Tips for First-Time Landlords Tips for First-Time Landlords

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Tips for First-Time Landlords

Hello to all you first time landlords!  We have comprised our top 8 tips for new landlords and our hope is that this article will educate you so that you don’t make the same common mistakes that most new landlords make.

1. Make Rent the Priority

Rent is your revenue. It’s amazing how many landlords are not aggressive in pursuing rent and late charges. It’s sometimes a good idea to work with people who generally need help … if they communicate with you.  But if your tenants just stop paying rent and ignoring your calls or texts, you need to start eviction proceedings. Otherwise, your tenant could be six months behind on rent before you know it, which makes this probably the most important of all the landlord tips.

2. Partner With The Right Investor

We have amazing business partners who are completely honest and transparent, two qualities that are absolutely critical when choosing your business partners. For some reason, some new landlords are very willing to partner with somebody they barely know just because a deal looks good. This is usually a mistake.
The first time we invested, we chose a business partner who we have known for over ten years and this is why we felt comfortable doing a business transaction together. We are not saying that you need to know someone for that long period of time but what we are saying is that you definitely need to do your due diligence before investing with someone for the first time and every other time after that!
Additionally, we have the same end-goals and values, which is what ultimately influenced our decision to invest in properties with our partners.

3. Screen Tenants Properly

Screening tenants is a really big deal, and we have seen some serious mistakes in this area. Beware of the tenant that has a 480 credit score, someone who couldn’t produce previous rent references, and didn’t have a job. Take a wild guess as to how that would ultimately end-up? Let’s just say that anything under 600 is considered bad credit. If you wish to be more prudent, here is the breakdown:
Excellent credit — 750 and above
Good credit — 700 to 749
Fair credit — 650 to 699
Poor credit — 600 to 649
Bad credit — anything below 600

4. Know Fair Housing Laws

For some reason, many investors choose not to educate themselves on fair housing laws, and there can be serious implications if you violate them.
There’s no excuse to not educating yourself on the laws in the real estate industry. Landlordology.com has created several easy-to-follow guides on fair housing.

5. Don’t Invest in Renovations That Won’t Produce High Enough Rents

There is nothing wrong with buying rental properties using all cash. However, be careful not to go over the top renovating these properties. For instance, if you are buying properties in what I would characterize as “B” neighborhoods, then make sure not to renovate them by putting high end tile in the bathrooms, marble countertops in the kitchen, and crown-molding in the den. Learn about cost effective ways to make the renovated property look spectacular without spending unnecessary funds that will take forever to just break even. Remember the high end  renovations in "B" neighborhoods don’t lead to a high enough rent rate to justify the expenses. Again, due diligence is imperative in any and all real estate ventures.

6. Collect Rent Online

There is no reason for you to be collecting rent by a check in the mail. Not only is it time-consuming to go to your P.O. Box or mailbox, keep up with all the checks, and then deposit the checks, but it’s riskier. The check can bounce, and then you’ll need to pay a non-sufficient funds fee and then contact your tenant for the rent and the NSF fee. When you collect rent online, this whole process is negated, and the process is dead simple if you use Venmo or PayPal or other payment apps.

 7. Use the Right Financing Strategy

Here is a little adage that we use every day and tell to anyone who’ll listen: 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 we have a line of credit instead of a term loan?  Investors focus 99% of their time finding deals. When they get a deal, they then scramble to find financing. We have seen several 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.

8. Market Rental Properties Effectively

It’s amazing how many real estate investors still advertise in the newspaper and use yard signs. From our experience, potential tenants who call you and pretend to be interested in your property are just nosy neighbors. Using an online resources to market your listing is great because tenants can view pictures of inside the property and get valuable information about the property before contacting you. We also suggest using a real estate agent. They can save you a ton of trouble especially vetting the tenant. This also saves you an incredible amount of time and the tenant pays the agent, so it's a win win for you!

Bonus: BE ORGANIZED!

Perhaps the biggest mistakes we see landlords making is that they aren’t organized, and they don’t keep proper records of revenue and expenses. So I couldn’t leave being organized out of a guide on landlord tips. If you don’t keep proper records of revenue and expenses you have absolutely no idea how profitable your property is.

We hope this article helps in your new rental endeavors. Learn from other's mistakes before you make them yourself!  It can save you tons of time and plenty off cash!  Good luck!

