Brinkman’s Landlord Tips
Sep. 10. 2019
As a Broker, Realtor and home owner, I thought I would share a few quick tips about my experience on being a landlord.
I will say, it certainly helps that I am in real estate, and started my career by doing leasing, but I try and educate all my clients on how to manage their own properties (given they live close and have a little time). I have been very fortunate to have great tenants in my properties and here’s a few things I have learned from being a landlord that I find work for me. Hopefully you’ll find them of value–
BRINKMAN’S LANDLORD TIPS:
- Get Face to Face with Your Tenant(s)
Whether you decide to hire a Realtor to help you lease out your home, or take it upon yourselves and tour with each potential renter, one thing I always highly recommend is meeting your tenants face to face. Show them your property, review expectations, give a tour of the quirks and give them your contact info. Tenants tend to feel more connected and have more respect for the property when dealing with a home owner vs a property management co.
2. Service Your Systems
No matter the age of your home, still try to take care of regular services as you would be leaving in your home (well, if you are responsible). Personally, I pay for regular HVAC maintenance (scheduled with my tenants) and pest control every 90 days. Some landlords choose to cover lawn maintenance, while some make their tenants manage mowing, it depends on how much you care for your yard and how much maintenance it needs as well if there are HOA requirements. I also own a home with a pool and most definitely have weekly service and cover the pool servicing as well.
3. Put Everything In Writing
This may seem like a no-brainer, but every now and again I have a friend who has been renting for three years from some old hippy and they never had a lease in place. Yikes. Lease agreements (not hard to find online and always happy to share sample terms) should be signed and given to BOTH parties. This is where you state your penalties, expectations, late fees, etc. And everything should be in writing. If you want your tenants to change the AC filter every 60 days–don’t forget to disclose who is providing the filters and how often in the lease.
4. Offer A Discount
This may sound silly, but I offer a $20 discount per month to my tenants if they pay before the first of the month. They have it set on auto-pay, which I also love and it keeps me on track for paying my mortgage as well. You could offer your tenants a discount if they auto pay or 6mo in advanced payments as well.
5. Know Your Costs
I will admit, it can be challenging to cash flow (in Austin at least) depending on the area and how much equity you have once you factor in property taxes and insurance. If you were once an owner occupant, and you decide to purchase another property and move into that one, remember that your property taxes may increase once your homestead is removed from that first property. But do not forget that almost always (Murphy’s Law) something WILL break, go out or need repair upon you becoming a landlord. Have an emergency/housing fund set aside. Also, let’s say you do get some not-so-great tenants, who start paying late or trashing the place, you will want to have funds set aside for the late payers and irresponsible. These funds may also cover a part that breaks for your AC, things that happen after a heavy storm or replacing carpet/new paint post tenant move out. Obviously it costs more to have tenants who renew every year, so offering a slight discount for an 18-24mo lease is also great incentive! And a side note–because your mortgage is $2500 doesn’t mean your rent will/has to be that much. Do your research (or have a Realtor help you) regarding what is renting for properties similar to yours in your neighborhood. Pay attention to market value.
Also, depending on your investments and goals, you may want to run purchasing an investment or leasing out your current home by a CPA or your financial planner first. Realize there are write offs and depreciation that help with taxes, but still costs to incur that for some, may be better spent in a different investment. So be sure to run the numbers first.
6. Require Renter’s Insurance
Be sure to make your tenant get renter’s insurance. I referred my tenant a few companies and have them show proof upon lease signing. This will also change your home owner’s insurance fees as well.
7. Background Checks
Some of my clients choose to find tenants and manage their properties themselves (this allows you to save money, but is a tad more time consuming, so it depends what your time is worth). If you decide to lease the home and market the property yourself, I recommend starting with Zillow-(while most Realtors find that site the devil, they are very helpful to landlord clients) which also has a way to run background checks. Another suggestion: Realtor.com, hotpads.com or Craig’s list and/or Facebook to find mutual friends who are looking for a place, and a sign in the yard with directional signs in high traffic areas can’t hurt. I like Go4Rent-where the tenant has to submit all the info for a complete application and background check or you can set up an account on MySmartMove and have tenants apply through that website. Understanding and reviewing your tenant’s background is important for you to make a decision, you can ask for explanations to holes in employment history, credit issues like late payments etc. and accept or reject based on their application.
Note if you choose to not market the property yourself you can pay a Realtor to do this for you. This is typically 100% of one month’s rent (at least in the Austin market, but can vary as well) and the Realtor will market, run background checks, draw up lease and then turn the keys and managing over to the landlord if they do not do property management.
I hope you found these tips helpful and how I typically look at the properties I own is that of a mindset: Real Estate is a long term investment. Take care of your properties, take care of your tenants–and they will take care of you in the long run.
Thanks for reading.