Newbie Help on Rental Property and Becoming a Landlord

[Nick Diecidue]

Hey BP Members!

My wife and I are newbie's and are looking to start our road to financial freedom. We currently live in Metairie, which is a suburb in New Orleans, and are currently looking to put an offer on a duplex that is listed at $175,000 in a medium demand area. We figure we will be able to charge $900/month per side ($1800 total) but also do not know the first thing about becoming a landlord or where to find tenants.

We also would be funding this deal with a Home Equity loan on our single family home. Would this be a good idea?

Any help would greatly be appreciated!

- The Diecidue's

[Mike Wood]

@Nick Diecidue  Welcome.  Since this is your first property, I would make sure that you like the area and the area can support good tenants.  Learning on your first property will be a challenge, but having to deal with bad tenants will make it even harder.  If you would not want to live in the area, it may be hard to find good tenants that want to.  As you know, Metairie has good and bad areas.  
Based on your rent price, I assume that its a 2/1 duplex.  If not, and its a 3/1 or 3/2 duplex, I would question the area.

Finding tenants is pretty easy in our area.  Craigslist, Zillow Property Manager and both free and get alot of traffic and responses.  Services like Cozy and Smartmove can handle the background and credit checks.  Just develop an application process and approval method and follow it.  In my experience, anyone that has to move in days and shows up with cash in hand is a problem tenant and will cause problems down the road.  Tenant in our area like quality rentals, so make sure its clean and repaired before showing it.

I think HELOC is a good way to come up with the 25% down payment. You will obviously be putting your home at risk somewhat, so that is something to consider. Also, you will need to close on the HELOC before the investment property, so if you dont already have it, you want to make sure that you disclose that to the bank when looking for a mortgage.

Good luck.