Is This a Place for me?

Question

New here.  I was recommended to this site just today.   It appears to be catered more towards investing in real estate.  My situation may be a little different.  It's this the place for me?

Here's my situating.  I have owned a house since 2017 that my father lived in until he passed 2-1/2 years ago.  It has sat vacant since.  I have been reluctant to even consider renting it out until just this week.  This will be a first for me, so I came here to seek advice.   First, do I need to talk with a real estate attorney,  CPA, or other before I even start this? Are online lease agreements enough to protect me and my assets?  When taking applications, should I charge a fee to cover background, credit, and employment checks?  How much? What company do you use for background and credit checks?  What would you consider an acceptable credit score?  I really know nothing about this, so I welcome any and all advise!! I'm in Alabama.  Thanks in advance!

Jeremy Fleming · Answer

I would really recommend you hire a property manager. I've self managed after getting excellent training and I still made mistakes. Big ones. Do yourself a favour, and interview a few property managers to take over this chore for you. Trust me on this one. It's the classic tale of "you don't know, what you don't know".
You will hate yourself if you self manage with zero training or experience.

Carlos Ptriawan · Answer

Based on your question it is way better to just hire PMC. Some of the folks who answered your question are good PMC just talk to them privately and they will answer your question.

Greg Parker · Answer

Interview several property managers.  Search BP for PM's in your area.

Ask for:

+ sample LMA(lease management agreements)

+  fees, pets, tenant placement,

+  maintenance agreements, AC filters, inspections, max amount they can spend without your approval

Depending on the location, also consider a STR property manager.

Tiamo Wright · Answer

You are absolutely in the right place! In regards to your question about renters insurance I always require tenants to have it and maintain it.

As far as your other questions some people go for an LLC to protect their assets (but more work to do tax time to do it right) where others keep it in their name and get landlord insurance and/or umbrella insurance. There is no right way, it is just what is right for you.

Similar to what others have said a Property Manager might be your best bet. Some states have limits on fees for applications, or pet rent or deposits. For example in Colorado certain cities had laws against more than 3 non-related individuals being in the same property as it might be considered a brothel. There are so many laws and regulations to know and understand so you don't accidentally step in it so having someone that knows those and keeps you updated as they change could help. We have a ton of great property managers in the community but you can also use the new Property Manager Finder to be matched with a few and to interview. https://www.biggerpockets.com/business/finder/property-manag...

J Smith · Answer

Do y'all require the tenant to have renter's insurance or leave that up to them?

J Smith · Answer

Awesome! Thanks

J Smith · Answer

Sounds good!

Alecia Loveless · Answer

@J Smith If you decide to self manage here is what I do. Just me, I’m a little different than other investors because I don’t always try to maximize my profits on every aspect I could.

After you have gotten your lease in place you will want to advertise for prospective tenants. I use Facebook Marketplace a lot. I get a ton of tire kickers. I have implemented a system where I call people 45 minutes before they are scheduled to come view a unit. This has significantly reduced no shows. Then once I’ve narrowed it down to my top 2-3 choices I have the 1st one do background checks/credit checks through MySmartMove.com. You put in the terms of the lease, the tenant name and email and MySmartMove sends out the background check request and the tenant fills in all their information and pays for the check which is now $44/applicant.

Assuming everything turns out with the check I sign the lease and get the security deposit. I collect the 1st months rent on move in day and prorate it accordingly.

Personally I deduct the amount of the background check(s) from the first month’s rent but absolutely no one else does this. In my area $44 is generally 2.5 hours of work for someone and I take a couple small steps like this to set myself apart from other landlords to the tenants. I also do not charge a pet deposit or pet rent because I believe our animals are family. I have not been burned yet by this. But this can be a significant additional source of income because people are generally willing to pay pet rent.

Then you let the tenants know how to handle emergencies and issues, if they call you or who to call.

Now you’re in business.

Kimberly Abeln · Answer

Yes, you’re in the right place! Don’t get too hung up on the details yet. I highly recommend Brandon and Heather Turner’s book, “The Book on Managing Rental Properties.” Read or listen to it first, and then you can decide your next step. Personally, I really like self-managing our properties. But If you decide to hire a property manager, this book will at least teach you what you should expect from them. I’m always happy to jump on a quick call or answer emails (I’m also in Alabama.) Welcome to residential real estate investing!

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