Updated almost 4 years ago on .
Tips For New Landlords
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to share some tips for new landlords.
Becoming a landlord may seem like a straight forward endeavor but there is a lot that goes into managing rental properties and managing tenants. In this episode, Charles outlines some tips he has learned over the past 2 decades from owning rental properties.
Talking Points:
➡ I have been a landlord since 2006 and there are a few tips I wanted to share with new landlords.
➡ 1. Be aware of leasing scams when renting properties. Make sure to watermark images and if you are posting the rental on Craigslist; avoid putting the exact street address in the listing.
➡ 2. Be cautious of large up-front (usually cash) payments from tenants – why are they doing this – there is usually a trade-off. Now I personally have offered to landlords to prepay a year of rent for 1 free month but in most situations, these are scams. Usually you cannot verify their credit, criminal record or employment. Make sure every prospective tenant formally applies and goes through a credit and background check.
➡ Always have a written lease that your attorney has previously reviewed and always have important communications; written and documented and when in doubt; send them certified. This would include; a non-renewal, a renewal with rent increase, noise complaint etc. It is crazy how many people rent apartments with a boilerplate lease they downloaded off the internet or with no lease at all. You must enforce anything that you put in writing or it could create a precedent that something in the lease is not enforced and then not required; like paying on time or paying late fees.
o Create a coversheet that you provide to the tenant when you present the lease to them and walk them through the coversheet. (checklist)
➡ Never have your tenants do any work at the property for a rental discount. You vetted them as a good tenant when they moved in; you didn’t vet them as a contractor. Unless they are a superintendent; do not make any deals with them for discounts on rent or doing work around the property. Keep everything separate.
➡ Have separate bank accounts; you should have one operating account; you should have one for security deposits and you should have one for reserves. When I owned and self-managed smaller properties; the property would be owned in 1 LLC and then I would have a management LLC that I setup. Under the management LLC I would have an operating checking account that was swept at the end of the month and I would have another account under the management LLC that was just for security deposits. I would keep a savings account under another corporation and that is where I kept my reserve fund. Any profits at the end of the month from the operating checking account would be swept to the reserve savings account at the end of the month. The management company has most of the legal exposure so you want to keep none of your own funds in there after the month is done.
➡ Always be professional with your tenants but do not be friends with them or become involved; even if you live at the same property. Limit text messages, no social media contact, no social meetups, don’t socialize when seeing them face to face; be nice, caring and then move it along. Don’t stand in their apartment or the hall for an extended period of time talking about non-property issues.
Listen - https://podcasts.apple.com/us/...
Watch