5 Things 1st Time Landlords Need to Know When Managing Their Rentals

5 Things 1st Time Landlords Need to Know When Managing Their First Rental Property

As a first-time landlord, you have a lot to learn fast. It's best to start now because if you wait until you're a landlord, you may have to react to any of the issues below without a plan. I always recommend working with a real estate agent who owns investment property in the market where you're searching for deals.

They can give you the inside scoop on which vendors are best for repairs, local policies, and things to watch out for that apply in niche areas.

As always, one of the keys to being a successful buy and hold investor over the long term is having a solid plan and the discipline to stick to it. Here are five things every first-time landlord should know when managing their first rental on their own.

1. How to Screen Your Tenants

When you're a first-time landlord, you may think it's simple to find good tenants. However, just because your tenant is smiling and willing to rent from you now doesn't mean they're going to make a good tenant after they've moved in.

Having an excellent tenant relationship starts with a proper screening process. You can avoid 90% of the headaches you read about by weeding out the problem tenants in this process. Your state and municipality have their guidelines, but here are my go-to strategies.

Criminal History and Background Check

Know who you're in business with. A good background check allows you to confidently tell your tenants and future applicants that everyone goes through the same process. If you're renting out a multiunit property, you can also mention that their neighbors went through the same process.

Follow your local laws on what you can and can't decline applicants for based on their reports.

Entire Credit History - Not Just Credit Scores

You need to review more than just credit scores, and you have to run your own reports (or at least don't accept copies provided by the applicants.) Reviewing an entire report will give you the story the score does not provide.

2. How to Collect your Rent

If you've never owned a rental before, you may not realize how important it is to set your tenant up for success right "out of the gate." The last thing you want is to have to chase them down for rent. Automatic rent collection tools take the hassle out of rent collection.

I prefer systems that include ACH transfers, reporting tools, auto-notifications, and automatic late fees if a payment isn't complete by the required date. This system ensures you don't have to worry about handling paper checks or dealing with common late payment excuses about the rent check being in the mail.

3. How to Manage Repairs and Maintenance

The best maintenance happens before the issue ever generates a headache for the tenants.

Preventative maintenance is the key here, and I always give my investor clients a checklist of repairs and items to inspect before a tenant moves in. If you fix a leak now, you may very well prevent a ceiling repair later if the tenant decides that a small leak is not a big deal.

Not all maintenance issues are preventable, though. So you'll need a good maintenance plan in place. Have your vendors ready for the basics. Plumbing, heating, and a handyman or general contractor are good places to start.

Make sure you have an easy process for your tenant to notify you about repairs that are needed.

The less friction, the better. Many automatic rent collection services offer a maintenance request feature that will allow a tenant to text or email and relay the message to you through the same system.

4. How to Make Sure Your Leases and Documents Protect Your Investment

You should use an enforceable lease to bind tenants to local and state laws specifically, not just a generic "rental agreement" found online or at Staples.

If you plan to own the property for a long time, consider investing in a consultation with a landlord-tenant attorney in the area. Landlord-tenant specialist attorneys spend hundreds of hours in court negotiating lease issues and can lay out every single line item to make sure you're protected. Spending a couple hundred dollars early gets you a lease you can use for as long as your own that property.

If you're working with an agent who owns property in the same market, they may be able to share a copy or point you to an attorney who can make sure your lease covers all the proper bases.

5. How to React When Things to Go According to Plan

At some point, you're going to encounter the 2 am shower leak or a broken stove knob on the day before Thanksgiving. You might have a tenant who loses their job and stops paying the rent but is still very friendly when telling you they will not move out.

You'll be able to rely on your network of experts for advice, but the main thing to remember is to be fair but firm. It's ok to be empathetic and understanding about a tenant's misfortune or a repair that feels like an emergency to them.

I would never recommend being cold or mean to a tenant. Still, it is essential to remember that your investment property is a business, so separating your emotions from the decision-making process is crucial.

All too often, new landlords end up in eviction court after repeated promises to pay and only file for eviction when they've waited months based on false promises. Being firm but fair means you can file for eviction, explain to the tenant that you'll work with them on a payment plan, but if they don't keep their word, they'll have to move on from the property.

Treating them with courtesy and respect, even if they don't reciprocate, will go a long way throughout your career as a local real estate investor.

I'm an investor agent and active investor in my community, so if you have any questions on the tools I use or how I help first-time investors go through this process, don't hesitate to connect with me here on BP. Assisting new investors is a passion of mine, so I'd be happy to do anything I can to help you on your journey.

Feel free to connect with me.