You’ve Bought Your First Property—Now What? Pt 2

This is part two of a two part post. Read Part One >>>

Being a landlord isn’t always sunshine and rainbows, especially when you’re just starting out. Whether it’s the maintenance costs, paperwork, troublesome tenants, or some mixture of all three, you’re bound to have questions.

We spoke with the Bryan Jenkins, the principal broker of the property management company AHI, to shed a little light on your doubts. Below you’ll find a comprehensive list of new landlords’ frequently asked questions and Jenkins answers to each.

Oh, and if you haven’t already, check out the first part of this topic for even more insider tips.

What is the biggest mistake new landlords make?

Micromanagement. It’s an easy mistake to make. You want to save every dime, and that’s a good thing. But it creates problems down the road if you don’t keep it in check.

A little while back, a door broke on one of our investor’s properties. He had to know if there was a replacement option $20 cheaper, what warranties were available, the contractor’s experience level, etc. He even tried to FaceTime the contractor while he was at Home Depot just to help pick out the door.

To some, that might not sound so terrible. Just being thorough, right? Well, Alabama has rainy seasons, and because he extended the repair process so much, it took three or four times what it should have. That meant more damage to the home from the rain, and less tenant satisfaction.

The investor had to pay more for the repairs, and when the tenant moved out, he was responsible for term costs, tenant acquisition fees, leasing fees, etc. Micromanagement is never worth it in the end.

How can I make my property stand out?

That’s easy. Curb appeal. You could have the nicest home in all of Alabama, but if your lawn isn’t up to par, it won’t make much of a difference.

AHI does lawn care once every two weeks, though we’ll add extra maintenance here or there if it needs it.

Should I ask my turnkey provider for properties that are already occupied?

It depends. On one hand, you can avoid a lot of fees if the home already has a tenant. You won’t have to touch everything up, add more lawn costs, or deal with the stress of finding new renters.

On the other hand, you might miss investment opportunities. ROI Turnkey, for example, will honor that request unless the waitlist is long, properties are few, and a less picky investor is interested in the same home. A lot of turnkey providers do it that way, so weigh the risks when making that request.

What surprises come six months in?

When the tenant moves in, everything changes. It takes a lot of work to maintain a good relationship with the tenant, but it’s the most important thing. We’re focused on building that from the day the tenant applies until after they’ve moved out. The trick is getting your tenants to stay as long as possible—so long as they’re well behaved.

We’ve had tenants who’ve become home-owner clients because they loved the way we did business. That’s the highest form of flattery.

As a property manager, what do you expect from the landlord?

I expect homeowners to take care of their homes, just like it’s the one they live in. I’ve had some look at chipping paint or damaged tiles and say, “I’m not going to replace that. It’s just a rental.” Homeowners can’t expect tenants to pay top dollar for their properties—and renew the leases—if the landlord isn’t willing to do basic maintenance. If you wouldn’t live in a property like that, why would you expect your tenant to?

Our landlords sign a statement of agreement that certifies they’ll have the property professionally cleaned so it can be show-ready.

What if the tenant causes damage?

It’s never a happy conversation, but it has to be done. We invoice them, and if they don’t pay, we take it out of their security deposit.

If everyone—landlord included—agrees, we’ll look at setting up a payment plan for the bigger expenses. That way, the renter has more affordable options.

We also require renter’s insurance, so the larger fixes usually take care of themselves.

How do you handle tenants who don’t pay their rent?

Don’t worry, it doesn’t happen very often. We deal with about 1,000 properties between our five offices, and on average, only five or six evictions occur.

We initially start with installments, seeing if we can work out some sort of system that’ll allow the tenant to catch up in a timely manner. Of course, wage garnishments are always an option, too.

But if that doesn’t work, we’re not afraid to evict. At the end of the day, our goal is to get that property to someone who will actually pay, whether the current tenant has to leave voluntarily or involuntarily.

I’ve nicknamed this process The Ballet because it becomes a bit of a dance from here. You have to tiptoe between giving the tenant some flexibility and holding your ground.

If you draw a line in the sand, stand behind it. Make sure whatever agreement you make with the tenant stays. Don’t let them constantly renegotiate.

A good property management company already has everything set up for eviction, even in the negotiation phase. If anything goes south, you can be ready to get another tenant moved in as soon as possible.

Any final, parting thoughts?

Ultimately, it’s all about balance. Find a property management company that creates a business environment while still maintaining good relationships. They need to be understanding yet firm. That’s what sets property management companies apart from others, and that’s what will set you apart as a new landlord.

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