How was your first rental experience like?

Question

I'm saving up for a down payment and looking forward to buying a rental. How was your experience and when did you start? Errors and solutions? And lastly worries?

Kenneth Garrett · Answer

@Tyler Thavong

It’s great, but comes with responsibility.  Taking rental applications and securing the information is very important.  Writing your own lease with rules.  Screening all applicants, understanding the information and deciding how to select your tenant. Have an in depth knowledge of the lease so you can explain any questions that are asked.  Review the lease with the tenant prior to signing.  All rent payments, security deposits, etc received should be certified funds; money orders, cashiers check.  Electronic payments thereafter.  Keep 6 months of expense in the bank for emergencies.  Depositing that money is a great feeling and you are on your way to hopefully financial freedom or whatever your goal is.

Nathan Gesner · Answer

Don't spend your last dime on the purchase. You need some money saved up to handle vacancies, maintenance, eviction, mortgage payment even when tenant fails to pay, etc.

Sylvia B. · Answer

Our first rental experience was a bit unusual. We wanted to buy a strip of land between our house and the highway in order to put in a driveway that bypassed the county road, which is always in terrible condition. Eight years ago it finally became available, but came with a house that we didn't really want. We had talked about possibly buying rentals, but this one didn't really fit our plan.

However, shortly thereafter, a friend from church said they wanted to move closer to town, and would we consider renting the house to them? It needed some minor plumbing work and brush cleanup around the house. Unfortunately, the brush cleanup turned into major plumbing work when Hubby drove the tractor over the septic tank and it caved in!

We got everything working and our friends moved in. Yes, we broke several "rules" with this house. Don't rent to friends/family, don't buy a property that doesn't fit your investment plan. And our personal rules: Don't buy outside the city limits, don't buy a house on a well or that heats with wood. But it has worked well for us.

We're still renting to that same tenant, who pays on time, every time and doesn't contact us with issues unless they really are issues. He takes good care of the house and is quiet and keeps to himself, which is important to us since his house is right at the end of our drive.

This is not a method that I would recommend, but this tenant has paid us rent equal to almost half of what we paid for the entire property, which we would have bought for our personal use anyway. So it has been a good experience for us.

Also -- We now own 11 SFRs in addition to this one.

Robert Biggerstaff · Answer

It was the most awesome feeling to receive that first rent check. I feel like a kid on Christmas morning each time the first of the month rolls around. The biggest thing I see a new investors do is they spend the money that they make from the rental properties. It is crucial to leave that money alone, and let it grow for you. Just remember that taxes, insurance, water heater, repairs, new roofs, all have to come out of that money.

John Teachout · Answer

Our first rental was a 3/2 sfr purchased at the bottom of the market in 2011. Took us 2 years to renovate it because we had such limited time. Rented it in early 2013 and it still contains the same tenant.

Brett Baginski · Answer

So far so good!   But I closed back in October so it hasn't been too long.  Out of the whole process, the hardest was the partial rehab, and that's because I decided to do the work myself with my dad and girlfriend.  The upstairs is 4 bedrooms and a hallway, which we ripped up the old flooring, put down about 700 sq ft LVP, and repainted everything.  Spent about three weeks there, all weekend and every day after work on the weekdays.  In the end it was worth it for me because it would have been a few thousand in labor costs.

Just make sure you have enough for a down payment, closing costs, repairs, and reserves in case anything big breaks.  Don't get into a deal that uses up all your cash.  Develop a strategy and try to stick to it.  Are you looking for something move in ready or something that may be much cheaper that you have to rehab?  Are you going to do the work yourself or do you have to find reliable contractors?

Try to read as much as possible right now and listen to the BP podcast.  It's always good to hear the horror stories so you can do your best to not put yourself in that scenario.  Good luck!

Deniz Eker · Answer

@Stephen J Davis

How do you find a mentor ?

Bjorn Ahlblad · Answer

My first one was a SFR 35 years ago in California; it cash flowed marginally. Screening tenants was very different then-no Internet. In the mid to late nineties we listed the property for 260k and no takers, so we just continued it as a rental. In 2015 the market was booming so we decided to sell; it went for 1.2 mill in one week and it was in a 1031x which we were able to replace! Lesson: always have money or access to money!

Stephen J Davis · Answer

I had a great first experience because I had a mentor that showed me how to do it right the first time. Then I just "cookie cut" the rest. Get a mentor and jump in! When you get up to $5000 or $10,0000  (or whatever your goal is) or more in net cash flow, you life is totally different. Financial freedom is the goal and there is no better way than real estate.

Himank Mandot · Answer

My first experience was quite a journey. In the beginning it was tough. Posting my property on zillow, trulia, hotpads, craigslist and every other possible rental website but was not able to find any successfull leads. Next I thought of trying through an Agent but their high and irrational fees led my hopes down. Finally I heard of Sandora.co For people like me this was the perfect solution to all my problems. From listing my house to scheduling the visit and sigining of contract. All in one place. #Sandora #Happyclient #sandoraforlife

How was your first rental experience like?

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