DIY Landlord and Property Management
I’m sitting here at my computer drinking a Sprecher’s Cherry Cola and waiting for the next future tenant to arrive, we have had 3 showings so far today and things have gone well. We have become more experienced over the 3 years we have been landlords and I wanted to share with everyone what DIY Landlord and Property Management really involves. Before you decide to go and buy an investment property let me share with you our experience renting and how we handle the rental process.
The good news is most of the hard work has been done. We renovated the unit about 2 years ago, so everything looks pretty nice and will just need to be cleaned and a touch of paint added. Let’s get started, shall we.
So the first thing you need is pictures, great thing is we have all of our pictures saved online from renting out the unit 2 years ago, if not this is one of the most important pieces of the puzzle. Your pictures have to be great! When someone sees the unit they are looking to rent this is your first impression, you will need clean and well light pictures. The impression you make will be with these pictures, they need to look and say something like “that place is nice” or “I could see myself living there” your pictures are your first impression. If your pictures are poor and grainy, expect very few phone calls and even less visits. So why am I taking these pictures are they able to see the pictures in my newspaper ad or am I making a flyer to put up in the grocery store or why would I need pictures aren’t I just putting a sign in the front yard?
Online and Online.
Since we live in the age of technology posting homes for rent in my opinion has never been easier. There is an app or website for everything you want to do with your rental. We use a website called Postlets, which is owned by Zillow. All you need to do is create a sign in and password, then follow the easy to use instructions listed on the website. Add the information including those beautiful pictures you took up above and starting putting the information you want the future renter to see. Location, number of bedrooms, bathrooms, what floor it is on if it’s a multi-unit, rent amount, security deposit, terms of the lease, amenities, appliances, etc. Everything that is included in your rental, you will want to list here, but the website is very easy to use so many of the items are simply placing a check on the box to include it in your listing, pretty easy, the whole process took me less than 30 minutes. After you have filled out all the information it’s time to post your rental online and get this unit rented. But wait who is looking at this Postlet listing? I almost forgot, what Postlets does is create a listing and send it to over 20 different websites some of which include Zillow, Hotpads, and many more. I’m not sure the reasoning but Postlets is not allowed to automatically post to Craigslist which is one of the most common places for people to look for rentals, but what it does is provide you with step by step instructions and a link to simply copy the code used for your listing. I took me an extra 5 minutes since everything was already done, the only additional item needed was adding the pictures pictures. So congratulations you now have your new investment property listed for rent and can be seen on multiple websites and all free of charge.
Email, Phone Call, and Text.
Let the phone calls, texts, and emails come in. I prefer to use my personal cell phone number and email address to talk with potential tenants. Like most of you out there, I have a full time job, so I do not directly answer the phone call, but leave it for voice mail and call back the next time I take a break. I also update my voice mail to include my name and information regarding the unit available for rent. I do the same with emails with my responses, I take a break from work and respond accordingly. Expect to answer questions even though all of the information is included in your listing. Yes it is a 1 bedroom, just like the listing says and yes it has a parking space also like the listing says, but it’s OK just be prepared to know the information about your unit. It also doesn’t hurt to be nice and friendly over the phone, remember you want people to see the property, not get off the phone and say that guy was a jerk, I don’t want him to be my landlord!
Appointment Schedule and Be There!
What most people are calling for is to schedule an appointment to see the rental unit, while your pictures may have caught their eyes, they need to confirm those beautiful pictures you took are for real. I think this is like buying clothes online, most people want to try the clothes on and see if they fit and how they look, but in this case returning the clothes or cancelling a signed lease costs so much more than returning jeans that don’t fit. When the property is vacant things are easier because you can just pop over to the rental building and open the door. This time around for us, we currently have a renter staying in the unit, so what we decided to do is have an open house of sorts. When the potential renter called I let them know the first day we are showing the property is Saturday between the hours of Noon and 5pm, what time works best for you? People who have a scheduled showing are more likely to show up than a blanket time frame of between Noon and 5pm. Each appointment I made was entered in my Google calendar as a reminder to know who was coming and at what time. In our case we have the luxury of living in the building so if the appointment is at 3pm, we just need to come downstairs and open the door, if the property was further away setting up appointments would be even more important. Because I have some bad news for you, just because they schedule an appointment they will not always show up. I have considered doing a follow-up phone call to make sure they are coming to the appointment, but my thoughts are if they can’t remember or don’t have the courtesy to show up for a scheduled appointment to the property do you really think they are they going to be good about paying the rent on time?
Welcome to Our Beautiful Home.
Now is the time to show the potential renters why they should live in your building. Walk them through, show them the apartment, feel free to add a little color to your rental, because remember you want these people to want to live here and pay rent. Don’t be afraid to explain each room a little just a sentence or two, something like “this is the bedroom it’s a nice size with a walk in closet and great storage” will do the trick. Tell them a little story to get their minds working because most people need a little help with the imagination portion. Tell them it’s a great fit for a queen sized bed or ask them if they have 1 car or 2 cars, so you can talk about the private driveway and off street parking. Sell them your property. If they are interested you will know, they will start asking more questions and you will provide all the answers they need. Like any good sale you need to close the deal. In this case you are really finding out if they want to live here by filling out an application. Because we do everything online, we take their information, name and email address(also phone in case you write it down wrong) and let them know you will be sending an application that same day.
