First time landlord

12 Replies

As a first time landlord, what would you say was the most important things that you did when you first started out? Additionally, what would you say is the most important things I could do to position myself with my first property to be able to add a second, as it relates to processes, delegation, etc?

My bit of advice here might be different to other advice you'll be getting, but here goes: understand why you're doing this first off and actively focus on your customer -- tenants. I think too often investors see tenants as a "necessary evil" and not as valuable customers. 

Also ask yourself what's your mission in owning these properties, and I bet deep down the reason has to be more than "make lots of money" because there are many other ways to make money. Why did you choose real estate? Understand that, make that reason your goal and allow it to help steer your decisions. 

keep your heart out of it.

it's a business, make sure renters understand it's a business.

never rent to friends and relatives, your the last one they will pay.

get your team in order. 

automate rent collections if possible. 

late payments should be dealt with on a schedule. 

fix anything wrong, thank them for letting you know about a problem. i can't fix what i dont know about.  The domino effect can be disastrous.

after you start to build a portfolio you can delegate the tasks that are less comfortable to you. (at an added cost).

contact Portfolio lenders and start a relationship. for when you will need future financing.

start scanning, studying, and searching for the next purchase. It's a business.

surround yourself with like minded people.  listen and learn. It's amazing what they see and do in there business. 

These are the first thing s that came across my mind while having my morning coffee.

You have to buy smart. Understand what "cash flow" means as defined by BiggerPockets. Learn how to use the 50% rule or the 1% rule to help you narrow down the number of properties you investigate. Know that just because something cash flows nicely on paper doesn't mean it will in reality if it's a Class D property that is hard to collect rent, is regularly abandoned or trashed, etc.

Buy smart. That will set you up for success and prepare you for the next one.

One of the things I did was to research what software options were available to help me out.  As a first time landlord, having software to help me collect rents online, list properties, perform budgeting, background checks, etc., was a stress reducer due to the already in place structure the software provided.  The thing that was most worrisome for me was just listing my property and coordinating showings so I could put someone in there ASAP.


Also, shout out to @Stace Caseria , while this is a business, you do need to take care of your customers and find the balance between the two.

As a first time landlord, you need to understand the federal, state, and city-level laws governing landlord/tenant interactions in your area. Many cities offer helpful resources and classes to get you up to speed quickly.

Once you have a firm understanding of the rules, the next thing to do is start creating systems, standard operating procedures, and basic means of organization.

To that end, read The Book on Managing Rental Properties by the Turners. It will save you SO much time and headache, guaranteed.

First off, learn how to screen potential tenants.  This one took me a while but never underestimate the BS people will sell you to move into your place.  Learn how to navigate your local municipalities's court records.  If you find an eviction or an unlawful detainer, do not rent to them.  Don't focus too much on credit ratings.  Sometimes, tenants with lackluster credit can work out great assuming they have the income ratio covered.  The low credit will often keep them there longer since it's a barrier for them to buy a home.  

Second, treat these tenants with the utmost respect.  If something breaks, fix it immediately.  A mutual respect for your tenants will encourage more timely payments, better care of your property, and most importantly, less turnover.

Speaking of turnover, this will most likely be your #1 expense.  With that said, do not feel the need to automatically raise rent at the end of every lease if the market doesn't dictate it.  Some no-nonsense investors on here have a rule that automatically adds 2-3% at the end of every lease.  IMO, this just forces people our prematurely and any potential gains are washed out with an empty unit for a month or two.

And lastly, if you are managing yourself, learn how to fix things.  There are simply YouTube videos on anything imaginable from replacing disposals, fixing dryers, etc.  Not only does this save you money, but it will help you build a more solid business relationship with your tenants.  

Ken


@Onye Chukwuma - welcome to the club! You're started down the right path by asking for help.

A few people said some great things.

  • @Stace Caseria - mentioned know your why.
  • @Rod F. - mentioned automation. Definitely use a rent collection tool (Avail is one to consider) and you can automate your late fees.
  • @Brian Spies - mentioned listings and showings. A few tools out there that do this and make it very easy. I'd stress knowing how to write a good listing description, including rules and amenities, along with good photos will attract best tenants.
  • @Anthony Vicino@Ken Musial - mentioned laws and screening. These really go hand in hand. You've got to know what you can/can't say, discriminate based on, and how to get criminal, credit, and eviction checks. Additionally, verifying previous tenancy and employment. 


I didn't want to add what they all said already. This is a great thread to bookmark and reference. Of course, @Brandon Turner 's book on Managing Rentals is UH-MAY-ZING. Buy it immediately and read it cover to cover.

Best of luck. Cheers to your new adventure!

Hi there! 

I started as a Property Manager/Landlord about 3 years ago managing a Single Family Home in Mountain View, CA. I literally had no idea what I was doing! But to answer your question:

"how do you position yourself to add another property...as it relates to delegating, processes, etc. " 

I recommend that you put the proper systems in place for every aspect of the business...(marketing, tenant showings, tenant screenings, application process, eviction, etc.) 

My first year as a Landlord, I was all over the place which led to a lot of unnecessary sleepless nights. As soon as I began documenting each important phase, I was able to make the proper adjustments that allowed the business to run smoothly and easily. Three years later, I'm proud to say that the business now runs on autopilot, with almost 0 vacancies year round. 

FINAL THOUGHTS: 

It sounds like you have the visions of expanding to more units...I firmly believe in order to do that successfully, having the right systems in place will position you to expand, delegate, & ultimately run an efficient business. You create the systems, and you hire the right people work the systems. 

Hope this helps! 

-Hiljin Sabangan 

dont buy into this crap that tenants are your customers . They are not , I would argue they are instead your employees and must be kept in line to keep your cashflow up .

Tenants are are going to tell you fabulous stories to get out of their obligations. Donot believe a single word these people say . They will lie cheat and steal to get their way like a rebellious teenager .

No good deed goes unpunished. Do not go out of your to buy gifts and special niceties for these folks . Do not do that because they will see that as weakness and will take advantage of you everytime . Realistically Once you get your gonads stomped on a few times till they are flat ..it will become evident you can’t go out of your way with them .

I agree with @Anthony Vicino that learning city, state and federal laws pertaining to running rental property, screening tenants, paying taxes, etc. is the most important. If you violate the law, you can't use the excuse that you "didn't know" because it is your job to know. 

The next most important thing is tenant selection. Either hire a PM to screen tenants or learn how to do it yourself.

In my opinion, the actual investment is less important. If you buy a mediocre deal in a good location and manage it properly, you will be fine. Most problems occur when people mismanage. Even a good deal won't work out if you mismanage.

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