People may say a lot of things about landlords, but nobody says that their job is easy!
Figuring out how to become a landlord for the first time can seem like an impossible feat, but trust us when we say that you will find your footing and begin the climb to success. There are many things that you need to become educated about very quickly.
From renter and tenant screening laws to local mandates, you’ll begin feeling like you need a personal attorney to sort through all of the rhetoric.
On top of that, figuring out taxes and the most affordable ways to maintain your property will have you calling on other types of experts. Some landlords become a jack-of-all-trades, but we can tell you why this approach is not always the best one.
To learn about being a landlord for the first time, check out this guide that we have put together. While it’s not all-inclusive of everything that you need to know, it can give you a step up in the real estate game.
A Table of Contents For First Time Landlords
- A Brief Note
- Finding Great Tenants
- The Rental Process
- Balancing Your Business Expansion
- Expert Tips For First Time Landlords
A Brief Note
While becoming a landlord may encompass everything from buying a property to making the necessary repairs for it to be in a rentable condition, it also might only include renting and working with tenants.
For this reason, we’re focusing this article on the rental and management aspect of being a landlord so that we can cover that information more thoroughly.
If you want more information about how to choose the right properties to purchase, what to do about renovations, or how to price your rental property, check out these articles:
- 3 Tips For Choosing a Rental Property
- Fencing Options for Rental Properties
- Landlord’s Guide to Flooring in a Rental Property
Finding Great Tenants
One of the key factors of being a great landlord is developing a killer sense for choosing the right tenants. Great tenants will help your job be more simple and enjoyable; bad tenants will make a mess and leave behind unsightly damage.
Learning how to choose the right tenants is essential, and it begins with learning how to market your property.
Choose Your Marketing Technique
The best way to be able to find a tenant that fits your property’s needs is to advertise in the right places and to advertise a lot! The more variety you bring in to the application process, the more tenants you will have to choose from.
While you may be afraid as a first time landlord that you don’t want to have too many applications to choose from, the opposite is actually true. You don’t want to feel the pressure to settle for the wrong tenant. Instead, advertise everywhere for the best results.
Consider advertising in the following areas:
- Local store bulletin boards
- Local newspapers or magazines
- On rental websites
- Facebook Marketplace
- On your website
- In online ads
Depending on the market in your area, you’ll be able to balance your marketing to match the local vibe.
Here’s a simple example. If your area is full of young tenants who are looking to rent modern homes, advertise on tech-friendly websites that will catch their eye. Your goal is to attract the type of client you would be interested in renting to by using the right advertising channels.
Learn How To Screen Tenants
Now that you have a lot of interest, you will be feeling the pressure to pick the right tenant. But slow down: Screening tenants is a process that you should take time on. Finding the right tenant is worth the wait.
Reduce The Clutter
First, your initial leads should already be pre-screened with the following questions:
- Income: They must be able to afford rent (many require a 3x income of the rent)
- Smoking or no smoking needs to match your property type
- Do they have pets
Use the basic questions you asked to do the initial cut. Then, dive deeper into your applicant pool.
Chat on the Phone
Before you show the rental, chat with the interested renter on the phone. We call this the “know before you show” step. Here you can weed out renters who are not a good fit. This post has 20 questions you can ask renters.
Show The Rental
Up to this point you’ve been refining your leads down to the quality renters that you want to show the rental to. Schedule showings and make sure the rental is in good condition for visitors. We have plenty of tips on showing your rental property. Be sure to bring a stack of applications for anyone interested in applying for the rental.
Next, you’ll want to call up the employment and personal references included in the application. Always call to ensure you were given real information and find out a little bit more about the tenant. If included, this is a great time to also call previous landlords, who can give you some insight about their renting style.
Background & Credit Check
The most discerning way to decide if a tenant is worth the risk or not is to do background and credit score checks, but sometimes this can seem a little too invasive to a new landlord. Think of it this way. If you sign up for an internet service for your home there’s a good chance they’ll run your credit. They want to ensure you’ll pay your bill on time. As a landlord, you’re not only worried about rent being paid on time but how the renter treats your rental. .
With being a landlord for the first time, it will benefit you to use a tenant screening service at this stage to make your final choices about the tenants you are considering. A good service can give you insight into the tenant’s history that can confirm any gut feelings you have about their reliability.
Follow The Rules!
It’s important for you to become very familiar with your local screening laws at this stage. Every area has rules set up that say what you can and cannot ask about on a rental application.
You are never allowed to ask about:
- Family size
- Ethnic background
Beyond this, your state may have further rules about what can or cannot be asked about in a rental application. Read more about state-specific laws here. Becoming familiar with these laws is a must before you screen any clients.
The Rental Process
Once you have picked the right tenant, it will be time to move through the stages of renting and managing a property. Deep breaths. It’s not as hard as you might imagine! The key to success is careful planning.
