need advice for first time long term rental
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Member since 2023 · 162 posts · 55 votes
4dThose three risks are real, and they're the same three that decide whether a first rental works: screening, maintenance, and turnover. We operate 236 doors in Memphis, mostly single-family, and here's how we think about each one.
Screening matters more than the credit score alone. We look for verified, repeatable income and consistency between the applicant's story and their paperwork. A bad tenant who won't leave and trashes the place usually traces back to a rushed approval.
Maintenance is cheaper when it's planned. We find and test contractors in small paid steps months before anything breaks, so a repair is a phone call, not a scramble.
And on the 1% rule: don't judge a deal on rent alone. A house that sits empty for a month costs more than most repairs — turnover and vacancy are the expensive part, not a leaky faucet.
Start with one house, screen slowly, and keep a reserve for the turn. What part of the process feels most unclear to you right now?
17 Replies
- Member since 2023 · 162 posts · 55 votes4d
Those three risks are real, and they're the same three that decide whether a first rental works: screening, maintenance, and turnover. We operate 236 doors in Memphis, mostly single-family, and here's how we think about each one.
Screening matters more than the credit score alone. We look for verified, repeatable income and consistency between the applicant's story and their paperwork. A bad tenant who won't leave and trashes the place usually traces back to a rushed approval.
Maintenance is cheaper when it's planned. We find and test contractors in small paid steps months before anything breaks, so a repair is a phone call, not a scramble.
And on the 1% rule: don't judge a deal on rent alone. A house that sits empty for a month costs more than most repairs — turnover and vacancy are the expensive part, not a leaky faucet.
Start with one house, screen slowly, and keep a reserve for the turn. What part of the process feels most unclear to you right now?
- Realtor · Columbus, Franklin County · Member since 2026 · 166 posts · 66 votes4d
San — those risks are real, and the way to handle them is to price them before you buy, not hope the 1% rule saves you. The 1% rule is only a quick screen. A first rental has to work after the mortgage, taxes, insurance, vacancy, repairs/capex, and a property-management fee (even if you plan to self-manage). Friends who were surprised by those line items usually left them out of the spreadsheet. On the tenant side, I use the same written screening criteria for every applicant and a documented move-in condition report with photos; that does not eliminate every problem, but it is how you reduce the odds of a messy holdover or a disputed turn. I would also talk to a local manager in the market you pick before you make an offer — they can tell you what similar $200k–$300k rentals actually lease for and what their full fee stack looks like. I would pick one market, not NC and Florida at the same time, and underwrite several real listings there before you chase a "deal finder." Are you planning to visit before you buy, or is this a fully remote first purchase?
- 4dJohn RacinePro MemberRental Property Investor · Casselberry, FL · Member since 2008 · 214 posts · 110 votes
San, your friend's three problems are real, but most of them get decided before you buy, not after.
My first purchase was two duplexes in a less-than-desirable part of Orlando. Tenants often paid weekly, there were constant issues, and I had to evict multiple tenants there. The numbers looked fine on paper. The location is what made it hard, and it shaped the kind of tenant problems I dealt with. Looking back, a better area with a little less cash flow would have saved me a lot.
BJ's right that the 1% rule is just a quick screen. On every purchase I put in 10% vacancy and a management fee, plus repairs, and break-even after all of that is my minimum. If you're buying from Virginia, plan on actually paying that fee. When I moved to California I hired a PM for my Orlando rental because I didn't want to be a long-distance landlord. Having self-managed before made me much better at holding the PM accountable.
On the tenant who wouldn't leave: look up each state's eviction process before you pick a market. How long it takes to get a unit back varies a lot from state to state, and that matters more than the weather.
If Merritt Island stays on your list, expect property taxes and insurance on a rental to run higher in Florida than the listing suggests, even after Amendment 3 passed this week. Amendment 3 expands the homestead exemption, which only applies to someone's primary residence, so a rental doesn't get that break, and it does nothing for insurance. Get a real insurance quote and calculate taxes at your purchase price before you offer, because the current owner's bill may include a homestead exemption you won't have.
