As an empire-building landlord, installing and managing tenant has led to many ulcer-inducing moments, especially when we were first starting out. I began The Reluctant Landlord to share my experiences and help others learn from them.
Before we get started I wanted to share my favorite resources.
I previously used Buildium and than I switch to Cozy as it saved me over $500 a year and is absolutely free for landlords. In addition to being SUPER easy to use. I love that it only requires the tenants first/last name and email address to send over the applicant/background check. They also have options to use their application form, marketing and collecting rent through them. Plus all your rental information is on there for when you need to list again.
I have had many requests for this complete start-to-finish guide on installing and managing tenants. I hope it helps you succeed!
To make this lengthy post on installing and managing tenants easy to understand and process as possible, it is broken down into sections. Each section is a different part of the how to manage tenants process. I have added an introduction to each section. This will allow you to read what fits your needs and skip the sections you are not interested in. In each section are all the current articles that I have written walking you through that section. To read that specific article just click on the pictures or the tile. Work your way from top to bottom, as they are all in order.
Treating Landlording as a Business
One hard lesson I have learned over the years as a landlord is that the goal is not to just simply cover your mortgage — you want to make money. The reason that I had no issues handling a vacancy and maintenance request while vacationing in Fiji was due to the fact that I make $1,808.57 a month with no expenses, and make a principle pay-down of $1,633.78 (October Income Report) .
Over the years, we have evolved and changed from deciding to self-manage after originally planning on hiring property managers, etc. One of the things that has helped us with our success was figuring out our business model. This way, as the Navy and our life changes and alters around us, we still have a plan and goal.
Getting Your House Ready
Over the years, we have made many mistakes. One of these mistakes included over-preparing and over-updating our house (double-headed shower, gorgeous wooden built-in closet, adjustable closets, etc). I will never forget when one of our first tenants asked to repaint the entire house. This was just after my husband and I had spent 3 days of our life repainting the house. I will be honest, I almost cried thinking about how much less stress it would have been if we hadn’t painted. Throughout my time as a landlord, I have learned through trial and error what is important to make a property a great rental, and what is truly a waste of time and money.
Deciding What To Include in Your House
As we discussed in the first section, it is really important to watch your margins. Our houses have very low margins because we put as little into them as possible. They are higher-end homes, which means that, after we pay mortgage insurance and taxes, there is not a lot left. That is why we remove anything that does not add value to our houses. Even removing these extra expenses, we have not negatively impacted our ability to install great tenants. If anything, we have preserved it, because we have more money to cover repairs, improvements, etc.
Self Management Versus Property Manager
Making the decision to self-mange or to hire a property manager is a very hard decision. An amazing property manager will beat a self-manning landlord every time — their experience and contacts can’t rival a property manager who just “cares.” Unfortunately, property managers are not all made equal, so make sure you interview them and that they are the right fit (80 Questions to Ask Your Property Manager).
In the beginning, self managing was not our first choice, but it has become a financial blessing for us. Along the way, we have had lots of stressful moments, although financially it has always worked out amazingly for us. I hope these articles help you make the decision that works best for your family.
Long-Distance Self Management
We have 8 houses in 3 different states — California, South Carolina and Virginia. As my husband is active duty, our list of states is only going to grow as we collect houses in the different states we are stationed in. One of the reasons why we have been so successful with our rentals financially is that we are able to manage all of our houses from anywhere. While the long-distance theme is found throughout my writings, here are a few specific articles on how we self-manage our properties from anywhere, including while on overseas vacations.
(Note: Don’t forget to check your local and state laws, as every area is different.)
Deciding the Rental Price
Deciding on your rental price is very important when it comes to protecting your house. You don’t want to price it too high and have an unnecessary vacancy. On the other hand, you do not want to under price your house. While it will rent fast, you are cutting into your repair and “dealing with it” money. You want to be rewarded financially for handling your rental, otherwise it is not going to be worth it in the long term. I know that there are days where I want to say “nope, not interested in managing you” to my investments. Then I remember the $1,800 a month I am earning!
Would you go to work if you weren’t paid? Your rental is the same way. Why would you want to handle your house if you weren’t making money? No matter whether you are a reluctant landlord and just want to get out, or are doing this as a long-term financial decision, always price your house at the highest market possible and make sure you are trying to make money whenever you can. Thinking about the financial blessings always helps me make it through the rough times.
Listing a House For Rent
As with advertising any type of item, the better quality your listing is and the more locations that it is found, the more people you will reach. Here, you can find tips on not only where to list your ads, but also how to create the best possible listing to get your rental rented out at the highest value possible. The more people you reach, the quicker you fill your rental with a qualified tenant.
Once you receive inquiries from your listing, the next process is to follow up with potential applicants. Over the years, I have found that the quicker I respond, the more success I experience. Tenants will shop around until they have a signed lease with a security deposit down payment. While some will view the entire market before picking a house, many will sign a lease and put a deposit on the first house that fits their family, especially in a competitive market.
At the end of the day, it is stressful trying to figure out when to bend and when to stand your ground. When I bend too much, I give the appearance of being a push over and my tenant takes a mile. When I don’t bend at all, I lose an applicant to what was truly trivial in the long run. Over the years, I have found that there is a definite line when dealing with tenants. Here are a few articles that I have written on how to handle tenants and their requests, when I concede and when I stand my ground. I hope it helps you learn from my mistakes!
Many states are more pro-tenant than pro-landlord in their real estate law. This puts the pressure on the landlord to find the right tenant that will pay the rent on time and take care of the home. Luckily, it is easier and more of a science than one thinks. Here are the articles I have written on how we screen our tenants, and the lessons we have learned.