This section will give you a brief outline of the steps that you will be working through as a landlord. Because every situation is different, we cannot give you the exact schedule of what you will be doing as a landlord.
Still, these tips for first time landlords should help you find your way.
Step #1: The Rental Contract
You’ll need to set up a contract for the rental period. This contract should include details about how long they will rent, what maintenance you will provide, rules about pets and smoking, and other details that the tenant and you as landlord must agree on.
Because it will be your first time working with a rental document, you’ll want to consider hiring a local attorney to ensure your documents are legal and complete. If you’re going with a do-it-yourself method, you can acquire a basic lease agreement form for a small price and adjust it to suit your needs.
Step #2: The Walkthrough
Before any tenant moves in, it is important that you do a walkthrough with them. Using a rental property checklist, you’ll want to go over how to use the appliances with the tenant while also confirming the condition of the property when they move in.
Both you and the tenant must sign off on this document. This protects each of you from future problems should damage occur during the rental period.
Step #3: Rental Period
While a tenant is living on your property, you still have work to do! From collecting rent to doing regular maintenance, it is up to you to make sure that the property stays in good condition for your tenants.
Be sure to make yourself available to tenants in case they have problems. The better the communication is between both parties, the better the rental period will go.
Generally speaking, you will need to attend to the following:
- Rent collection
- Utility payment (if not handled by tenant)
- Fulfilling maintenance requests
- Doing regular maintenance
- Supervisor repairs or maintenance done by third-party services
- Replace batteries in essential safety devices, such as smoke detectors
- Maintain lawn and common spaces (if part of rental agreement)
This list of responsibilities might be much longer if you are managing a property more directly or one that has more needs. If you need to leave town for any reason, you can look into hiring a property management firm to keep up with bill payment, rent collection, and other regular duties.
Note: Hire Help When Needed!
On that note, it’s important that we point out one thing that many new landlords are unwilling to do. You will need to hire help from time-to-time, and that’s okay!
Even if you can do some repairs yourself, what is the cost to you and your tenants? Can you fix a pipe in a way that it will never break again, or did you teach yourself to do a short-term repair?
Being realistic about when to hire help and not becoming a jack-of-all-trades is key to your future success as a landlord. Some repairs are OK to tackle alone, but you must know when to bring in the big guns. Your wallet and your tenants will thank you.
Step #4: Moving Out
When it comes time for your tenant to move out, you will want to set up a final move-out walkthrough once they have removed their belongings. Using the same checklist that you used for the initial walkthrough, check the home for damages beyond the usual wear-and-tear.
If necessary, the cost to repair any damages will need to be taken out of the renter’s security deposit before it is returned to them. If the tenant leaves anything behind or refuses to move out, you will want to read up on eviction and how to handle these situations.
If you do need to have repairs done to the property before you can have another tenant move in, take care to choose a great contractor and get the work done efficiently. Shoddy work will only delay your next rental even longer!
Step #5: Back To The Beginning
You’ve completed your first rental cycle! Once you get to this step, it’s time to go back to the beginning. Repeat the cycle. From finding a tenant to moving them in and out, you’ll do it all again many times for many properties.
Balancing Your Business Expansion
What does a new landlord need to know about business expansion? More than you might think!
After you successfully rent out your first property, you might be eager to find tenants for other units that you have available. While you should rent them out soon to make the most profit possible, you also need to consider how much work you can balance.
Being a landlord is not always a full-time job, but sometimes, it is. Before you expand your landlord business to include a huge volume of properties, be sure that you have the means necessary to properly assist with tenant problems quickly.
The last thing that you want is for the expansion of your business to ruin it, so be careful about managing your balance as your business grows. Hire help as needed, and don’t be afraid to slow down.
Expert Tips For First Time Landlords
Because this article cannot possibly cover the entire breadth of what you will be responsible for as a landlord, we thought we would include some final general tips on how to be a landlord for the first time!
These five tips will help you find success.
- Charge an application fee or charge for running the background check depending on local laws. Not only does this weed out renters who aren’t serious, but it also shows that you are serious about finding quality tenants.
- Set aside up to 30% of rent for repair and maintenance. Even if you don’t use it, it is still there if you need it.
- Hire a local property manager if you are not local. This is essential for fast repairs.
- Research local taxes and fees. They differ from city to city and state to state and can have a large effect on your profit.
- Save receipts from everything, and hire an accountant to do your taxes or become a tax expert to ensure that you get every deductible possible.
You Can Do It
Being a landlord for the first time is not easy. But it’s been said before that nothing easy is worth doing, right? Challenging yourself to be a success in this business is very rewarding.
All you need to remember are these important factors:
- Find the right tenants
- Hire help when you need it
- Put aside money for emergency repairs
- Have patience
In a matter of weeks, you’ll find yourself to be more experienced with more responsibilities than you ever imagined taking on before. And you’ll be doing a great job of handling them!