Follow us on Facebook and Instagram!
&
Subscribe to our YouTube Channel!
Revival Property Group
"Real Estate Solutions At Your Convenience"

Hello to all you first time landlords!  We have comprised our top 8 tips for new landlords and our hope is that this article will educate you so that you don’t make the same common mistakes that most new landlords make.

1. Make Rent the Priority

Rent is your revenue. It’s amazing how many landlords are not aggressive in pursuing rent and late charges. It’s sometimes a good idea to work with people who generally need help … if they communicate with you.  But if your tenants just stop paying rent and ignoring your calls or texts, you need to start eviction proceedings. Otherwise, your tenant could be six months behind on rent before you know it, which makes this probably the most important of all the landlord tips.

2. Partner With The Right Investor

We have amazing business partners who are completely honest and transparent, two qualities that are absolutely critical when choosing your business partners. For some reason, some new landlords are very willing to partner with somebody they barely know just because a deal looks good. This is usually a mistake.
The first time we invested, we chose a business partner who we have known for over ten years and this is why we felt comfortable doing a business transaction together. We are not saying that you need to know someone for that long period of time but what we are saying is that you definitely need to do your due diligence before investing with someone for the first time and every other time after that!
Additionally, we have the same end-goals and values, which is what ultimately influenced our decision to invest in properties with our partners.

3. Screen Tenants Properly

Screening tenants is a really big deal, and we have seen some serious mistakes in this area. Beware of the tenant that has a 480 credit score, someone who couldn’t produce previous rent references, and didn’t have a job. Take a wild guess as to how that would ultimately end-up? Let’s just say that anything under 600 is considered bad credit. If you wish to be more prudent, here is the breakdown:
Excellent credit — 750 and above
Good credit — 700 to 749
Fair credit — 650 to 699
Poor credit — 600 to 649
Bad credit — anything below 600

4. Know Fair Housing Laws

For some reason, many investors choose not to educate themselves on fair housing laws, and there can be serious implications if you violate them.
There’s no excuse to not educating yourself on the laws in the real estate industry. Landlordology.com has created several easy-to-follow guides on fair housing.

5. Don’t Invest in Renovations That Won’t Produce High Enough Rents

There is nothing wrong with buying rental properties using all cash. However, be careful not to go over the top renovating these properties. For instance, if you are buying properties in what I would characterize as “B” neighborhoods, then make sure not to renovate them by putting high end tile in the bathrooms, marble countertops in the kitchen, and crown-molding in the den. Learn about cost effective ways to make the renovated property look spectacular without spending unnecessary funds that will take forever to just break even. Remember the high end  renovations in "B" neighborhoods don’t lead to a high enough rent rate to justify the expenses. Again, due diligence is imperative in any and all real estate ventures.

6. Collect Rent Online

There is no reason for you to be collecting rent by a check in the mail. Not only is it time-consuming to go to your P.O. Box or mailbox, keep up with all the checks, and then deposit the checks, but it’s riskier. The check can bounce, and then you’ll need to pay a non-sufficient funds fee and then contact your tenant for the rent and the NSF fee. When you collect rent online, this whole process is negated, and the process is dead simple if you use Venmo or PayPal or other payment apps.

 7. Use the Right Financing Strategy

Here is a little adage that we use every day and tell to anyone who’ll listen: 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 we have a line of credit instead of a term loan?  Investors focus 99% of their time finding deals. When they get a deal, they then scramble to find financing. We have seen several 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.

8. Market Rental Properties Effectively

It’s amazing how many real estate investors still advertise in the newspaper and use yard signs. From our experience, potential tenants who call you and pretend to be interested in your property are just nosy neighbors. Using an online resources to market your listing is great because tenants can view pictures of inside the property and get valuable information about the property before contacting you. We also suggest using a real estate agent. They can save you a ton of trouble especially vetting the tenant. This also saves you an incredible amount of time and the tenant pays the agent, so it's a win win for you!

Bonus: BE ORGANIZED!

Perhaps the biggest mistakes we see landlords making is that they aren’t organized, and they don’t keep proper records of revenue and expenses. So I couldn’t leave being organized out of a guide on landlord tips. If you don’t keep proper records of revenue and expenses you have absolutely no idea how profitable your property is.

We hope this article helps in your new rental endeavors. Learn from other's mistakes before you make them yourself!  It can save you tons of time and plenty off cash!  Good luck!

Follow us on Facebook and Instagram!
&
Subscribe to our YouTube Channel!
Revival Property Group
"Real Estate Solutions At Your Convenience"

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