All Forum Posts by: Steven Alvarado

@Steven Alvarado The one thing that stuck out to me is the fact that you will be out of town. I had this same experience with a townhome I owned in Portland. I started travel nursing and rented it out. I wasn't cash flowing at all but I sold it after 4 years and made $150k from it. So don't worry too much about cash flow for now- it's worth it as a long term hold. 

Also, have you thought about property management? I know it's an added expense but with you not being close to the rental, a property management company is there for any little Maitenance items that come up, or to screen and place new tenants. Unless you have a great network of handymen, plumbers, etc. It also takes more off your plate to focus on other things. Just a thought!

Quote from @Steven Alvarado:

Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO. Written by attorney investors, it's full of practical advice pertaining to management of investment property, has sample forms that can be edited, and - most importantly - they tell you what your primary state laws are and where you can read them. It's updated every year and is the best $40 you'll spend as a Landlord. There is one book for 49 states and a separate book for California.

Here are some easy ones that really help. Set the tone from the beginning. 

1-It's not a hotel, you don't cater to all their needs and rants, only the reasonable ones. Say "No" or they'll think of you as a pushover. 

2-Not sure what your laws are, but make sure you charge a late fee and send the appropriate notices when rent is late, even if they call you, tell them there is a late fee but you appreciate the call

3- Definitely put money aside, they will break something. Before you call a service repair, go look at it yourself. 

Aloha,

Be sure you changed your insurance from a Homeowner's Policy to a Landlord's Policy. Different coverages...

Other than that, study up on Local LL/Tenant laws; Fair Housing laws; Fair Credit Reporting Act; contract law basics; and hopefully you did a great job of screening so will have plenty of stress free time to study! If you get bored, sit in on a couple LL/Tenant court sessions to see how it goes.

Quote from @Steven Alvarado:

Hi,

I recently got my primary residence leased out this month. I’m excited about it but lacking the knowledge behind being a landlord and the responsibilities that come with it. Curious if anyone had some Do/Don’ts , specific items to keep track of or wish you had done when you started. Sadly, ill have little to no cash flow on this property due to mortgage vs rent income. I had my property listed September 2021 and while doing research, discovered the possibility of being able to tax deduct for those months while the property was vacant and on the market. I was looking to hire a CPA in the Houston area for next year but wasn’t sure if it was worth doing for 2022 tax season also. My goal is to eventually invest into more properties or businesses to generate more passive income.

 Hi Steven,

This sentence here caught my eye: 

"while doing research, discovered the possibility of being able to tax deduct for those months while the property was vacant and on the market."

You then go on to wonder if you can afford to hire a CPA.  If you did qualify to deduct in 2021 and did not (and it's possible that you could), then I think that it's likely that you can't afford NOT to hire a CPA.  There's also making sure your basis and depreciation are calculated correctly - correcting it down the road can be very expensive.

Personally, I'd have a CPA look over your 2021 tax return to see if it can be amended to your benefit and continue on so they can offer your tax strategies as you go.

Best of luck to you!

Join an REI or LL association in your area-google. Get Brandon Turner's book Managing Rental Properties. Underwriting podcasts on here or youtube. All the best! Welcome to BP @Steven Alvarado!

What up what up,

Im glad you're making some moves. Im curious your cashflow vs expenses. If your tight there then plan on personally stacking up reserves from your income to prepare for things that will go wrong. 

Regardless, there are things you should be doing as a new landlord. I'll rapid fire some things for you.

First, start researching how to manage a property/tenants and so on. A lot of this is learning how to work with and manage people effectively. (Your tenants, contractors, your business relationships)

You have already rented but make sure your lease has been used before and been put through the ringer. This should not be a quick random google print out. BP actually offers some contracts on the site.

Also, you want to make sure that the security deposit is held in the appropriate account based on what your local laws are. They vary from state to state. Some times it has to be in an interest bearing account, sometimes it doesn't matter, lots of times you cannot commingle other funds with it etc.

You should've done a "move-in condition statement" prior to tenant move in. Then a "move-out condition statement" when they vacate. That's the only thing that will hold up in court if there are issues with security deposits/property damage when they move out. 

I would say to be sure you start to study and learn the tenant/landlord laws in your area. It will help so that you know your rights and what you can actually do.  

Do NOT accept cash as form of payment for rent. No venmo, no CashApp. You should be using something that will keep track of payments, provide receipts, and easily accessible at any time. Apartments.com, RentRedi.com, Appfolio.com, and many more are available to you to do this. If you must accept cash for rent - go to staples and get a stack of invoices/receipts and ensure your tenant gets one every single time they pay you. Have them sign it if possible and keep your copy of it. Scan it and upload it so they are readily available and organized. If you do not do this and the tenant tells you, "I left the money in the mailbox... You took it, i'm not paying twice.", then you are screwed and it becomes and issue to collect.

What's the mortgage vs. rent? If you lack cash flow, you need significant reserves for when things break. I'm a big fan of turning a primary residence into a rental. I'm surprised that it doesn't cash flow, considering the low interest rate environment during the last few years.