First time land lord advice.

21 Replies

Hello B.P. community!

I am approaching my closing date within the month. Just to give you some background, I am moving into my first investment property in Cumberland, Rhode Island from Massachusetts. I will be living in one of the units, and the other will be rented. It is already occupied and has a signed lease until September. I'm looking for information that could be helpful on my journey moving forward. I would love to hear about previous encounters and just simple things that a newbie may not realize. ANY help is appreciated, Thank you!

@Brett Aguiar

I would say, make the place nice, fix things when they break, be a responsive landlord. Maintain the property, know your neighbors they will call you if anything is "off"

On the other side

My 2 biggest mistakes were.

1. Settling for a tenant, don't do it, stick to your screening criteria. I have gotten suckered by the underdog story.

2. Don't delay in starting eviction process. Waiting a month on a promise to pay is costly.

Sounds harsh but I learned the hardway.

@Brett Aguiar what @Michelle G. wrote is good advice.

You might also consider attending a local real estate group such as RIREIG which meets monthly in Warwick. I know they have a "landlord round table" about once a year you might find interesting, and of course many members are landlords of various experience levels, some with quite a few war stories to tell.

I'd say, if you haven't already, familiarize yourself thoroughly with Rhode Island landlord-tenant law. Also build a relationship with a good real estate focused attorney, perhaps by having them review any lease you're thinking about using.

Some people recommend telling tenants you don't own the place, you're just the manager. That can be tough to do in a situation where you're living there, but if you think it's a good idea and can pull it off, it's potentially even better as you can always blame "the owner" if you have to tell them no on something. It can make it easier if things become antagonistic.

I'd say, most problems in this business are caused by poor tenant selection, so I strongly recommend researching here on Bigger Pockets about the various methods used for tenant screening. Come up with your criteria for tenant selection before you start renting it out, and then stick to those criteria, no matter how much money a potential tenant waves around or what kind of story they give you.

And as Michelle said, if you realize there's a problem, act quickly. Delay will only make it more painful, and cost you a lot more time and money in the long run. (This applies to both tenants and maintenance/repair issues, actually).

@Brett Aguiar

Everything Michelle said is on point. Been burned before.

Make sure that you are charging market rent. If you are over market rent no one will show up. Under market rents will have you with too many great tenants.

You are welcome to come to our local real estate group. We meet on the 3rd Thursday of the month. In Warwick

I second reading the landlord tenant handbook and also reading your lease.  Draft your own lease for renewal, some inherited leases can be really bad. If the building is old and not lead compliant work on that.   Set some guidelines for the property if you need to, things you shouldn't need to tell people like what/where is allowed storage and no unregistered vehicles etc. When you take over  officially notice them on who to pay and how. Ask for any outstanding maintenance issues upfront.  Know the difference between a maintenance issue and an improvement.  

I am not big on lying to the tenants about owning the place but if you want some distance you can say you need to discuss with a partner or you can just say let me think about that.  Some things don't need an immediate answer.

Congratulations, @Brett Aguiar !

In addition to what others noted, I'd highly recommend "The Book on Managing Rental Properties" by Brandon Turner.  You won't have all of your systems in place on day one, but this will help you understand what types of systems you'll want to create in order to make the job a bit easier.  This book helped me a ton in my first year of landlording (and still does in my second year of landlording!).

Good luck on your journey!

Originally posted by @Brett Aguiar :

Hello B.P. community!

I am approaching my closing date within the month. Just to give you some background, I am moving into my first investment property in Cumberland, Rhode Island from Massachusetts. I will be living in one of the units, and the other will be rented. It is already occupied and has a signed lease until September. I'm looking for information that could be helpful on my journey moving forward. I would love to hear about previous encounters and just simple things that a newbie may not realize. ANY help is appreciated, Thank you!

I first want to say congratulations on your investment!  In my opinion the duplex is the best 1st time investment purchase. I purchased one and lived in one side as well.  It is a great move on your part.  Living in one side you get lower rates on insurance and the mortgage as well.  

As a new landlord you will have great advantage on many things.  Just as stated above, take care of your property and fix it the right way.  If you are not a handyman I highly recommend you try and learn to do as much as you feel comfortable.  YouTube is a great tool to learn DIY.  

I also recommend buy a filing cabinet or use a drawer and keep all your receipts.  Even if you are doing repairs on your side you live in.  Use them as your deductions.  Mileage is also big! Even driving around town try to keep a mileage journal.  This will be a great advantage on your tax return.

Another is if you ever plan to do a big renovation with a few thousand in mind.  Go to Lowes/ Home Deput and open a contractors account.  Tell them you are a landlord and you own properties.  Trust me they will open it.  Once you do that you will get a great discount on a big purchase.  I have saved 10 and even 20% before on projects (buddy up to the guys in the contractor area of the store).  If you buy more properties the big box stores will become your friend and you will be visiting alot if you become the handyman.  Once again keep ALL RECEIPTS.  Even when you eat lunch.  Over years it will add up to thousands of dollars.

