Are you thinking about buying your first rental property or renting the house your moving out of? Being a landlord can be a challenging experience. There are many things to keep track of, and one mistake can cost you.
In our latest post, we have put together a checklist for the process of buying a rental property, the process of screening your tenants, and a list on how to manage once you are officially a landlord!
Own Your First Rental Property in Warner Robins: A Checklist
When You’re Ready To Buy
- Have Your Finances In Order – Buying your first rental is a little different than buying an “owner occupied” home. Investment properties, many times, require higher down payments and the terms are shorter. You need to know your credit score and tend to any negative marks before you apply for a loan. You don’t want to find out afterfinding your dream home that you aren’t able to afford it.
- Set Your Limits –When it comes to rental property, “What can you afford to spend?” is the wrong question. Always ask, “What can the rents from the house afford?” Don’t compromise here. If you have to help the rents of the house pay for the mortgage, don’t buy the house. Struggling to make your mortgage payments will take the joy out of owning a rental house.
- Research –Talk to investors, read as much as much as you can, study your market’s trends, and consider buying a course. The best investors never stop learning. Most medium and large cities, like Warner Robins and Perry Georgia, have an investors group.
- Take Notes – Maintenance on your first rental property can stop you’re your investing career before it starts. Take detailed noted of each property you see. Many people will use a chart to easily compare price and other variable features of a home to the work required to get the house ready to rent. Find a good contractor you trust to help find a rental that is in good order. This will help you get into being a landlord before getting hit with extra costs you didn’t know about.
- Hire Professionals to Help – A first-time investor should never navigate the process alone. Enlist the help of professionals to help you along the way. Find other investor that are willing to help mentor your first rental property.
- Buy Below Market Value – To help guarantee a return on the property, you should try to only purchase properties that are listed under market value. If you aren’t able to get the lease payments you are after, at least you will be able to sell the home for more than what you bought it for.
- Calculate a Property’s ROI – To calculate ROI, the net profit of your investment is divided by the amount of money you have invested. The results are expressed as a percentage or ratio.
When You Are Screening Tenants:
- Advertise – Most popular real estate sites that also list rental properties as well. Make sure you have excellent photography and accurate property descriptions. Read some of the other listing to see what they are putting In the description. It’s also a good ideas to bookmark some of the comparable house up for rent to see how fast they get rented.
- Provide Application Forms – Hopefully, you will get tenants who want to apply on the spot. Make it easy on them by having application forms readily available.
- Background Check – Running a background check on prospective tenants is crucial. There are many websites that can assist with this.
- Credit Check – In addition, running a credit check will help make sure your tenant will be able to pay you! We like a credit score of 620 or better, but many times the payment history and kind of debt they have tells a better story.
- References – Thoroughly check all references provided. There should be a place for these on your application.
- Sign an Agreement – The agreement, or lease, should be very detailed and leave no room for disagreements. Include your process for conflict resolution. Your first rental property will set the stage for the rest of your rentals. Go over with the tenant and get them to initial each page. This will ensure everyone is clear on what is expected and fewer conflicts will arise.
- Conduct an Inspection – Both you and the tenant should inspect the property (together if possible.) This goes back to having everyone on the “same page”.
- Clean & Repair the Property – Any repairs noticed during the inspection should be made before the tenant moves into the home.
- Change Locks – To reduce your liability and keep everyone secure, you should change the locks with each new tenant.
- Final Steps – Collect deposits, rent, and provide keys.
After Your Tenants Have Moved In:
- Tenant File –Create a tenant file with all the pertinent information. Keep track of all tenant issues.
- Calendar –Keep track of important dates, lease terms, maintenance schedule. If you own many properties, property management software will help to keep you organized.
- Stay on Top of Things –Keep the house in good shape and exercise a proper maintenance schedule.
- Master Vendor List –We said before to buy a house with the least amount of repairs as your first rental property. Unless, of course, you are experienced in repairing houses (Then go for the run down house for cheap and fix it yourself). You will inevitably have to pay repair costs and maintenance fees. Work with vendors you trust for maintenance, plumbing, AC repair, etc. Keep their contact info readily available.
Any money making endeavor you have ever become successful at required practice and training. Rental properties are no different. Another option that will help you get up and running faster is to get a professional landlord like us. We learned early on in our investing profession that trying to do it all yourself can cause big problems. It takes a team to make any business work and we would love to be on yours’.
Do you want to purchase a house for investment purposes? We can help! Send us a message or give us a call at the office! (478) 256-9947