New property in Smyrna, DE I have questions about self managing

[Justin Demko]

I am finishing a remodel on a house in Smyrna, DE and is it almost ready for a tenant. I have no experience in real estate beyond being a home owner who has done a remodel that I have now moved out of and want to rent the house out. I want to self manage this property. I plan to buy the bigger pockets Delaware landlord forms. I have a prospective tenant who I plan to run through the smart move app. I have some questions please see below.

-Do I need a rental property application? What are the benefits of taking the time to create one, or can I handle all the details verbally and reflect what is discussed on the lease agreement? I can see it being helpful after a few of these but this is going to be my only property for at least the next 6 months to a year.

-Should I tenant screen for all adults in the house or only those responsible for paying the lease as agreed?

-What kind of questions am I permitted to ask previous landlords and employers?

-How does the lease get finalized? Do I just put all the paperwork on dotloop/docusign and send the digital copy to a lawyer to get it official?

-What is the purpose of mandating renters insurance?

-Do I legally have to hold the security deposit in escrow? Can I just keep it in a separate saving account? If I do need to do it in escrow who do I need to deal with to make that happen is that a local bank or lawyer? Are these rules specific for Wilmington, DE and the surrounding area or is this standard?

Thank you,

Justin Demko

[Nathan Gesner]

@Justin Demko we can answer your questions for you but there are another 1,457 questions that you failed to ask. You may want to consider hiring a property manager until you've gained some knowledge and experience. Nothing will destroy your rental investment plans faster than the wrong tenant or a simple legal mistake.

If you insist, you need to read some books on how to manage a rental. My personal favorite is "Every Landlord's Legal Guide" by NOLO. It includes some of the most common forms you'll need and they can be edited. BiggerPockets also has a book about managing that is highly recommended.

You need to know your state laws inside and out. You need to know how to accept applications and screen tenants. This is probably the single most important step. You need to learn how to determine market value, how to advertise, how to pre-screen and screen, how to protect against predator tenants, how to deal with late rent or unauthorized tenants or pets, what you need to know about lead paint or mold or ice dams or furnaces or pet urine on the lawn...

If everything goes right, you rent the place one day after advertising, a little old lady moves in, and she pays rent without fail for 30 years at market rates and you walk away a winner.

The more likely scenario is that you'll enroll in the school of hard knocks and be beaten back and forth many times before getting it right, losing thousands or tens of thousands in the process. There are a lot of smart people out there that lost a lot of money along the way and dealt with a lot of stress. Many more have walked away from investing completely.

I'm just saying you should consider hiring a professional and doing it right from the start. It wills save you a lot of time, money, and trouble.