Are you managing a property for the first time & want to absolute CRUSH IT – leaving no doubt that you are operating at 100% efficiency!? Here’s our list of 10 essential tips and best practices for first-time landlords.
1. Stay organized and keep records!
One of the biggest mistakes landlords can make is not being organized and failing to keep a proper record of revenue and expenses. Whether it’s through a simple excel spreadsheet or a property management software – data is key! Without that information, you won’t know if your property is profitable. And if a former renter asks to see documentation related to their time as your tenant, it’s good to have that information at hand.
2. Follow Fair Housing laws
There are serious, legal consequences for violating Fair Housing laws, which were put into place to ensure that people of different races and ethnicities, disabled and elderly people, and people receiving government assistance are not discriminated against.
3. Make rent the priority
Rent is your revenue. Be willing to aggressively pursue rent and late charges. If your renters stop paying rent and ignoring your automated texts on a regular basis, you need to start eviction proceedings. Otherwise, you could find yourself six months behind on rent, which is a worst-case situation for any landlord.
4. Screen tenants properly
Screening tenants is important––you want to find the right person, someone who will pay the rent on time and take care of your rental property. Be sure to implement a thorough screening process. You can do so FOR FREE with ZenLord Pro & receive a beautiful report like this.
5. Collect rent online
In a world where I can get groceries delivered to my door with a click of a button, there’s no reason to collect rent checks these days. Not only is it time consuming to go to your P.O. Box or mailbox, keep up with the payments and deposit them, it’s a risky way to collect rent. What if the check gets “lost” in the mail? What if it bounces? Then you’d need to pay a non-sufficient funds fee, which you’d need to eventually collect from your renter. Plus their rent payment for that month.
When you collect rent online (FOR FREE) using ZenLord Pro, you can automatically remind tenants that rent is due & get notified when payments land in your bank account.
6. Don’t allow pets
So many Americans own pets, and by not allowing them, you significantly decrease the pool of potential renters for your property. But if you’re a first-time landlord, you may want to avoid the pitfalls of allowing pets, at least as you get going. Pets can damage carpets, walls, and other parts of a rental unit by peeing, pooping, and scratching. It costs money to repair these damages, and if you don’t know how to screen for a good renter and a good pet, it might not be worth it.
If you decide to allow pets, do your research first, especially when it comes to pet deposits, pet fees, and pet rent.
7. Don’t ignore extra revenue streams!
A lot of investors think 1-1: if somebody buys a house, they rent the house out, and that’s it. But you could be ignoring several extra types of income that could improve your property’s return on your investment.
It’s your land, maximize it! Here are some ideas for earning extra money:
- Do you have a garage to rent out?
- Is there an unused shed?
- Do you have a community room?
- How about a parking lot?
- Could you install solar panels? Look into selling back any excess energy generated to the grid.
8. Don’t invest in renovations that won’t produce higher rent
Speaking from experience, it might be tempting to renovate the property and make it as nice and modern as possible. Sure, after renovating the property, it’s possible it would be nicer, in your eyes, than many owner-occupied homes. But those renovations might not lead to a high enough rent to justify the expenses. Depending on the city or neighborhood, you may have a hard time finding renters willing to pay a higher rent to make the renovations worth it.
9. Partner with the right investor
Some new property owners will partner with somebody they barely know, just because a deal looks good & they are starving to make something happen. BE SAVVY.
We knew our business partners for more than five years before we did a business transaction together. In that time, I learned they are honest and transparent, two qualities that are critical when choosing business partners. Additionally, we have the same end-goals and values, which is what ultimately influenced my decision to invest with them.
10. Use the right financing strategy
A good deal with the wrong financing strategy is a bad deal. Say that again…A good deal with the wrong financing strategy is a BAD DEAL! Most investors focus on the interest rate, but there’s a lot more to consider when financing rental property.
- Is there a balloon payment?
- How long is the amortization period?
- Can there be an interest-only period when renovating the property?
- Can you get a line of credit instead of a term loan?
Investors focus 99 percent of their time finding deals. When they get a deal, they scramble to find financing. I’ve seen my best friends lose good real estate deals because they didn’t have enough time to put their financing in place.
Be just as proactive about financing rental property as you are about finding deals. The good news is we have some of the best lender partners. Connect with them through ZenLord Pro.