You’ve Bought Your First Property—Now What? Pt 1

This is part one of a two part post. After 8/8/18 you can read part two >>>

Congratulations, you bought your first property. You spent time researching different markets, analyzing data, and meeting with different turnkey providers to find the best deal. All the hard work is done, right?

The work of investing is over, but now you’re a landlord, and that’s a whole different ballgame. There’s only one way to keep everything running smoothly: strong property management.

We sat down with Bryan Jenkins, the principal broker of the property management firm AHI, and asked him the questions on every new landlord’s mind. He explained the steps his company takes to ensure his clients’ smooth transition from investor to landlord. Follow these surefire tips, and you’ll run into fewer problems, regardless of your property management choice.

There are so many property managers out there. How do I know I’ve chosen the right one?

Your property manager should, above all else, be concerned with maintaining good relationships, not just good homes. After all, a happy tenant equals a happy landlord.

Find a property manager who focuses on building a strong relationship with the tenant. If the renter’s happy, they’re far less likely to leave. That means you don’t have to take care of as many maintenance costs, vacancy issues, and—let’s be honest—headaches.

Of course, that doesn’t mean your property manager should give the tenant free rein, either. If your manager can be firm yet friendly, you’ve probably made a good choice.

How do I deal with all the tasks and paperwork before closing?

A lot of property managers say, “Once you’ve closed, give me a call and we’ll work from there.” That’s not a bad approach, per se, but if you can find a better option, go for it. All the paperwork before the closing date gets overwhelming, especially if you’re a first-time investor.

AHI walks you through the process. We line up the inspection, appraisal, and closing date. It usually takes a week between the appraisal and close, and in that timeframe, our management gets the paperwork to the client and answers any questions. On the property management side, it only takes two days to finish the rest of the paperwork. Then the property is ready to close.

We transfer the ownership to you on that day, so if it’s an occupied property, you’re legally cash flowing immediately afterward.

Few property managers help with the home inspector process, the appraisals, and due diligence. If you can find a company that will do that, hold on tight.

Will my property come with marketing photos?

That depends on your specific property manager and turnkey company, but hopefully, yes. You’ll save yourself a lot of trouble in the long run. Just think of how valuable it would be to have photos of your property right after it’s been renovated—no existing tenants or damage.

I know all new ROI properties come with 3D Matterport photos, floor plans, and aerial photography. Those are great marketing tools when you’re between tenants. That way, vacancies are minimized.

What big surprises should I expect?

Some landlords are a little surprised by the cost of getting everything set up. Fortunately, some property management companies offer a little leeway.

Here’s how AHI does it: If it’s an occupied property, you’ll receive a prorated rent check via your owner portal. If it’s a vacant property, we pull our leasing fee out of the first full rent check, not the prorated one, so you can have a little cash flow going.

What does the maintenance process look like?

First, your property manager should check the warranty. If your property has recently been renovated, there’s a good chance you won’t have to pay anything. If it’s not under warranty, we dispatch our vendors to take care of the problem.

How do you choose your contractors?

AHI aims for mid-size contractors. We don’t want the glitziest ones because they’re rarely worth the money, but we’re not about to use Bubba Joe’s uncle’s brother’s pop-up shop in the alley, either.

Poor quality vendors will only cost you more money in the long run. Sometimes, you have to spend a little money to make more money. Real estate investing is about risk management for everyone involved.

Got more questions?

Becoming a landlord can be tough, and we’ve only covered the tip of the iceberg here. Don’t worry though, we’ve still got you covered. Check out the second part to You’ve Bought Your First Property—Now What? for answers to the rest of your questions.

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