Understanding The Business of Buy and Hold Investing: A Landlord

[Jaelyn Whisler]

Two nights ago, I attended a meeting in Prince George's County about buy and hold investing as well as managing your own properties. So I'm just going to jump into some of the things we went over. Feel free to add anything or comment your opinions...

To Survive Over The Long Run Managing Your Buy and Hold Investments:

• Understand that your business is to provide quality housing
• Understand that you're looking for quality tenants
• Understand your goal is to satisfy your quality tenant so they keep buying from you
  • Tenants are looking for convenience and superior comfort
    • Great value within the area

The Process of Buy and Hold Investing

• Prepare investment property for rental
  • Make a decision on your exit strateg(y/ies)
    • The better the neighborhood/area, the better your security to hold the property for cash flow versus to flip it (generally)
    • The better the neighborhood/area, the faster the appreciation (generally)
    • The better the neighborhood/area, the smaller your profit in cash flow (generally)
  • Staging is an option to consider as well when preparing to get the property ready to market
    • Does "The Thinking" for the tenant and helps them to picture themselves living in your home
• Market rental property
  • Craigslist is a good marketing vehicle to use when marketing your property to tenants... It's FREE and a lot of people, including tenants searching for a home, come through this site to find what they're looking for
• Screen and select qualified tenant
  • Host an open house personally
    • Have application forms ready with requirements, what's going to happen in the screening process, and the qualities you expect from your tenants
• Avoid fair housing problems
• Lease-Up the tenant
• Set and collect the rent
• Implement day-to-day operations
  • Have a handyman you can trust and who will get the job done in a timely manner
  • Get things done in order to keep your business running smoothly (rent, taxes, mortgage, maintenance, etc.)
• Know how to renew leases AND how to deliver termination letters and deal with eviction
  • If they're a good tenant and you're a great landlord, your tenants will have no problem renewing a new lease period with you
  • If they're not a good tenant and start missing payments and etc use your current relationship with them to reason out a solution. But if nothing works, protect your business and evict

Top 10 Things To Succeed in Buy and Hold Investing

1. 1.   Have a back up exit strategy
2. 2.   Screening
3. 3.   Get everything in writing
4. 4.   Establish a security deposit
5. 5.   Stay on top of repairs
6. 6.   Don't allow your property be a target for criminal activity
7. 7.   Respect your tenant's privacy
8. 8.   Choose your supervisor and handyman carefully
9. 9.   Insurance, Insurance, Insurance
10. 10. Try to resolve disputes without or before bringing in any lawyers

Let me know what you guys think. This is my understanding of what the guy was saying. And I possibly missed a couple key points, but I'm still learning so I'll get it soon (:

Thanks for reading. Hopefully I'm getting all of this right haha

[Steve Vaughan]

Great post @Jaelyn Whisler!  Way better than I could have summarized and I have been doing this for too long!

A couple points and a question, please.  I have never 'staged' a rental.  Most renters don't need to picture them and their stuff inside like a home buyer, but I have had applicants come back to take some measurements for their beds and couches.

I never do open houses.  All showings have been pre-screened fairly extensively.  I have applications and screening/qual criteria listed at the showing, but not what I expect from them. When I post ads on craigslist, I have 4 or 5 questions at the bottom that need answered and I only use the anonymous e-mail at first.  In general I ask: How many folks? How many vehicles? Is this far from your work or income source? Do you smoke? Do you have pets?  Your phone will blow up with the same questions from the same unqualified people if you just put the ad in with your ph#!  The ones with 6 adults that smoke with a bunch of kids and cousins with no job and an old semi that needs to be parked somewhere - do you want them at your open house?? 

I didn't quite understand something about the better neighborhood. What's 

• The better the neighborhood/area, the better your security to hold the property for cash flow versus to flip it (generally) ?  The security part is throwing me off.  Thanks!