Advice For New Landlords

I’ve been helping landlords for years now and as I look through the masses of info = I have shared, one gap I find is what a new investors needs to know before they own their first rental property.

The trigger for this was just a quick comment a subscriber named Matt left me the other day.

You see Matt’s been reading my articles and watching some of my videos preparing for his first rental property which he closes on at the end of the month.

He’s being pro-active, he’s getting prepared and educated and he’s being very smart about getting started!

I love it.

To hopefully get him off to an even better start I replied back to his comment with some additional tips and suggestions, but  I realized that unless someone is reading that specific article they will miss that specific information!

So I realized maybe I need some information all in one place to help others just like Matt! So here’s what I have.

Getting Started With Rental Property

Some of the information I’m going to talk about here you’ll find in other articles on the site or videos here and on YouTube I’ve done and I’ll include some references to these at the bottom of the article.

In my experience I’ve found that I read one article and don’t quite get a concept, but when it’s explained slightly different or from a unique perspective suddenly it becomes crystal clear.

I’ll also include a subscription form at the bottom where you can get my guide “The Secrets of Successful Rental Properties” where I also talk about some of these tips that apply to your first rental property and to your fortieth rental property, or at least in different ways.

So rather than babbling too much more, let’s get started!

Leases – They Are Not All Created Equal!

If you’re not familiar with my background, my online start was with a site that helped landlords evict tenants in the province I’m located in, Alberta Canada.

Sure I had my own sites for my Real Estate biz that I’d created in the past or paid someone to build, but AlbertaEviction.com was all my own.

This site came about because of my own personal experience with so many evictions over the years. Now I hope it’s not a shock that a guy who educates landlords has had to evict a ton of tenants.

It should be more of a reality check.

Because just about every landlord I know has had to evict a tenant at some point in their career. Time and circumstances change situations and a perfect couple one year may be divorcing or laid off the next causing you the landlord problems as their problems trickle down.

It’s not uncommon for me to get emails from landlords telling me how they’ve had great tenants since they bought their first rental property five or even ten years previously, but suddenly they’re stuck evicting someone.

It can be a bit of a numbers game and the longer you own a property and the more tenants you have the better (or should I say worse) chance you have of getting a bad tenant.

In my case, I’ve just dealt with so many more tenants than the typical landlord that I’m that much more experienced with the negative aspect of the business.

Which bring me full circle back to my point about leases. One of the biggest problem so many landlords I helped through my eviction site had, was they used the wrong or if not wrong, a poor lease. Leases are not all created equal and the rules in various states, provinces and countries also vary making it important that your lease applies where your rental property is located.

An example of this is in my local area is that I recommend to landlords to only use “Fixed Term Leases” rather than “Month to Month Leases”. The reason being (at least in Alberta Canada) a landlord doesn’t need to renew a fixed term lease (find out local rules that apply in your area!).

“Fixed Term leases refer to leases with a start and end date, they can be as short as a one month term or as long as several years, but they have a defined end date.”

In English, that means that if I have a tenant who is constantly late with rent, doesn’t maintain the yard or I’m just not getting along with, once the lease term ends, I’m not obligated to renew it, they have to leave.

If instead I used a month to month leases that just rolls over with no fixed ending date, I require a valid reason to evict the tenant, so unless he is doing something in serious breach of my lease, I’m stuck!

The lesson from this is, understand your local tenancy laws and make sure your lease fits what’s best for you! You may not have the same rule about fixed versus month to month, but you need to understand what does apply and make sure your lease includes what benefits you the landlord the most.

Next step is to ensure you have a very specific lease for your region.

If you’re buying a generic lease from an Office supply chain, a corner store or downloading it off of the internet, it better apply specifically to your region.

Now just about any generic lease will work everywhere, but the problem is they are generic and they don’t contain the specifics you need to enforce them for your benefit.

If you can make your properties non-smoking, your lease needs to contain that information. If you don’t allow pets, your specific lease should state that. If you don’t want tenants to sublet rooms or the basement or a garage, your lease requires a clause stating the restriction.

I could go on and on, and I already have I believe, but I need to because it’s that important. Generic leases get you started, much like generic house plans are the building blocks for your dream home.

You need to fine-tune that lease much like you choose colors and materials if you are building a home, so it suits your needs and protects your interests.

