Just bought our first rental property! Now what?

Question

Hi BP community,

My fiance and I just purchased our first rental property in Charleston, SC. We paid all cash for a 2BR, 1.5BA townhouse about 10min from downtown. It's in great shape / turn key. We setup an LLC and will transfer the title there. I purchased Brandon Turner's Property Management book and plan to read that ASAP.

However, any additional advice as to how we can best set ourselves up for scalable success? Specifically, where can we find a comprehensive draft of a leasing agreement? Anything else we should be doing proactively? We close next month and will immediately start accepting applications and screening tenants.

Thank you!

Best,

Will

Reid Matthews · Answer

Hey Will,

As a PM in the area:

-have a lawyer look over your lease

-make sure EVERYTHING is in your lease (who replaces air filters, who replaces smoke detectors batteries, who cuts grass)

-be thorough with background inspections

-make sure tenant is aware (and is in lease) on when fines occur for late rent and how much they are

Those are things that first come to mind.

In can be expensive and time consuming to set it all up the first time and do it in a way that protects yourself and your investment.

Let me know if I can help in any way!

Mike McCarthy · Answer

@Will Graves

Look into Cozy/Apartments.com for screening and rent collection

Read and understand your state/city landlord tenant laws.

Read and understand screening and questions you can/can’t ask. I tend to get at least one applicant ‘fishing’ for discrimination complaints (do you accept section 8, etc). Make sure you answer correctly!

Make sure you get a home inspection from an inspector of your choosing, even if it is a turnkey property.

And btw, I love Brendan Turner’s books, you’ll find a wealth of knowledge there.

And most importantly, good luck and have fun with it!

Mike D'Arrigo · Answer

@Will Graves Congratulations! If you want to scale your portfolio quickly, I would put a mortgage on it and pull my money out. Since you paid cash, you won't have to wait 6 months like you normally would if it was financed. I would take advantage of today's historically low interest rates. That will make it challenging to put it in an LLC though.

Charlie Tunstall · Answer

this is all great advice you have here...I would simply add, spend a bunch of time..a bunch, on your tenant screening. Don't be in a rush to fill it and you'll set yourself up for success/happiness

Will Graves · Answer

@Mike McCarthy Thank you Mike! We have our inspection today actually and should receive that report soon. Great tips regarding city & state landlord tenant laws & screening Q's. We will be sure to familiarize ourselves with those.

Just bought our first rental property! Now what?

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