Starting out as a Landlord

Hey Guys,

One year into my property management endeavor, I just got this really awesome review back from my tenants who just moved out of California. Here’s what they said about my wife and I as landlords:

“Hello Sof, thank you to both you and Shelly for being the greatest landlords that side of the Mississippi! Calex was a delight and my family and I will always cherish the wonderful year we spent there. We took lots of video and pictures of Greta’s growth and development there, most notably her first steps towards walking. We really will miss it“!

I was surprised to get this review, because I tried really hard not to be a nice guy. I aimed to be fair in all circumstances, and always refer to the lease. I even deducted from their security deposit for some minor stuff, but documented everything and got them to sign off correctly.

So I thought about it and realized that this success is attributed to a bunch of steps I did right. Most notably, screened for the right tenants, treated them with respect, responded to maintenance items promptly, communicated often, did regular inspections, followed the lease and enforced the lease, and just treated my rental like a business.

I did pretty much everything mentioned in Heather and Brandon Turner’s “Book on Managing Rental Properties” with a few tweaks specific to my property. Great book by the way, and I highly recommend getting the audio version as well, since Brandon is the voice of the book, which is especially amusing when he’s reading “I Heather” quotes/stories.

My old tenants left the house in great shape ready for new tenants, who moved in 2 days after they left. One thing I didn’t think about at the beginning of the tenancy was the level of trust I was building. My tenants were paying me a hefty chunk of change after all, and taking the utmost care of my property.

So when they said they were moving out of state to help their family with medical issues, I supported them. I won’t lie, part of me wanted to see proof of ailments and medical conditions, and I was nervous about finding new tenants. Thankfully, I had a procedure for that!

Although I was initially sad and worried that my best (full disclosure: first, and only) tenants were moving out, this was an opportunity to do it even better next time, and refine the new tenant process, which is exactly what I did. Then, I had another thought. I wondered what the real estate market was like where my tenants were moving to. Now we’re looking for deals in their new city, and I have someone I trust to help me out!

Getting back to the move-out process, since initially renting out my house, I moved several hours drive away. So, I gave my tenants the task of showing the house for me. I suggested I’d give them a finder’s fee if they found a suitable tenant to move in. I would of course screen all candidates by phone, and internet, but I would save an enormous amount of time from driving to the property, getting it ready etc., if they would just show the house for me and report back.

Paying a property manager to find a new tenant is typically a substantial percentage of the first month’s rent, and I couldn’t justify that. So I figured, why not give that back to my tenant who was slogging away keeping the house clean and making it available to show to candidates? It worked out to be a great incentive.

For anyone who has done deep cleaning themselves, it sucks, even if it is your own grime. But in some cases you’re cleaning up previous occupants’ messes from years before you ever moved in. 

I’ve been on the other side too, actually just a month before when we moved out of a 1 year rental we were living in, before buying our new place. I am grateful for such an educational experience, and I immediately applied the new knowledge the situation with my tenants moving out. I wanted to treat my tenants how I want to be treated, with respect and fairness, and it felt good to use that power responsibly.

Thinking back to the open house, I made some mistakes with my tenants, like not asking them to take down attendance of every person who viewed the house. However, they did follow my instructions and give applications to everyone, and we got several completed apps back. That was awesome!

Fast forward today, my new tenants and I are off to a great start. They completed the lease, move-in inspection report, and paid all deposits and rent monies electronically, and on time. We got through the initial maintenance items, which were really minor, and I refined my process even further, so I will do even better next time. New tenants are enjoying living my home, and I’m enjoying my responsibilities as their landlord. It’s a win-win!

So, I just wanted to share story of my first tenants and let other new landlords know that it’s possible to have it go well from the start, be a great landlord, and not get in trouble. It just takes screening the right tenants, and then following through with your procedures (and the law) that you can learn in advance, or in my case, some knowledge in advance, and the rest of the learning as you go with great help here on Bigger Pockets.

I highly recommend learning the right way beforehand, but then some things you only really truly learn when you’re doing them. It’s been a wonderful experience, and so far we’re getting better with our next tenants, and possible future deals with my old ones. The new story has already begun!

Cheers,
Sof