Setting Up Showings
I have a love-hate relationship with showings. I love showing because it is often the final sell, and then my applicants are ready to sign the lease, place the deposit, and my house is officially reoriented. This, of course, is exciting and a stress reliever. But, on the flip side, I also hate showings, because it means that I have to clean my house, and deal with no-shows or those who really aren’t interested. It can be a time suck, especially when you have a million things to do. Luckily, over the years, we have found ways to make it an efficient process and a lot less stressful.
Showing Your House
Honestly, I find the aspect of showing my house the easiest. I just open the door and let the applicants look around. I ask any questions and carry on the conversation based on their cues. I hope these articles help you find it as easy as I do. The biggest issue is people, not showing.
Picking Your Tenant
Picking the right tenant for our houses is easy when you only have one candidate, and hard when you have many to choose from. When there are a lot of applicants, you feel the pressure to pick the right one for your house without breaking fair housing. These lessons learns and experiences will help you pick the best tenant for your house.
Creating Your Lease and Deciding on Terms
My lease is the single most important thing I do, to not only protect my investment but also to make my job easier as a self-managing landlord. In the beginning, I had a very VERY vague lease, thinking that a lot of property management was common sense. Come to find out the hard way that common sense does mean squat unless its written in your lease or the law. After a few hard lessons learned, I create a 16+ page lease and outline my expectations very clearly.
I spend an hour or so reviewing the lease with all signing parties, so that there are no misunderstandings or questions. Once the lease is signed, I do not negotiate and I hold all parties to the document. As counterintuitive as this might sound, once I had my lease aka rule book and helped my tenants’ feet to the fire, my issues decreased drastically and life became significantly less stressful.
I am SUCH a believer in my lease that I wrote an entire book about my lease. The lease has every addendum wording and explanation that I have in my lease. I hope this book makes your lease much less time consuming.
Signing and Ratifying the Lease
This is the important part, and it can seem overwhelming, especially when you’re not able to do all the pieces in person. Luckily, technology has made it very easy to sign and ratify the lease in person and long distance.
Depending on your tenants, this could be an easy exercise or one that makes you want to pull your hair out. In the beginning, I use to dread this first day. Especially with my site-unseen tenants, I used to feel like this was the time where people would take it upon themselves to renegotiate the deal. I once had a tenant demand that their pet fee be waived because the carpets weren’t cleaned, after they had been offered a carpet cleaning and turned it down. I had another tenant demand an exterminator come out because they left the windows open and a pameto bug (a flying cockroach so plentiful in Charleston, SC area that it has its own name) flew into the house. My most favorite to date has been my tenant telling me the house was absolutely filthy and unlivable in…because one shelf in the closet was not cleaned.
The great thing about a great lease is the ability to say no and smile. It is all survivable. The key I have learned is to stick to your lease, use the word no, and stick to your guns. I hope that these tricks, and the ones found in these articles, help you experience a smooth move-in.
As a self-managing landlord with 8 rentals and not enough monthly salary to cover all my vacancies, it is imperative that my houses stay rented. Still, even if I could afford for all of them to sit empty, I would rather spend my money on experiences and fund stuff than an empty house or 8. Luckily it is easier than you think to keep your houses full .
Over the years, the longest vacancy I had was 16 days, and that was because work was nuts, I over priced the house and was about to leave on a big trip.
Day to Day Property Management — Responding To Tenant Inquiries
Once the tenants have been moved in, the next step is to manage tenant requests. As we discussed in the very beginning, your goal is to treat this like a business. I have learned that tenants have no issues spending other people’s money, but are very stingy with their own. That is why I enforce the lease, say no, and only do required repairs, not improvements. One of the hardest (but best) lessons that have kept away the goblins we talked about in the first section is how to handle my tenants.
Day-to-Day Property Management — Repair Management
Managing repairs has been the last frontier that I have had to conquer. For me, this has been the hardest part of management, as it is the hardest to replace things, especially since we have properties in small towns. I have totally spend $200 on a 30-minute repair because it was a safety issue and it had to be done. Over the years, I have learned many tips and tricks to both reducing the tenants’ need for repairs and better managing my handy men.
Your rental financials are very important. Making money is why you put up with all the stress and do all the work. Having a ship-shape financial position and paperwork is key to making sure your financial house is in order.
From someone who is the Queen of disorganization, I can tell you that, as a landlord, organization is very important. From needing your leases within a minute’s notice when you need to refer a tenant back after a request or issue, to being able to find all your receipts in order to correctly report your income and expenses. Over the years, I have come up with a few tricks that have made my disorganization more organized with the least amount of pain.
This is the best part — when a tenant wishes to renew. This means no turnover cost. Still, I always review my rent and raise it.
Move out is when the landlord realizes if they have had the infamous “perfect tenant” or not. This is where I evaluate the condition of my house, if the lease was followed (move out cleaning, vent cleaning, professional steam cleaning), along with the damage. Damage that is wear and tear is fine, but any damage to the house exceeding wear and tear or that violates the lease comes out of the security deposit.
Tips and Tricks from an Experienced Landlord
Over the past 4.5 years, we have learned many tips and tricks from handling over 20 unique tenant personalities. Hope these articles sharing our lessons learns helps prevent a few of ulcer inducing moments of your own.
At the end of the day, I am still an always-learning landlord. While most days fall under the “nothing new” category, there are still many days that I am shocked and add another line to my lease. It’s a marathon, not a sprint. The fact that, through a little sweat equity, my tenants are paying off my houses and allowing my husband and I the opportunity to retire early allows me to persevere even though I just want to let my temper rain.
Did I miss any steps? Do you have any questions that are left unanswered?
This spring I am putting together an e-course and book on how to manage tenants from anywhere. So please comment and leave your feedback. I really value your opinions and help.
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