What have been your very best landlording tips?

General Landlording & Rental Properties
9yFollow

What have been your very best landlording tips?

Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

Over the past couple of years we have focused mostly on flipping houses in Arizona.  But starting this year, 2017, we are now starting to pick up rental properties that we are turning into lease options.  So far we have picked up 4 properties in Arizona that we have lease optioned and we have 4 more that are in the various stages of rehab and coming to market.  

As a fairly new landlord, what I would like to know is what have been the very best tips that have helped you the most when you started out as a landlord?

Thanks for your helpful tips.

480-206-1209Podcast Guest on Show #287
1Reply
183 views

Most Popular Reply

G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 867 votes
9y

Hi @Shiloh Lundahl,

On the acquisition side, it took me a long time to fully understand cash flow calculations. How to properly forecast costs for repairs, maintenance, CapEx, vacancies, and even learning that I needed to include property management costs even if I were managing the property myself.

On the management side, the two most important things are tenant screening and tenant retention. Turnovers are where you lose money as a landlord, so those two tasks become the highest priority. 

Please don't hesitate to reach out over PM at any time!

Cheers,

9Reply
See this reply in the discussion

49 Replies

Jump to latestLatest
  • G. Brian DavisPro Member
    Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 867 votes
    9y

    Hi @Shiloh Lundahl,

    On the acquisition side, it took me a long time to fully understand cash flow calculations. How to properly forecast costs for repairs, maintenance, CapEx, vacancies, and even learning that I needed to include property management costs even if I were managing the property myself.

    On the management side, the two most important things are tenant screening and tenant retention. Turnovers are where you lose money as a landlord, so those two tasks become the highest priority. 

    Please don't hesitate to reach out over PM at any time!

    Cheers,

    9Reply
  • Al Williamson
    Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
    9y

    @G. Brian Davis nailed it. 

    But let me add that you don't have to limit your income to just market rate rent. Monthly rent is just one cash flow stream - it's not the ONLY stream.

    Look for opportunities to pay your mortgage without relying on rents. Stretch yourself.

    If you do this exercise, you will have the money you need to maintain your property, fund your reserve, and improve your lifestyle.

    Most landlords can barely afford to maintain their properties!

    Best to you!

    4Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    9y

    @Shiloh Lundahl, probably my best tip is to not get in too big of a hurry to rent a vacant property, especially if you have several open at once.  I have always tried to make my leases come due in the summer months.  it is much easier to work on them, cheaper if you have to pay utilities for a few months, and most folks do not want to move in extremely cold weather.  Unfortunately this may mean I have 2 or 3 or maybe even 5 or more units come open at the same time.  When that happens you feel overwhelmed.  You have a large drop in gross income, several thousand a month, you have a LOT of expenses in fixing things up and painting them.  You cannot seem to find the time to do the work you want to do.  Suddenly you worry about what happens if they stay open for 5 or 6 months each, or longer.  You suddenly drop your normal pickiness and take a marginal tenant who has the money to pay first months rent plus deposit.  Then you have a constant problem with them on paying rent, not taking care of the property, breaking out windows, pets without approval etc.  Don't get is such a hurry that you drop your standards, you will always regret it.

    9Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @G. Brian Davis thanks for the tips. I have a couple of properties in Indianapolis that looked great on paper when I bought them but I didn't properly forecast costs for repairs, maintenance, CapEx, vacancies like you suggested and they have not performed as expected. I also was with a property management company that I don't think helped the situation. I am now calculating the numbers you mentioned into the equation and I'm coming up with more realistic numbers for those properties.  

    480-206-1209Podcast Guest on Show #287
    2Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    9y

    @Shiloh Lundahl After you fully understand how to run the numbers for an investment property the most important part of being a landlord is tenant screening. Tenant screening makes or brakes landlords because bad tenants can lead to those increased turnover costs like @G. Brian Davis mentioned. 

    Give yourself a chance at the beginning and try buying a property in no worse than a C+ area, preferably a B area. Your paper returns will more closely match your real life returns the better the area you are in.  

