Advice for new landlords?

Question

I would love to have some helpful advise for new landlords!

James Galla · Answer

Make sure you've got a nice team set up with an attorney, accountant, and handyman available with emergency hours.

Davina Keo · Answer

@Isaac S. THANK YOU SO MUCH for this awesome advice!

Jonathan W. · Answer

@Davina Keo

We rent out SFH in decent neighbors or better

Ideal tenants

1. Don’t have long stories or situations need to be understood as if you were a therapist.

2. Shouldn’t have to work their rent off by improving your house. This can be beneficial if done right but MOST people who need to do it to afford rent will usually take you for a ride or screw you over somehow!

3. Talk in complete sentences.

Tenant screening is almost like a job interview.

4. Are respectful and don’t look messy in anyway when coming to a showing

Avoiding trying to be the best tenant in the world by giving them the best quality appliances/fixtures. I mean it’s not a bad thing and it doesn’t mean be super cheap but it will end up costing you much more then any gesture could be worth and won’t add much value. 1000$ dishwashers are nice and may move a tenant in faster theoretically but fixing one can be stupid and people don’t use more then a few settings on it anyways!

Dennis M. · Answer

Two rules of landlording

1: the tenant is always wrong

2: if the tenant is right ,see rule number 1

John Underwood · Answer

The number one best advice I can give. Is properly screen your tenants. This will help to minimize future pain. Over time you will get long term tenants and the money will come in every month as it should.

Isaac has done great advice and he is spot on.

Davina Keo · Answer

@Nathan G. Thank you for responding to me Nathan! Set for life got me into real estate! An amazing book! I'm actually working on paying off my school debt and I am finally almost done and I will hopefully be able to buy my first property at the beginning of next year!

Nathan Gesner · Answer

@Davina Keo it's hard to tell you how to get to Disneyland when I don't know where you're currently standing. Here's my generic advice for someone starting out.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by @Brandon Turneror The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control your finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by @Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up.

5. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Isaac S. · Answer

Go to bigger pockets and look up previous posts that have already answered this...hundreds of times

1. be friendly, don't be friends

2. always do credit and background check, i mean it... ALWAYS! No felons, no previous evictions, have a good job for a company that is not going out of business

3. don't let tenants pay late, require late fee if they do, and don't put off eviction if they keep feeding you excuses. Never let them give vague answers(they say next week, ask them to specify a day/date) or not return calls.

4. Fix things in a timely fashion. Don't be a slumlord.

5. Learn how to fix things. Change locks, electrical outlets, switches, fixtures, etc...even if you don't end up doing the work yourself, you will be better able to understand what's going on and what you are really paying for.

6. Build a dream team. An accountant with real estate specific experience, a lawyer that specializes in tenant disputes(last resort), most importantly a trustworthy ethical handyman.

7. Sometimes, when all is said and done, its cheaper to just pay a bad tenant to leave, rather than suing and/or evicting. Stop the bleeding sooner and reduce stress in your life and in my experience still cost less than months of non payment during eviction process, legal fees, possible intentional property damage, and a judgement against someone with no assets and probably little/no income. This will depend on your local tenant/landlord laws.

8. Wood floors(faux or real), kitchens, bathrooms, and appliances will always improve your asset...but, not in war zones, it will be more stuff to fix or replace sooner.

9. Use Zillow and Apartments.com and Facebook for your marketing, craigslist is going the way of newspaper classifieds.

10. Raise the rent every year, even if only 1-3% to keep up with inflation. But, dont get greedy and chase off a good tenant by raising it 15% only to realize that 1-2 months vacancy will take you a year to recover the lost income, even at the higher rate.

There's many more, and much more details to the above, but that's my two cents for now.

Good luck!

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