Renting Out My First Property - Newbie Landlord

[Yashank Choksi]

Hey there! 

Hope everyone is doing amazing.

I am located in Charlotte, NC and I will be renting out my property for the first time somewhere around August. There are a couple of repairs that I will have to get done on the property. For repairs, what would be the best way to go about it? Should I find the cheapest option or should I look into more quality repair work? Also, is there any checklist that will say the things I need to have up to date in order to rent the property out?

Another question: would getting a property manager be a wise step? I am kinda confused about it since I only have one rental property. 

Since I have at least 6 more months for it, I want to start preparing now!

Any help regarding this is highly appreciated!

Best,

Yashank

[Nathan Gesner]

Quote from @Yashank Choksi:

If you can manage on your own, that's recommended. If nothing else, it's a good opportunity to learn what it takes and whether you are good at it or not. Knowing what it takes will help you see the value in a good property manager.

The problem is that managing rentals takes more than most people think. You should know the law and stay current on it. You need to know how to study the market, advertise your rentals, screen applications, avoid scammers, collect late or unpaid rent, deal with unapproved roommates or animals, handle lease breaks, confront tenants about lease violations, and a hundred other problems that can pop up. Then there are once-in-a-lifetime situations like COVID to navigate where some of us did very well while others lost their shirts.

Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO. Written by attorney investors, it's full of practical advice pertaining to management of investment property, has sample forms that can be edited, and - most importantly - they tell you what your primary state laws are and where you can read them. It's updated every year and is the best $40 you'll spend as a Landlord. There is one book for 49 states and a separate book for California.

If you decide to hire a property manager, just know that finding a good one is similar to finding a good renter: you need to know what a good one looks like and you need to screen, screen, screen! Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!