choose them as a tenant, make sure only cash or Cashiers Checks are acceptable, Otherwise they can stop payment on checks and money orders once they move in. PACIFIC HEIGHTS!!!!
23. Don’t allow tenants to move into the property unless they have rent and security deposits PAID IN FULL!! NEVER give anyone the keys until you have all move in fees, money due you in your hands and utilities (if they are to pay them) placed in their names.
24. How much Security Deposit can you charge. Believe it or not, your State has a law for that. Michigan is one month and half plus first month rent. What does your state say?
25. If tenants pay for utilities. make sure they have them placed in their names on the day or prior to the day you sign the lease. Call the day you sign the lease to verify that has been done. If not, DON'T RENT TO THEM, they do not follow instructions.
26. If you are a Property Manager, make sure you are a Broker, or work for a Broker who does Property Management. About 3 states say you can be a Property Manager and not work for a Broker if you a Licensed Property Manager, not a licensed Realtor or Salesperson.
27. If you are a Landlord and have a Property Manager, either let them be a Property Manager 100% or you handle everything yourself, but not do both
28. IMPORTANT: Learn the forms of your STATE !
How long do you keep your paperwork, your leases? Tenant files?
What is a Notice to Quit?
What is a Demand for Possession?
How many days does your state law require you to send that Notice to Quit?
What is a Termination of Tenancy?
How many days does your State law require you to dent that Termination of Tenancy?
What is the difference between a Notice to Quit and a Termination of Tenancy?
How do you fill them out?
How many copies do you need?
How much do they cost?
What is a Health Hazard Eviction?
When can one be sent?
What is a Writ of Restitution
How do you fill out all these forms
How many days are required for the process
How do you handle an eviction in general?
Do you change the locks on the tenants…ABSOLUTELY NO!
How do you handle a tenant who hasn't paid their rent?
How do you handle a tenant whose lease has expired?
How do you handle a tenant who won't move out
How do you handle tenants doing damages?
What type of Pets are legal rental pets?
How many people can live in a house
What to do with too many Guests in the rental home?
Unknown people on the lease?
How do you evict someone, not on the lease?
How do you handle tenants doing drugs
How do you handle noise complaints
How do you handle vehicle violations
How do you keep a tenant long term? See my blog on The Tenant Phase
To be a successful landlord, and maintain that excitement that you had when you first began, before you knew the ropes, you have to have all this in place, and you MUST AT ALL TIMES STICK TO THE RULES OF YOUR CONTRACT, YOUR LEASE AGREEMENT. Stick to the rules, and you will keep that excitement. You will keep not only your tenants happy, but you will be happy, making your family happy, and that’s what makes landlords still be landlords after 30 years in the business.
Thank you both for responding and with such helpful information.
Nancy- your answer blew me away! I appreciate the details and extremely valuable information you put into your response! Reading your response has helped my greatly. It also set in stone how much I have to learn and educate myself on but better that I do that now as opposed to when I own a property and realize how ill-equipped I am.
Many thanks Nancy! You rock!!!
Now here are some tech based “must haves”
Websites saved on your phone -
Hope this helps!