    4Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    9y
    Originally posted by @Shiloh Lundahl:

    As a fairly new landlord, what I would like to know is what have been the very best tips that have helped you the most when you started out as a landlord?

    Other than the usual advice of finding the right tenant the most useful tip I can give you is to eliminate/minimize variable expenses. When we purchase a property/business we evaluate every fixed & variable expense & look for ways to minimize the variable expenses.  For example for small properties- 4 units or less, we'll purchase home owners warranty to cover the mechanical systems.  It's a small investment that helps us manage the cost of surprises later.  Another example- For properties where for one reason or another the landlord is responsible for the heating/cooling bill we'll convert the property to budget billing (a fixed cost) & then implement a renovation plan to convert the property where tenants are responsible for the heating/cooling.  

    312-681-7487
    1Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Al Williamson Thanks for your input.  My wife and I sat down the other day and went over our plan for creating a reserve for each property.  We thought of about 5k per property.  How much do you save in reserve for each property?  Do you do a fixed amount or a percentage of the value of the property?

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Al Williamson
    Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
    9y

    it's an equation that involves the remaining useful life of (at min) your three biggest components. For example: roof water heater exterior paint. 

     He should also make adjustments for how long you plan to hold onto the property. If you plan to sell soon you don't need as many reserves as if you were going to hold forever. 

     So those are the two frames that you need to look at your reserves fund through. But you could simplify things by always having the full replacement cost of your most expensive component,the roof, saved up at all times. 

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    9y

    Tenant screening for sure. You are much better off with a vacancy than a problem tenant. Be patient.

    I would also say to take care of the 'leaks under the sink' and 'my .... Is broke' yourself.  Usually an easy tightening, filter cleaning or breaker flip.

    4Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Al Williamson Thanks.  We plan to hold these properties for 5 years.  That is when the option comes due.  We do realize that some people will not exercise the option though so we should still have some saved up in case we have to do some repairs before we do another lease option.

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Carlos Gonzalez
    Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
    9y
    Shiloh Lundahl If you want to hire a handy man for repairs and such tell them that you have more properties which you own that way you can negotiate a better rate with him.
    0Reply
  • Johann Jells
    Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
    9y

    Show the places yourself. This is your best opportunity to get a feel for your prospective tenant as they wander through the property. Chat them up. You'll get a feel for whether they're picky or defensive.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    for me.. it was simply tenant retention.. turn over kills you especially if you don't live there.

    A great handyman is a must when your like me and can barely change a lightbulb

    and of course I do everything backwards. .I move a tenant in and I tell them up front.. I will NEVER raise your rent if you simply pay on time and take good care of the home...

    and in fact I have been known to lower rent if tenant says they need to move to something cheaper.. if they have been good up to that point .

    Along with tenants that can't pay super high utls bills in the winter I will cut rent 100 a month for 4 months.. again tenant retention....

    but I never really look at this as real cash flow anyway.. its all about getting the asset paid asap.. 100% of income goes to mortgage then maintenance then extra to mortgage.. but again I am not normal I don't think.. LOL..

    so to me good tenant up front and RETENTION over the years.

    I have one home I bought in MS that was new construction in 05 and have the same tenant.. never raised the rent.. he just keeps paying my house off for me.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    5Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Michael Noto Thanks for the advice.  So far tenant screening has been the biggest tip.  I buy a lot in C neighborhoods (not nice, but not the ghetto) in Arizona because the B neighborhoods are all over 200k in Arizona in my opinion.

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Michael Bertsch
    Bossier City, LA · Member since 2015 · 122 posts · 50 votes
    9y
    -Buy in great locations with good school district. You want your properties to appreciate over the years and you attract better tenants. -Try and stick with newer houses so you are less likely to have problems with electrical and plumbing. Galvanized plumbing breaks down over time and will cost you a lot of money. -Have strict criteria when screening tenants.
    2Reply
  • Sarnen Steinbarth
    Commercial Real Estate Broker · Fort Collins, CO · Member since 2015 · 308 posts · 151 votes
    9y

    Here are a few top tips that come to mind. . . 

