Hey everyone!

Times are looking little rough right now for a lot of people. But for me? I am in contract with a home that seems to be a deal I’ve been looking for. This will be my first investment and with time like these, it makes me doubt myself because of everything that could go wrong.

So the question I have to landlords, what should I be looking out for? What if tenant do not pay rent as of right now? How to screen for a great tenant so that I’ll have less problems in the future? What should I be asking to my tenants?

The same goes for interview my PM. What kind of questions should I have for them? What makes a PM a great PM so that we both can have a strong connection.

I hope everyone is doing well out there. If there’s any advise landlords can give me. Please share!!! Would help a lot.

Btw: this will be a out of state purchase!!!

@Benson Gee   Get references for the PM, find out all of the fees they charge to both tenants and landlords, how long it takes for rent to be deposited to your account and the rules on repairs (at what $ amount do they have to ask you).

If the house you are buying is currently rented, get a copy of the lease, security deposits, rental history (ie have tenants been paying on time), how long have they been there.

@Benson Gee look through the current lease that the tenant is on. Once the lease expires, if the tenant would like to stay have them submit an application and perform a background check to make sure they meet your criteria. You'll need to establish what this criteria is. Generally: Income is 3X rent, no past evictions, minimum credit score, positive feedback from past landlords, no violent convictions, smoking/non smoking, pets/no pets etc. Then get the tenant on your lease with your own policies.

References for PM, see how many units they manage, how long they've been doing, do they own their own properties, etc. A tip is to call the PM and act as a prospective tenant, see how they handle this and how organized they are. This shows a lot for how effective the PM is. Find investors in the area your investing in and make some connections. 

Being that this is your first investment do you have reserves? A safety cushion WHEN (as it will happen) things go wrong.

IF you don't then this isn't the time for you to be investing. As tenants won't pay, that's a fact and you'll have to take the hit for a bit

Tenants should always make 3x Rental Income. Have no Felonies or Evictions. That's the basic criteria. 

One final point, in Dallas Tx. The state has no income tax so property tax is assessed every year especially for out of state owners. They really screwed with me as the lower unit was investor owned and he never had his unit reassessed. Be careful out of state is easier now but it will cost you 1k a week minimum to go there for a visit if something goes south...

Originally posted by @Theresa Harris :

@Benson Gee  Get references for the PM, find out all of the fees they charge to both tenants and landlords, how long it takes for rent to be deposited to your account and the rules on repairs (at what $ amount do they have to ask you).

If the house you are buying is currently rented, get a copy of the lease, security deposits, rental history (ie have tenants been paying on time), how long have they been there.

Sounds good! Thanks Theresa  

Originally posted by @Lucas Miles :

@Benson Gee look through the current lease that the tenant is on. Once the lease expires, if the tenant would like to stay have them submit an application and perform a background check to make sure they meet your criteria. You'll need to establish what this criteria is. Generally: Income is 3X rent, no past evictions, minimum credit score, positive feedback from past landlords, no violent convictions, smoking/non smoking, pets/no pets etc. Then get the tenant on your lease with your own policies.

References for PM, see how many units they manage, how long they've been doing, do they own their own properties, etc. A tip is to call the PM and act as a prospective tenant, see how they handle this and how organized they are. This shows a lot for how effective the PM is. Find investors in the area your investing in and make some connections. 

 Might be a dumb question but how do you find tenants, past landlords? Do we just ask them or is there a way to find that out some how 

Originally posted by @Davi Fu :

Hi I had two condos in Dallas 2005-2010 what I learned is running credit scores was the most important thing over 700 I had no problems 650-700 I had issues but some such as coins clogging the washer, and a broken toilet were normal ish but less than 650 nothing but trouble....

are you saying anything lower than 650 is a problem?

Originally posted by @Federico Gutierrez :

Being that this is your first investment do you have reserves? A safety cushion WHEN (as it will happen) things go wrong.

IF you don't then this isn't the time for you to be investing. As tenants won't pay, that's a fact and you'll have to take the hit for a bit

Tenants should always make 3x Rental Income. Have no Felonies or Evictions. That's the basic criteria. 

 There aren't any tenants in them at the moment. Are there any questions I can ask them to be more careful so that they will be paying rent. Like keeping 3x rent in their bank account? Asking them if they are still working? and see if their jobs are recession-proof?

@Benson Gee for finding tenants you post your rental listing on various listing sites: Zillow, Hotpads, Craigslist, Facebook, Apartments.com, etc. Then depending on how you have it setup tenants will either contact you or submit an application. Then on your application you can put criteria for them to list previous landlords.

No you can't ask anything like that cause no one holds a crystal ball if their job is recession proof. You can't ask if they have savings and proof of it but then when do the questions stop for you to feel "safe"?

