First rental, very sudden, what to prepare for?

Question

Nathan Gesner · Answer

@Thomas S. gives good advice but I would recommend you hire a good property manager until you're situated and educated. You can start by going to www.narpm.org and search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees.  Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addendums. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance or problem tenants. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

I hope this basic guide helps. If you have specific questions about property management, I'll be happy to help!

Thomas S. · Answer

Step one is to access/ devour/ memorise your state landlord tenant regulations. Do not consider working with tenants until you know the regulations. Step two is to study everything you can find on this web site about our business regarding the importance of screening tenants, how to screen and how to reject applicants. When you finally find one with the high standards required to make a good tennat never hand over the keys until you have CASH in hand for FMR, LMR, Deposit etc. everything allowed under the regulations. I also highly recommend you only use M2M lease. It will save your butt.

Step three prepare yourself for newbie nightmares. If you are not prepared they will be inevitable.

If you do not think you can handle the stress learn how to evaluate and choose a good PM.

Step three prepare yourself for newbie nightmares. If you are not prepared they will be inevitable.

If you do not think you can handle the stress learn how to evaluate and choose a good PM.

Ryan Swan · Answer

You're putting the cart before the horse in terms of preparing to own a rental before you even own it.

You really need to speak to an attorney regarding your uncle's estate. Don't transfer any real property or try to assume the loan until that's been done.

Jeff Rabinowitz · Answer

What steps have you taken to determine that this will be a good rental? Do you know what market rents are? Do you know how much it will cost to get the house in rent ready condition? If you don't have the money to do the repairs, where will the money come from? If you think you want a property management company, have you found one (hopefully, a good one) that wants to manage a small house in a low income area? What will they charge? Will this be a profitable rental or might you be better off selling it? Is your family on board with operating this as a rental or do some of them want to be paid their share now?

Doug McVinua · Answer

@Joshua May I read some other potential challenges that may need more clarification. You mention splitting profits with family at the time of sale?

Assuming this is going to be an Estate soon, who is in charge of the estate, do others expect money out of this property etc?

I would be cautious regarding spending your own money on anything until you own this unit. Estates can and often get ugly regarding the differences of opinions on how things are going to be divided, who gets what etc.

Maybe I'm misreading your comments but until the dust settles be cautious. Families often turn ugly when someone sniffs a little inheritance.

I have done court-ordered sales when the parties can't agree the ultimately a judge decides to sell the property and divide the assets that way.

Thomas S. · Answer

Always remember applicants lie, usually by omission.. Your propose in screening is to discover the lies and eliminate those applicants. The good ones will rise to the top on their own. You then simply select the most qualified of those remaining. In addition to the facts their personalities also come in to play. You want to choose the  best personality fit wise for your needs. If a applicant comes on too strong, too sweet or overly needy/cooperative reject them immediately...you are being conned, possibly a professional tenant that proper screening should have eliminated.

The key is to never hesitate to reject any applicant for any reason...rejection is preferred over a eviction.

If you miss the lies you will end up with a bad tenant. Remember screening is initially only about the facts, do not view applicants as people until you narrow your selection down to the best.  Do not adopt a first qualified approach to selecting tenants. You want to select best qualified. No reason to settle for less than the best.

Chris R. · Answer

To add to the above, I really can’t emphasize enough calling references on their application. We met this seemingly great couple we had full intentions of signing.  I called their application references and they helped us dodge a huge bullet.

Also services like TransUnion SmartMove is crucial for background checks once their references come back favorably.  You’re going to have to get creative in a low income neighborhood as the credit often isn’t what you’d like but the more of these you do, you’ll get mentally calibrated to the range you should shoot for in your area.

James Wise · Answer

1st thing you'd want to do is get the house up to snuff. Fix everything that needs to be fixed. Once the home is ready place the ads on Craigslist, Zillow, Trulia, Facebook etc...When doing showings with the tenants I recommend open house style showings. If you try to make specific 1 on 1 appointments with the tenants you will quickly realize that no show's are commonplace. So you want to setup 1 or 2 time slots and tell everyone who's responded to your ads to come to 1 or the other.

Once you start taking applications make sure you run a complete background check. Credit, Criminal & Eviction reports are a must.

Stanley Bronstein · Answer

@Joshua May Here's a link to some good info on the Arizona Residential Landlord Tenant Act

https://housing.az.gov/general-public/landlord-and-tenant-act

First rental, very sudden, what to prepare for?

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