Thanks Rosina, BJ and John provided good info to me. I feel better now. I was so confused and worry after I talked with my friend. Even when I pickup some realtor agents from Zillow and redfin to discuss with them... It seems they are not sure how to help me out.... maybe I connected to wrong agents... I will continue to research and ask more questions.... I just know about this forum from youtube... Again, thanks team a lot... I think I need to find a good agent who has a connection with property management. Then, I should be fine. Also, I should choose "turnkey" deal to prevent risks.
- 4dJohn RacinePro MemberRental Property Investor · Casselberry, FL · Member since 2008 · 214 posts · 110 votes
San, good question, and you're right to be skeptical when every agent tells you their area is great. Here's how I'd check it without taking anyone's word for it:
1. Check vacancy yourself. Search rental listings for that zip code and look at how many similar homes are for rent, how long they've been sitting, and whether the asking rents have been cut. A lot of listings sitting 60+ days with price drops tells you more than any agent's pitch.
2. Call two or three property managers who work that area, not just the agent selling the house. Ask what a home like the one you're looking at actually rents for, how long it sits between tenants, and which streets they'd avoid. Managers are the ones dealing with turnover and evictions, so they tend to be more honest about where the problems are.
3. Ask who the tenant pool is. With my Orlando duplexes, the warning sign I missed was that tenants often paid weekly. Ask a manager what the typical tenant there earns and how they pay.
4. Look at crime and school data for the exact address, not the city. A few blocks can make a big difference.
On turnkey: it can work for a remote first purchase, but treat the turnkey company's rent and vacancy numbers like an agent's opinion and check them with an independent property manager before you sign. Even if you don't visit, pay for a local inspection and ask for video of the street, not just the house.
Are you leaning more toward NC or Merritt Island now?
- 3dDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
To be blunt, not sure you have any chance of succeeding at owning a rental property.
Your stated goals conflict with reality.
BUDGET: $200-300K is not the problem, what Property Class you buy will be
LOCATION: again, doesn't really matter, but understanding whatever market you pick is important
REMOTE INVESTING: here's where you're HIGHLY likely to make a very costly mistake. You are just starting out and stated you don't plan on physically seeing the rental you buy. Which leads to your BIGGEST challenge
TEAM BUILDING: you can be successful at all of the above IF you can build a great team!
You've already experienced the challenge of this as you posted your frustrations with contacting agents to assist you.
CHALLENGES: you don't know what you don't know
How are you going to know good teammates from bad ones?
How will you know a good deal from a bad one?
You don't seem particularly motivated to figure all this out
So, you may be better off investing your money in a REIT or mutual fund.
Logical Property Management4.9465 Reviews - Lender · Cartersville, GA · Member since 2026 · 19 posts · 5 votes3d
Hi San, happy to help. Can you tell me a little more? What part of NC are you looking at, what price range, and are you planning to pay cash or finance it? That'll make it a lot easier to give you a real answer.
- 3dNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
this won't work. you can't choose a market based on a google search. as @Drew Sygit also pointed out, if you buy a random property in a random market you will just lose money.
- Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 204 posts · 71 votes3d
If long term rentals aren't your thing, and it sounds like that may be a concern you have, some people do what we do and buy at a good price by taking over the seller's loan and instead of having a long term renter which may turn sour, actually selling it as a Lease/option. That way you get your up front money back right away so you can repeat the process, the optionee takes over the responsibility for the property so any damage is left up to him to repair and you collect payments just as you would otherwise. It allows one the ability to control the property without the worrying about the risk of it being trashed. In this set up you don't need a property manager so cash flow improves. It's not "market specific". We have properties in California Arizona Georgia and Texas. It's more oriented toward knowing how to put it together than an actual location. Perhaps you should consider lease/options.
