8 Transition Tips I Wish I Knew When I Bought My First Rental

I recently met with a fellow real estate investor and his wife who are just getting started in building their rental portfolio.  He had taken our local REIA Landlord 101 class and wanted to get together to discuss making a smooth transition with residents, the property and into the business itself.  Here are 8, obvious and not so obvious, transition tips we discussed.

1. Act Like a Business.  Whether or not you have an established business entity or are going in as a sole proprietor, there is no reason you can't act like a business.  Set the expectations up front with your new residents as to what your operating hours are and what are deemed as emergencies (i.e. fire, flood, blood).  Get a Google Voice number, and only give that out to your residents, not your personal number.  It will keep the records of all the voicemail's and text's, and even has the ability to record incoming calls.  It allows you to screen calls pertaining to your rental business, and stops "all hours" calls.  Record a business-like outgoing message and set the stage that you run your business professionally.  

2. Join Your Local Real Estate Investor Association (REIA).  Whether or not you have rentals yet, joining the local REIA will allow you to network with other investors and landlords, and arm you with some education that will help you avoid pitfalls you would have otherwise made if you went at this business alone and uninformed.  You will find mentors, joint venture partners, vendors and even friends who will help you with your business endeavors. 

3. Don't Knock on Doors for Rent.  Set up a business banking account and have residents deposit their rent directly into the account either by direct deposit/ACH, mailing it to the bank or taking it to the bank personally.  This protects your personal safety (you won't be targeted as a landlord holding large stacks of cash on the 1st of each month), and it protects the residents, ensuring that their money is accounted for by directly sending it to the financial institution.  This also makes you look more professional and less "mom and pop."  If you don't have an LLC, you can file for a fictitious name (google search - DBA or Doing Business As) and use that name on the account.  Banks are very timely with updating deposits, and you will know who is late or not just by logging on after close of business.

4.  Know the Power of the 5 Day Notice.  In Pennsylvania we have what's called a "5 Day Notice."  This is a notice that is posted on the door of a residence when a resident is in breach of their lease and gives them 5 days to correct the lease breach. Most of the time, I use this notice for late rent and more times than not, this little piece of paper gets rent into our hands faster than any other method. We print it out on very loudly colored paper (i.e. neon green or blaze orange), post it in a conspicuous location, most times the front door of the building or unit and then take a picture of it for the file, as evidence of proper notice if we take the resident through the eviction process.  Good residents will be embarrassed and call us to make arrangements for getting the rent to us asap, and others just "magically find" the rent and deposit it into the account that day.  Not-so-good residents may not give you rent, but at least you won't waste time on excuses and you have begun the process of removing them from your rental in order to rent to a resident who will pay on time.  Don't be afraid of offending anyone, handle the calls from good residents with grace, and let them know, no matter who is late, notice has to be posted.  (You can always blame "the office" as you will learn in #7).  The other reason to post the notice is it might give the resident the ability to file for rent assistance.  If the resident is an otherwise good tenant that you want to keep, starting the eviction process (this holds true for my rental market) allows the tenant to apply for rent assistance from organizations in the area.  The resident keeps their apartment, and I still get paid.  

5. Master Key Your Properties.  "Oh, but I only have one duplex, I can keep track of the keys."  Yes, you can, but remember, you probably want more than 2 units, and it is easier to set the stage in the beginning to scale your business, than wait til you have 20 or 100 units and have to go back and begin the master key process.  Trust me, no one looks cool with a janitor's key ring.  

6.  Move-in/Move-Out Inspection.  If you are purchasing a property and inheriting residents, do an initial inspection of their unit if the previous landlord cannot provide you with the move-in inspection form that the resident should have completed when they first took possession of the unit.  The resident may have made that hole in the wall and tell you that it was there when they moved in, but it is better to establish a baseline, and know there was only one hole when you purchased the property, verses the 3 that might be there when the resident moves out and you don't have any documentation to know if there was just one or three when you first purchased the property.  Take pictures too!

7. Establish Good Cop/Bad Cop.  If you are purchasing your property as part of a team, or even a sole owner, having a good cop and bad cop can help ease you into the experience, by giving you some breathing room when residents ask you for things.  For example, a resident may ask me, "I know I was late with rent, is there anyway the late fee can be waived?"  I never like to give direct answers to these questions, because it will establish me as the decision maker in their mind, then they will start requesting things from me, expecting answers right away when they make requests.  Instead I respond, "I am not sure, let me ask the office and get back to you." Since I am the sole owner, I make the bad cop "the office." Doing this gives you time to research the answer. In this instance, if they haven't been late ever in 2 years, which I will find out when I review their resident file, you may want to do that favor for them, but if they were late consistently, you can go back and remind them how many times they have been late and due to that reason "the office" won't authorize you to waive the fee.  If you get tougher requests, it buys you time to talk to other landlords to see what's the best route to take in that specific situation.  

8.  Don't Allow Access to Basements and Attics.  This may sound random, but it is something I see over and over again. Landlords allow an all access pass to basements and attics, and as humans, we love to fill the space available to us, and residents love to fill it with junk.  You, as the landlord will ultimately be stuck with all the stuff they didn't feel like moving when they leave, which turns into hours of lugging things out to a dumpster you had to rent, or a big fat check to your trash hauler.  If you have a multi-family building and you have washer/dryer hook ups in the basement, that's not a problem.  Frame out a wall allowing access to the laundry area, but deny access to the rest of the space.  Denying access to the basement in a SFH may not be feasible, but you can definitely deny attic access.  The basement should be more than enough space for their things.  Denying attic space, also stop residents from using it as an "extra room" for their tag-along adult children, friends who lost jobs, etc.  

I hope these items help save you some headaches, I know they would have saved a few when I first got started.  I welcome hearing tips that I may have missed.

Stay motivated and keep crushing it!