End of the day you're investing so there are will be risks. If you can't handle the risks then you shouldn't investing. Keep your money in cash and watch it not grow.

@Benson Gee You'd be surprised how much of an impact sticking to a system can have. Set your due date, set your late fee, tell the tenant about both, and don't cut corners. Using rental management software can be a huge help in this too. It will automatically send out reminder notifications, apply late fees, and force the tenant to pay late fees before paying other rent charges.

@Benson Gee first, if your rental is in CA or SF toss out what was here, then go read the tenant landlord laws for your locale. 

If your rental is not in CA still go read the tenant landlord law for its locale. Then contact a local rental owners association and see if they have any new landlord training. It was the best 100 bux I ever spent :)

good luck! 

Originally posted by @Dave Spooner :

@Benson Gee You'd be surprised how much of an impact sticking to a system can have. Set your due date, set your late fee, tell the tenant about both, and don't cut corners. Using rental management software can be a huge help in this too. It will automatically send out reminder notifications, apply late fees, and force the tenant to pay late fees before paying other rent charges.

Thanks Dave! What kind of rental management software do you recommend? 

Is your property in a tenant friendly or landlord friendly state? Now is a good time to see if a tenant is worthy because of the financial crises Covid19 had on people. If they are working and/or have cash that's good  if Covid 19 Didnt hurt them financially they may be worthy of further checking credentials. Right now in tenant friendly states like NY, the governor says don't worry about paying rent until August. Thats a score for existing tenants.

@Benson Gee It depends on a few factors. If you have a large number of units and you manage for owners, Buildium can be a good fit, or something even more substantial like Appfolio.

For just one unit and even as you grow, Innago is a good option. It can automate the late fees, reminders, and you can turn off the ability of your tenants to make partial payments - all really useful in sticking to that system!

@Benson Gee it sounds like you could use a good foundational education on how to manage rentals. I highly recommend "Every Landlord's Legal Guide" by NOLO. It's worth every penny! It has practical advice on most aspects of managing rentals and includes the specific laws for each state. If you are in California, be sure to get the California edition.

Should you start investing now? That depends on where you live. If you are talking about Seattle, LA, NYC, or other cities that are allowing rent deferments and closing eviction court, you should probably wait. Many cities/states are open for business as usual and you can probably survive.

@Benson Gee For out of state purchases the quality of your PM matters more than the quality of you as a landlord. They will be dealing with the day to day. What attracts the best PMs? Properties in good areas. 

When I read Rich Dad Poor Dad he had two points I took to heart 1. Small deal in case it blows up 2. Be your own
property manager for 2 years. From dealing and owning a few properties Property managers are 1-2 star everywhere. I'm sure others will disagree but that's my own experience. Actually on one of my Dallas condos the manager was embezzling and the other the HOA hired a general contractor who was hired to oversee the work of others but he preyed on the HOA pres older single female she gave him power to do a huge roof and HVAC and he was able to oversee his own work so he put a mechanic lien on all the units basically caused this hug lawsuit etc Sorry off topic and probably why others will say SFR but I also know the larger the property the more people the more chance for issues.

Funny I say all this as I'm trying to post my own question about renting or selling my own condo and being long distance.

On a current tenant or all tenants there is no real way to check on them being good as there are a lot of mom and pop and they don't want the hassle of reporting a bad tenant and the bad ones just shrug it off IMO the credit score is the top indicator.

@Benson Gee read David Green’s book on long distance investing and Brandon Turner’s book on managing rental property.

@Benson Gee don't be afraid to overpay for a good property manager, especially for out of state. Trying to save 1-2% in fees while using a "bad" property manager could end up creating more headaches than it's worth

A lot goes into vetting PMs. Reach out to several. You should evaluate not only their responses about your basic questions like fees, maintenance, evictions, renewals, etc, but how they respond. Does their presentation seem polished? Do they take a long time to get back to you?

If they're not putting in effort to bring you on board, there could be one of two issues: you don't have properties yet/your properties are not in good areas, or they don't have an organized and efficient process, and their communications with your tenants won't be any better.

When you do evaluate on the terms, it's also not as simple as picking the lowest cost. Evaluate the cost in terms of value they bring, their experience and expertise, how many doors do they manage, are they all in one area or spread out? Is their average property like yours, or not? If you own a 50 unit apartment and your PM only manages SFRs, that's probably not the best fit, and vice versa. 

A good PM will be evaluating you as much as you are evaluating them. A good PM has spent years honing their processes, and don't want to spend time on owners who will disrupt those processes due to unrealistic expectations or a lack of understanding of their business. A good PM will be transparent and forthright.

@Jon Kelly yes! I agree. For you what’s makes a GREAT PM?