I just bought a home, now what?

Question

Hi BP members, I have a scenario that I would love feedback on.

Lets say that I just bought a beautiful duplex or triplex. I ran the numbers and they showed great cashflow and investment opportunity. The house has no tenants. What do I do now? I'm a 22 year old and buying a house seems daunting but exciting. If I were to pull the trigger and buy a duplex/triplex, what comes next? Lets pretend that it does not need any major work, just minor repairs.

Justin R. · Answer

@Michael Faudoa I'll assume you're buying local to us here in SD metro area.

First, go to the library and read any one of the 15 "How to be a Landlord" books they'll have there.  That'll provide the basics, but they'll probably be written in 2002, so remember that the Internet changed a bunch of things.

There's no reason you can't and shouldn't manage this triplex yourself - you'll learn a ton in the process and it'll set you up for another one, should you choose to go that route.  Knowledge and experience is more important than cash flow at your age.  Plus, in the market we're in, property management is too easy for the cost involved.

While you're in escrow, figure out what your rental posting will say.  Figure out how you'll handle pets.  Figure out what your requirements will be - income, credit, rent amount, deposit, how they'll pay rent, etc.

The day you close, get in there and make whatever minor repairs are necessary that would show up on pictures.  Take some good pictures.  Write some good copy.  Post the units on Zillow.  Have them syndicate to their affiliate sites.  Post on Realtor.com too.  Use the copy you already put together.

You're going to get at least 25 responses in the first 2 days - that's how much demand there is for every rental in metro San Diego.  Respond to each of them.  1/3 will not meet your reqs.  Another 1/3 won't respond.  The final 1/3 (8 people) will go back and forth and message you.  Be ready for an open house 3 days after posting.  Invite each of those people to come.  5 will stop by.  3 will apply.  2 will qualify when you run BG and credit.  Rent to one of them.  Keep going till you fill all units.

There's plenty of other important mechanics of landlording, but you can figure out the other stuff as you go.  Focus first on getting people interested in the rental, renting to the best candidates, and making sure you collect the money.  Your first one will be a bit of a rough learning curve, but you'll be fine.

I only do small multifamily, and only in SD.  What I describe above has been my experience for just about every vacancy in the past 5 years.

Katie Stewart · Answer

Hi Michael! I would say that the first step after buying your property is to start marketing your rental online. There is free landlord software out there that will provide you with online applications and screenings as well as market syndication so your property is posted to all of the major listing sites. If you need any recommendations on software, please feel free to reach out to me directly through personal message!

In addition, I would make sure you have created a rental criteria that outlines income and credit requirements as well as how you will treat those with a criminal background or eviction history. Then, I would create a state-specific lease with addendums that cover major issues (i.e. rent payments, pets, etc.).

Good luck, I look forward to hearing more about your investing journey!

Maurice D. · Answer

make sure you get an extra set of eyes on the property, specially if it's your first.  preferably a contractor or an experienced investor to help you size up how much $$$ the "little" repairs may cost.

then use the rental tool here or a spreadsheet and plug in the numbers to make sure it cashflows after deducting expenses, insurance, taxes, property management and capex.   even if you manage it yourself, you need to factor in property management to ensure the deal has enough cashflow.

Alina Trigub · Answer

@Michael Faudoa Congratulations on deciding to start investing at such early age!  Before you go the traditional way and get a duplex, decide for yourself whether you want to be an active or passive investor?! Do you want to be a landlord or not? If an active investor, is your rentals your thing or would you rather try wholesaling or note investing or something else?

My point is, decide what your long term RE goals are and work towards them! But remember to only concentrate on one thing at a time. If you have a hard time doing it, then read "One thing" by Gary Keller!

If you have more questions, feel free to PM.

Best!

Michael S. · Answer

Good for you for starting your real estate investing at such a young age.  I'm impressed.  The last thing on my mind was buying real estate when I was in my early 20s.

Yatznira Rodriguez · Answer

Hi Michael! Congratulations. I recommend you familiarize yourself with your state's eviction procedures and tentant/landlord laws sooner rather than later, to protect yourself from professional tenants.

Michael Faudoa · Answer

Thanks Matt, sounds like I need a strict screening process for prospective tenants and to make sure that I contribute a certain percentage each month to maintenance, repairs, etc.

I'm sorry that my question provoked you enough that you had to reply in such a sarcastic manner- I may ask a lot of dumb questions because I have no clue what I'm doing, just looking for help.

I have a feeling you wouldn't be so demeaning in person, computers tend to make people a little more ballsy... but maybe its just your personality.

Thanks for the reply! I'll try to ask better questions in the future.