    • Tenant screening, tenant screening, tenant screening
    • Good location, then there will always be demand
    • Maintain property well (poorly maintained property attract poor tenants)
    • Get a an organized process for the recurring tasks:
      • Marketing
      • Rental applications (recommend doing them online)
      • Tenant screening
      • Showings
      • Lease creation
      • Condition reports
      • Rent collection
      • Maintenance / repairs
      • Inspections
      • Notices
      • Tenant communication
    • Don't let maintenance issues linger and become worse
      • (Recommend against having tenants doing maintenance or painting).
    • Be reasonable with tenants, but don't be a push-over
    • Enforce your rental agreement (if you don't like what's in it, change it).
    6Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Crystal Smith I like the idea of the home warrantee.  How does that work exactly and is it a pain to get them to cover things that break?  Also, does having a home warrantee effect insurance when it gets used or is it not related to insurance at all?

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Johann Jells I like the idea of meeting with the clients to get a good feel for them.  

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Jay DeCima
    Redding, CA · Member since 2016 · 224 posts · 143 votes
    9y

    Shiloh

    Over 40+ years of investing I developed my Managing Your Tenants By Mail process.  I created this to keep my sanity when I had 250+ rentals at my high water mark.  This will eliminate most personal, usually emotionally charged, tenant encounters.

    0Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Jay Hinrichs That does sound backwards a bit, but who am I to argue with Jay Hinrichs.  

    Right now we are in the building phase of our business.  Would you suggest paying things off quickly while you are in the building phase or would you do that after you have reached a certain point in investing?

    480-206-1209Podcast Guest on Show #287
    1Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Sarnen Steinbarth Thanks for the list.  That is exactly what I was hoping for.  A good list with bulleted items that I can create a system around.  That was awesome. Very helpful.

    480-206-1209Podcast Guest on Show #287
    1Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    9y

    Have a " no pay , no stay " policy .   Never let a sob story get to you .

    1Reply
  • Andrew Holmes
    Rental Property Investor · Chicago, IL · Member since 2015 · 275 posts · 271 votes
    9y

    1. Only buy areas with B or C avoid high crime and economically depressed areas. 

    2. Poor quality properties attract poor quality tenants

    3. Have a set of rules for your tenants follow them. 

    4. If you want to do charity and help some one don't make them your tenant. Help them give them money or help them in any other way. Just do not help them by putting them in your property. It always come back to bite you. 

    5. Only sign 2 year leases minimum. 

    6. Tenants like an employee. Set the ground rules from the min they make contact. If you are firm but fair you will attract people who will fit that mold. If you compromise then you will keep running into goofy tenants. 

    7. If you fail to screen and train your tenants then you tenants will own your investments rather than you owning the investments. 

    4Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    9y
    Originally posted by @Shiloh Lundahl:

    @Crystal Smith I like the idea of the home warrantee.  How does that work exactly and is it a pain to get them to cover things that break?  Also, does having a home warrantee effect insurance when it gets used or is it not related to insurance at all?

    W/ the home warranty if something breaks down that must be replaced we pay a deductible to replace it. For example, a new furnace that would normally cost between $1800 & $3K depending on the brand & efficiency, would cost us a $300 deductible to replace. The deductible is usually between 10%-20% of the replacement cost. When we establish a CAPEX budget for a property we put the deductible in the budget for everything covered in the property. It's our way of removing the uncertainty of variable costs. The caveat w/ the home warranty is you can only purchase it when you buy & close on a property, not after. There's no relationship between a warranty and insurance.

    312-681-7487
    1Reply
  • Robert D.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 14 posts · 4 votes
    9y

    This is more for multifamily properties: if you ever have an issue where one unit is complaining about bugs, don't just send the exterminator to that unit, but also send them to every unit surrounding that unit (or just spray the whole building). Often you'll find that it's your cleaner tenant that complains about bugs, when the problem is actually caused by a neighboring unit occupied by someone who is messy.

    Also, expect an increase in bug sightings whenever anyone moves in or out.

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free