It may require buying a lease from a local landlord association, it may require getting a custom lease created by a Real Estate specializing lawyer in the area or it could be somewhere in between. Just make sure it’s not generic!

For a reality check it should also not be a single page! My standard lease I’ve modified and edited over the years as rules change, is four pages long and uses a small font in order to contain all my clauses and information.

It’s that long because I try to cover everything!! And your lease should too!

Now onto the next priority.

Tenants – They Too Are Not All Created Equal

More reality checks for you, not all tenants are equal or will look after your property the same way.

That nice looking couple who seem so pleasant may be professional tenants who bilk landlords out of months worth of rent and understand how to live rent free for months or even years at a time by being smarter than their new landlord.

There are so many districts throughout the world that have set up very tenant friendly legislation that makes it virtually impossible to evict tenants in a timely fashion.

They’re set up to allow tenants to appeal or delay hearings month after month and even then they are awarded extra time to vacate. Professional tenants understand these rules and once they are in, they can cause havoc.

All while not paying, or while damaging your property or worse building drug labs or grow ops which you get stuck fixing later.

The lesson from this?

Screen your tenants diligently and rigorously. Create systems and processes where you check and double check the information applicants provide you.

This includes calling and verifying all references, previous landlords and contacts. I even go so far as to check online profiles for their Facebook, Twitter, Instagram and more to see who these people really are.

If you put in the effort up front to do all this fact checking, research and verification, you’ll find you can save yourself a ton of headaches going forward.

As my friend Julie The Street Smart Diva and I often talk about with students who have gone through our coaching programs, it’s far easier to let the wrong person in than it is to get that same person out.

Your job as a successful and educated landlord is to make sure you never let that wrong person in and makes sure they end up somewhere else while you reserve your property for the fantastic tenants you deserve!

The Final Lesson For Your First Rental Property

Create Systems! I just referenced this when talking about screening tenants!!

As new landlords and investors you have a ton to learn as you get started with your first rental property. From the incredibly important skill set of screening tenants to property maintenance and much more.

Some you may do yourself, some you may hand off to others to do, but long term, many of these processes need to be repeated over time. Often over and over as you own a property for years or expand your portfolio.

The challenge being, if it’s been a years since you last screened a tenant, can you remember all the steps?

If you happen to own several properties already and you’re ready to do your annual or semi annual inspections, do you know what furnace filter sizes to bring to replace at a specific property?

Do you know how many smoke detectors are in the property that take batteries and which kind of battery so you have them with you?

Or if you are adding a second or third property to your portfolio, what did you forget to do or ask the first time that you need to know for the next time?

Did you talk to your insurance people in advance to get the proper rental insurance in place?
Did you have a list of home inspectors you know and trust at the ready?
Did you have a list of requirements for your Realtor of what your next property needs to have?

These are just a few examples of the hundreds of questions that need to be answered as you maintain and expand your portfolio.

And yes it is a lot of work, initially at least. But that extra work at the beginning as you take notes gives you references and the start of check lists and the systems you need to streamline your landlord business going forward.

Once you get the basics of these processes down and in some semblance of order you’ll find it a helpful resource that you can go back to for years and years and that will make your land lording experience simpler, less stressful and ultimately more profitable!

Now just to tie all this together and to help make this easier to remember, I want to share with you what I call,

The Educated Landlord’s Mantra

1. Remember how hard it is to get them out (bad tenants)
2. Do your due diligence (on new properties & new tenants)
3. Trust your gut, but have processes (so you don’t forget steps or get caught in emotional decisions versus rational decisions)

If you can remember these three steps as you get started as a landlord, it will carry you forward many years!

Wrapping Up

So, those were my thoughts and words of advice about your first rental property, what would you add to this? I’d love to get some feedback from you, maybe share your advice or some lessons you’ve learned as you started in your Real Estate investing journey!

Just leave me a comment below and share any stories you could add and any feedback you might have! I look forward to your thoughts and will reply back to everyone!

Also, if you didn’t grab my guide The 7 Secrets of Successful Rental Properties yet, simply fill out the form below and you’ll get it emailed to you!

And finally, if you belong to a Real Estate group, know other landlords who this could help or could simply share this with people on your Facebook, LinkedIn or Twitter feed, I’d really appreciate it!

There are handy share buttons right at the bottom of the article and the more people we can share this with, the more successful and educated landlords we’ll have out there!

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