Steve the Landlord?

I’ve been a landlord for almost 5 months now.  I have learned a lot of different things along the way, but so far it has been easier than I thought it would be.  The main part is, since we have a crew of workers, we can easily get stuff fixed for tenants when it is our responsibility to fix.

Right now we own 9 units, 8 single families and 1 duplex.  Nine of the units are rented and one is under construction.  We bought our first rental in August-09 and placed our first tenant for Sept 1st, so we have done quite a bit in the last 5 months.

Some of the things I have learned:

  • Signs pull WAY more phone calls than I ever thought they would.  Being a young guy, I thought property signs are kind of old school, but I would guess 75% of our phone calls come from the signs.  The people who call off of the sign are also usually best qualified (they’re already in the area for some reason anyways.
  • Ask a lot of questions.  When a tenant is looking solid, I always schedule a meeting to “show them the property.”  I ask a lot of questions along the way.  How much they pay at their current place, why are they moving, what they like about my property, etc.
  • Most renters have really bad credit (this may say something about the type of property I keep), but anything above 600 is a great credit score for one of my renters.
  • Trust your gut.  I make exceptions to certain requirements for people I feel comfortable with, but force the tenants I am less comfortable with to meet every step.
  • When people try to negotiate your price from day 1, be suspicious.  When we’re asking $1,200/month and before asking any details of the property they offer $1,000/month it’s not worth your time.
  • Don’t defend your houses imperfections.  We are used to selling turn-key properties with a full rehab.  At the start tenants would point out flaws (style of faucets, pink tile in the master bath) and I’d defend it or offer to fix it. Now I just acknowledge that it exists.
  • Becoming a landlord is not the quick path to wealth.  We have positive cash-flow on every property, but the numbers are definitely not even close to exciting.  The tax benefits on the other hand, are a whole different conversation.
  • Be prepared to meet tenants on evenings and weekends.

That summarizes my experience so far.  I am happy that we decided to self manage our properties, it is a lot of work, but I feel confident with the people we are picking.

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7 Responses to “ Steve the Landlord? ”

  1. stephen j. moore says:

    steven i know this have nothing to do with this post but the 700k deal that you have ,hows thats going?And do you plan on getting any more properties in that range?

    Do you manage your properties yourself or do you have a outside property management company do that for you?

  2. Steve says:

    The bigger house is listed for $599,000 right now, we have a couple offers, trying to pre-qualify before we accept. We would buy another property in that range, if we got another great deal.

    We self manage everything. We do list properties in MLS and agents get a 3% commission of the term, if they find a renter.

  3. jp moses says:

    Great stuff, Steve! Here’s another one, from one landlord to another:

    RENTING TO THE WRONG TENANT ALMOST ALWAYS COSTS YOU MORE (MONEY AND GRIEF) THAN WAITING FOR THE RIGHT TENANT.

    In other words…vacancy sucks…but bad tenants suck worse. Ask me how I know that! And how many times! :-)

    Thanks for posting, my man!

    …jp moses
    .-= jp moses´s last blog ..What Investors Should Really Know About the New Stimulus Tax Credit =-.

  4. Steve says:

    JP – every long-term landlord I know has reminded me of that many times. I am very picky, but I am sure I will learn the lesson once of twice the hard-way and become even more picky!

  5. You guys are the best! I own 3 rental homes (I manage 1 and have a property manager for the others as they are out of state). I just finished putting a HUD home under contract for a 90 day flip (thanks JP!). JP, I used your free residential lease agreement for my last tenant! I don’t know where I’d be without you guys!

  6. Jennifer says:

    How are you financing your rentals? I have tried to get conventional financing, but the banks will not loan me anymore money because they will not offset my rental income from my one rental to its mortgage because I do not have 2 years renting experience. I just can’t win with these banks…it is always something.

  7. Arthur says:

    Jennifer,

    You might try going with a smaller lender. I had the same problem. The lender I ended up using counted the rental income as part of my monthly cash flow so long as I had a lease agreement in place. The company was Prime Lending (I am not and agent – just a fellow investor). I am sure there are others, but rule of thumb don’t talk to the BIG BANKS they won’t touch you – try a credit union or smaller lender. I hope that helps.

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