Hi Brett,

I’m a Cumberland resident and a Cumberland investor. We should have coffee, and you can give me a tour.

George

Congrats on the first investment! @Brett Aguiar

BiggerPockets has a variety of tools and ways to connect with other users, so I would recommend exploring the site and looking through the forums. 

There are a some names you will start recognizing as you go, and some resources/tools you will end up saving and using as you move forward including great articles and the renowned podcast: https://www.biggerpockets.com/renewsblog/

Welcome to the community, and best luck to you in your investing goals!

- Scott

As long as you buy using an entity such as "123 Main St LLC", and move in as Joe Blow, tenant, your neighbor would be none the wiser.

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Originally posted by @Brett Aguiar :

Hello B.P. community!

I am approaching my closing date within the month. Just to give you some background, I am moving into my first investment property in Cumberland, Rhode Island from Massachusetts. I will be living in one of the units, and the other will be rented. It is already occupied and has a signed lease until September. I'm looking for information that could be helpful on my journey moving forward. I would love to hear about previous encounters and just simple things that a newbie may not realize. ANY help is appreciated, Thank you!

 Congrats.

Hopefully this is the start of 999 more apartment units for you (I have acquired over 1,000 units and I also started with a 2-family as well!).

Read what I've learned on one of my buildings where I made over $1 MILLION. You'll learn a lot, specially things you should not do as a landlord:)

https://www.biggerpockets.com/forums/311/topics/644570-how-i-made-over-1-million-on-1-deal-after-6-years-of-headaches

@Brett Aguiar

My best tip of advice would be to get the best possible renter. Do not settle. The more desperate someone is, the more it raises red flags. You really have to trust your gut with people. If you are sketched out by someone in your first meeting/phone interview then don’t chase it.

It is easy to spot a genuine, good person. Don’t let the financial risks of a vacant property make you bend. Wait for the right tenant and all of the other problems people have, don’t happen.

@Brett Aguiar

Understand taxes and the management of your money.

The BiggerPockets textbook is a good start.

Learn you legal rights as a landlord and the rights of the tenant. Keep a nice amount of money ready for repairs caused by "Murphy's law"..

Be a good landlord, and take good care of your tenants.

@Brett Aguiar choose your tenants wisely. I wish I’d have known about BP before we picked our first tenants. A nightmare scenario.

Exact scenario that me and my wife experienced few years ago. You've got great people sharing their advices already so I will just add: screen your tenants, read the current lease and renew it if something isn't right. Treat it like a business, keep the receipts for maintenance, repairs etc but also treat your tenants well and enjoy being a landlord. 

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@Brett Aguiar

Don’t forget to collect the pro-rated rent and security deposit at close. And get extra keys.

Study the current lease and make sure you know what terms you must agree to until September lease is up.

Introduce yourself to tenant immediately after close and give them written instructions on how rent is to be paid.

Schedule a walk through with tenant and fill out a “Move in Checksheet”. Document any damage now! It’s really their start over period unless the seller gave you documentation of unit before they moved in.

Take pictures of any damage during walk through.

Fix any deferred maintenance items immediately. The tenants will appreciate that if seller has been ignoring their reports of things that are damaged, and you’ll want to keep your property nice.

Prepare a new lease now and tweak it as you think of things. Mine is 10 pages long.

Do NOT over do things and spend money that doesn’t really need spent. For example, tenants would like new carpeting. Well, that isn’t going to get you more rent from their current lease, and they will just cause wear and tear for no benefit to you.

Make sure you are putting away a percentage for maintenance expenses, vacancy, capex, and maybe future management expense. How much depends on current items like Hvac, appliances, roof, paint, etc.

@Brett Aguiar

Establish guidelines on how tenants will contact you if there is a problem. Knocking on your door is not a good plan. I prefer a text message, and preferably between 8 am to 8 pm, unless it is an emergency.

Place this in your new lease, along with language on what to do in case of an emergency. For example, if there is a gas leak, call 9-1-1, and then call me when everybody has vacated unit and is safe! And show them where the main water cutoff valve is in case of water leak.

If they ask you a question that you are not sure about right away, tell them you will research that and get back to them. Then do that quickly. Or refer anything you can to the lease language. Do not deviate from the lease.

@Brett Aguiar

To clarify, the tenants obviously have no obligation to sign a new lease now, but start preparing one now so you are confident that you like it when it comes time for them to either sign your lease or for the next tenant. And along those lines, do research now as to what the rent may be when their lease runs out. If they ask you now if rent will go up, I would just state you have not even done any research on that and you are just focused on honoring their current lease and getting settled after your move.

Two big mistakes

Not charging full market rent rates on your property

Waiting around ,Failing to actually evict losers who don’t pay

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