Have your first property under contract or considering buying a rental property? Congrats! If you plan on self managing, what should you do first? Here are some tips to get you started on the right foot.
Treat It At A Business Not A Hobby
Remember you are running a business, treat it as one. Keeping documentation is key. You can chose to keep paper copies, but also scan and keep electronic files so you can’t physically lose the paperwork. Creating a binder with your mortgage, taxes, water/sewer, and tenant info is a great idea.
Inheriting Tenants/Finding Tenants
If you are inheriting tenants, contact them. Introduce yourself and the new owner and provide your own contact info. Speak about any issues they have about their unit or their plans going forward. Do you know the current rental income for your market? Craigslist and rentometer are two great sources to determine what your units can rent for.
How do you plan on collecting rent? Consider creating a separate bank account for rental income. This account can show income coming in as well as expenses paid out of the account. This is extremely important for tax purposes. If you are collecting security deposits, it is best to create a separate interest bearing savings account to hold the deposits. This can be a landlord/tenant account and most banks know how to set this up. Each tenant will sign a w9 form. This is to show the taxes on the interest paid are under the tenant’s social security and not you as the owner/landlord.
Do you plan on doing the work yourself or having a handyman to get work done when needed? You can go to home depot and purchase basic tools such as a power drill, screwdriver, hammer, tape measure, ladder etc for minor repairs. For toilets, a toilet auger will save you many headaches! Creating systems for repairs will save you time when you are unsure who to contact when you need to get something done. Preventative maintenance should be done on your properties.
Before you take the keys, make sure you can answer these important questions! Your goal is to make the transition to managing the rental as smooth as possible for you and your tenants.