Application for What? I’m not trying to work here, I’m trying to live here!
I would say applying for a job and applying for an apartment are equally as intrusive, I think the only item that we don’t ask for is fingerprints. We take this portion very serious as the people that are selected will not only be living in our building and paying us rent to do so, but in our case they will be living in the same building we live in, which makes this step even more important and becomes a little bit more than will the renter pay on time. We are not going to be having dinners together or anything, but we will run into them a couple times a week, exchanging pleasantries and sharing items like laundry, patio, and a parking area.
We ask our potential renters to go through a 2 step application process. The first is free of charge, this is an online application that includes an attachment for a photo id and your last 2 pay stubs. We had to switch this year from a previous application we used and are trying out and online site called rentalapplication.net. We are using this for the free portion, however you do have the option to include a credit, background, and eviction check. It’s a simple application that can be filled out within minutes. We treat this as the get to know application. It tells us where you live, work, and how much you make, it also shows your general interest and gives us a glimpse into how you will handle future requests, like sending the rent check. If someone fills out the application the same day and sends you their pay stubs, it’s a very good indication of how they will pay the rent and that they are very interested and well qualified.
After we receive all of the applications, we then make a choice on which applicants we would like to take the next step and go through the credit and background check. We use Transunion My Smartmove, I use the Bigger Pockets link to show my support as Bigger Pockets has great information that I have used over and over in my real estate adventure, especially when I first got started it’s a great resource. This site makes life simple for the landlord and for the renter.
Making the Final Decision.
After they have submitted their information to Smartmove you will receive an email informing you the information is ready to be reviewed. You will be shown their credit score and all of the payments and debt they have on file. This will also include any criminal or eviction records, which is important in making a decision in the occupant of your home. Credit scores are only a small portion of the picture, but something that needs to be looked at because this credit check will show even more detail like: if they are making their car and credit card payment on time and how much revolving vs installment debt they currently have. These details are one of the most important criteria that I look at, because it tells me if you have too much debt and if you can afford your bills and most important, the rental unit. This is one of the last steps where you are making the final decision. I do recommend giving a call to a past landlord and current employer, but I think this is a personal decision. For example I would not call the employer if the applicant has been working with the company for the last 3 years and I receive pay stubs showing they still are currently employed, I’m just not sure what information an employer would be able to give me, unless they tell me he no longer works here, which would be helpful. I do like to give a past landlord a call, just to see if they remember the tenant and have had any issues with them. The last landlord I called said he wished the tenant never left, she was nice, kept the place clean, and paid on time. It was a confirmation of what I already was feeling from our conversations, but it made me feel good about signing the lease with a recommendation.
This morning I sent out the credit and background check which is paid for by the applicant, assuming it meets our approval we will set up an appointment to sign the lease and collect the rent and security deposit. After that it’s all hand shakes and bank deposits;)
Summary and DIY Numbers
We have been landlords for a little over 3 years and like many of the things that are DIY, if you take the time to become knowledgeable and learn about the item that needs to be done, you can complete the task. This is not the DIY toilet repair, that saves you $100, this is big money and I would say constitutes as a Big Win. For example if your rent is $1,000 and you took the hands off approach and left everything to a real estate professional/property management company, expect to give up as much as an entire month’s rent. This is only for getting someone in your property, they will then charge an additional 10%(approximate) for taking care of your property. Using the $1,000 example, you would be paying them $100 each month and then when repairs come up they are making the phone calls to get everything fixed, but you are responsible for the the repair cost of the toilet $150 in our example. Doing a little bit of math, you are expecting $1,000 month in rent x 12=$12,000, but if you decided to leave it up to a professional, in this case, it would cost you 2 months worth of rent(10% property management fee and 1st month rent or $2,000). This could even be a reoccurring expense if your tenant moves out every year and new tenants come in.
DIY landlord and property management for real estate investment is a big win and you learn more about the property and people who are moving into your building. Their are great resources available, I would start with Bigger Pockets, it has a wealth of knowledge. I believe real estate investments and having a renter pay for your mortgage is the best way to wealth and financial independence, it is not the easiest method, but if it wasn’t hard, everyone would do it. It’s the hard part that makes it great.
I also advise you to check out Bigger Pockets and their Tenant Screening, it’s very similar to what I have outlined in my post, except they have more pretty pictures and a cool process map to follow, yes process maps are cool, along with some more details.
*I am not a real estate professional, I do not play one on TV, the information in this article is from my personal experience. Since everyone’s experience and situation differs, I suggest you do your own due diligence and/or consult a real estate professional.
Big thank you to Mrs. Even Steven Money for putting together today’s Featured Image!