How can I be proactive when I'm buying a home?

Question

I'm a newbie real estate investor and I'm in contract of buying my first rental property. I have turned in all the paperwork that they have requested and I have gone through my inspections and I was wondering what steps can I take to be proactive?

I feel like I'm just waiting for the process to move along and I want to take action but I am a bit lost as to what I can really do. I am househacking this property so I do plan on moving out for the first time as well.

I know this is a pretty vague question but any insight would be awesome. Thanks!

John Mocker · Answer

Alec,

From an Insurance perspective, ask the current owner to get from their agent "Loss Runs" for the past 5 years.  It is not required most times for a new purchase but it is good to have.  If there were losses, it may give you info on a problem that will reoccur.  You can also then check if the repair was completed.

As long as you will be occupying the house, the normal policy to cover it will be a Homeowners.  Once you move out you will probably have to move it to a Dwelling Fire.  Be sure to mention to your agent about house hacking.  Most homeowners policies have guidelines on the # of renters and other things related.

Lynn McGeein · Answer

@Alec Jacobs your real estate agent or you, if not using an agent, should reach out to your lender and closing agent weekly just asking if you’re still on track for closing date, making sure appraisal is in, survey is being done if you wanted one, etc., if they’re not automatically updating you. Read your state and local landlord tenant laws. Even if you meet the exception for an owner/occupant or number of properties, it’s best to know them better than your tenants do.  Don’t buy big items or open new accounts, make sure your identification is current, not expired, and talk to your lender before moving any large sums around.

Melanie P. · Answer

Maintain your credit and bank balances. Do not charge up any credit cards you have, take out new ones and do not buy a car, or finance anything else new until after the closing.

Call your lender and ask them to confirm underwriting has everything they need from you, ask when they will issue final approval and follow up on that.

See if the current owner will share their preferred vendors for the property with you - begin to reach out to them and introduce yourself.

Have a discussion with your family about what items from the house you'll be taking with you. Make plans for supplying anything else you'll need for day-to-day living.

Congratulations and good luck!

Kiana Kelly · Answer

Contingencies for when bad things happen! Yes! When is rent considered late, on the 3rd or the 5th? Can they pay their rent in 2 payment or 1 lump sum. Is the late fee $250 or 10% of the rent. How many times can they be late on the rent? What are the lease terms; 3 month, 6 month, 12 month. What is the penalty fee for breaking the lease? It could be 1 months rent. Up to you, you're the landlord. What is the max # of total occupants, meaning can 3 people move into the rental or just 1 individual. If they cause a sewage back up because they are flushing wet wipes and the cost of repair is $760, who is paying for it? If they bring in bed bugs? Do you have insurance for your appliances, if the tenant says the washer stopped draining the water and now their clothes smell like mildew, do you know how to schedule service with warranty or call an appliance tech? - THIS IS NOT MEANT TO SCARE you I promise, but this is the mindset of experienced real estate investors, which one day you will be too. - Good luck friend! ✨

Nathan Gesner · Answer

Yes, I'm not sure what your question is. The process of purchasing a property takes a little time, but typically less than 60 days. You inspect, you may need to negotiate repairs or price changes based on your findings, the bank appraises it to ensure they can underwrite the loan, then you close.

If you find yourself anxiously waiting, you can do what the vast majority of investors never do: educate yourself on how to manage a rental. Do this before you need to. How will you market the property? Screen applications? Collect deposit? How do you keep out squatters, trespassers, and thieves? Should you allow pets? If so, how do you screen them and how much should you charge for them? I could literally write hundreds of questions you should be asking yourself. Unfortunately, most landlords wait until a problem appears, then they eventually realize they are behind the 8-ball and try to figure out how to fix the problem.

Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO. Written by attorney investors, it's full of practical advice about the management of investment property, has sample forms that can be edited, and - most importantly - tells you what your primary state laws are and where you can read them. It's updated yearly and is the best $40 you'll spend as a Landlord.

Joseph Beatty · Answer

I agree with the rest of the insight saying to just educate yourself as much as possible on owning rentals. By now, hopefully you've got some tenants in there and everything is going smoothly. I'd love to hear how your experience was!

Thomas McPherson · Answer

Hey Alec, first of all, congratulations on being this far in the process.  Make sure you are staying in touch with your lender and respond promptly to any requests for documents.  Create a budget for yourself allocating costs such as utilities and maintenance so you are prepared when unforeseen costs appear.  Start thinking about the criteria you want for your tenants, and figure out your screening process so you are ready to rent.  I hope this helps!  Let me know how your househack goes!

Kristine Ann · Answer

I was going to suggest talking to your insurance agent also.  You didn't mention home insurance and that will need to be set up before closing.

Don't buy anything yet (don't rack up you credit card balances), but window shop at the hardware store.  If you are ready to go with a paint color for your owner's suite, then you'll be able to start painting your portion of the apartment as soon as possible. Take a leisurely walk through home depot or Lowes. Look at paint, flooring, closet systems, door knobs, locks and so on.

Get your banking set up to receive rent.  Look into tenant management apps. Think about what company you will call for plumbing issues.

Wale Lawal · Answer

@Alec Jacobs

Congratulations on your first rental property contract! To get ready for closing, check the inspection report, wrap up your loan, plan your shift, get set for renting out parts, start your utilities, get home insurance, plan fixes, and updates, make sure all legal and money stuff is set, keep learning, and get ready for moving in and having tenants. Talk to investors, property managers, and real estate folks for tips.Good luck!

Kiana Kelly · Answer

As a property manager, have you spoken to any of us? Have you reached out and shown them your rental and gotten a couple of quotes? Are you knowledgeable about the rental laws in your area or do you have an agent that can help you with that? Better yet, do you have a lease agreement prepared for your future tenants? Welcome to the world of managing rentals, if you can sit and chat with some Property Managers I am sure you will understand the preparations you need to take. How are you going to list and market your rental? What is going to be the security deposit? Who is going to process the applications? Who is going to show the unit to potential tenants? Do you require renters insurance? Can they bring a pet? What utilities will they be responsible for and is it included in the rent?

Food for thought, I can go on forever but this is the mindset I would have if I was in your shoes. Hope this helps get the wheels turning.

How can I be proactive when I'm buying a home?

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