Turning current house into a rental as we move into a new house

4 Replies

We brought a new house and want to turn our current home into a rental.

I'm in Seattle WA, where we have brought a house close by, and I have a heap of questions about setting up a rental property.

1. How should I set up accounting books for the rental property?

2. How do I set the best rental price for the house?

3. What are the common mistakes people make as they start as landlords?

I'm looking for some to point me in the right direction.

Thanks, heaps, for your help.

Cheers

Dave

0. Congratulations. Being an investor is a scary step, and one that, if done well, will lead you to financial freedom.

1. Don't overcomplicate it. Track receipts on excel. Keep all receipts.

2. Zillow is shockingly accurate on rental prices. If you narrow your search function to "Rent" on their website, you can see what properties in your area are going for. Avoid target pricing for properties that have been listed for 14 days or more. Aim high. If you have to remove your listing and relist lower, it will be okay.

3. The hardest part of being a landlord is finding good tenants. You can make every other mistake, and if you lease to the right tenants it will all be okay. You can make no mistakes but renting to the wrong tenants and all your work will be for nothing. Screen your tenants. Don't trust your gut. Get background checks. Call employers. Check credit scores. Tenants with good credit tend to be tenants who care for your property.

We are currently in process of getting our current home set up for a second set of renters. Our first primary has been a rental since 2014. 

I agree the hardest thing is finding good tenants. If you have good tenants the rest is a breeze. Our first tenants had low credit, but I listened to their story and wanted to give them a chance... were late with rent the first month. Ended up evicting them maybe 8 months later. Our last tenants were amazing. The day after they moved in the guy stepped through a rotted piece of board on deck... laughed about it really cool. Only called for one other thing. Wish his job didnt move them. They were dream tenants. Just had a new guy move in in May... think I have had 10 service requests... but he pays on time, just calls for very little things. Have been debating managing our properties ourselves. We have management company bc we were not in same state for a few years, but now am back in same state. I think we will keep management team, especially since we want to purchase at least 1 a year. But if u go management team route, interview a few. 

Also, I agree... zillow is pretty on target.. also management team will help give you estimate of what things are going for.

Good luck!

I agree with Jody. I'd add for common mistakes is treat it like a business. People will tell all sorts of stories about why they are great tenants. Listen to them, but don't believe all of them. Look at the references. Also make sure you read the tenancy act and understand the rules. You should be able to get a standard lease that applies to your state for free and modify it to suit your needs.

For rental applications, some property management companies have templates on their website.