@San Le, I would not pick a state off a Google search and then go hunting for deals there. Your friends' stories are worth taking seriously, and the better first step is picking a strategy that fits what you need this money to do. There are also plenty of REI strategies that don't involve money to start. I've lived in several states and owned property in more, so I'd be open to sharing what I've seen. Are you hoping for monthly income from this first one? What strategies have you read about so far?
Written with AI help, edited by me. The 1% rule is only a rough screening shortcut; it can't tell you whether a property will cash-flow after financing, taxes, insurance, vacancy, repairs, capital replacements, management and HOA costs. Before choosing NC or Florida, narrow it to a few specific neighborhoods and run the same conservative worksheet on actual long-term rental listings. Use rents supported by comparable leases, not just a seller's projection; get an insurance quote for the exact address, confirm taxes at your purchase price, and check flood and wind exposure.
If you expect remote ownership, ask two local property managers what they charge—including leasing, renewals and maintenance coordination—and what vacancy and turnover they see. A local inspection and contractor estimates can help uncover near-term costs. For tenant issues, learn the state and local process and get professional guidance before buying; consistent screening and a documented move-in condition report help, but don’t remove every risk.
You don’t have to choose a state based on climate alone. Compare a handful of real deals, and pass if the math works only with best-case rent and no vacancy.
- 3dMatthew MorrowBusiness MemberInvestor · PA - NY - NJ · Member since 2019 · 967 posts · 349 votes
@San Le those three risks are real, and I'd price them before buying instead of hoping the 1% rule covers them. Run the same house with a real management fee, a real turnover, and reserves for the big items. I'd be careful buying sight-unseen on a first one too. Photos miss what a walkthrough catches. After a $12k lesson early on a two-unit, every deal I do gets a sewer scope now. Purchase price is still what decides how much room you have when something shows up.
CORE Team | Realty ONE Group Supreme548 Reviews - 14hJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Welcome, San, and good on you for asking these questions before buying instead of after. Your friends' stories are common, and most of those losses trace back to buying thin deals and skipping reserves.
The 1% rule is just a screening shortcut: monthly rent around 1% of the price. Once a deal passes it, run the real numbers with vacancy, repairs, management, taxes and insurance, and keep a reserve for turnover. If it still cash flows after all that, one bad month doesn't sink you. Decide how the property will be managed before you close, and screen tenants slowly.
With $200K-$300K, I'd compare a couple of markets before settling on NC. Columbus, Ohio is worth a close look. A lot of deals there hit the 1% rule and still cash flow after every expense, most come with $20K-$30K of built-in equity at purchase, and single families mostly run $120K-$180K, so that budget could cover more than one property. Landlord-friendly rules and evictions that wrap in about 30 days when uncontested are a big reason it works for people investing from out of state.
Happy to connect, and to introduce you to investor-friendly lenders and property managers here if that's useful.
Jimmy Lieu, Red 1 Realty4.9124 Reviews - 8hArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 974 votes
Quote from @San Le:
Hi Everyone,
I am a new investor. I am trying to find someone who help to find a good deal around North Carolina state. I choose NC state based on google research. First, I do not like cities are too hot or too cold. Second, NC is good state for long term rental. If you have any other better deals, such FL (Merritt Island). I open with that. My budget is only $200k-$300k
Also, I am curious about 1% rule. Based on my friend feedbacks, they have negative cash flow easy:
1) Property management
2) maintain costs - repair when something break
3) tenant sue -- some bad tenant did not release the house after the contract is expired. They also mess up the house really bad condition after they leave. My friend used to lost a big amount for this case.
Too many risks there. That scares me a lot because I am new investor.
Hey San, those are valid concerns, especially for your first rental. I'd focus less on the 1% rule and more on the actual numbers after property management, maintenance, vacancy, taxes, and insurance. A good property manager and proper tenant screening can also help reduce a lot of the headaches. I'd keep an open mind about out-of-state investing too. The Midwest has some affordable rental opportunities worth exploring, especially if you have a reliable local team in place.
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