In this video, I'm going to
discuss the eight things that I wish I knew before becoming a landlord.
Why this is so important is because purchasing the property
is only half the battle.
If you miss, manage the property, you will not get the return that you want.
These things are critical to your cashflow, so stay tuned.
The first thing is to run your credit and background check.
And while this may seem obvious
to some of you,
and I thought that
it seemed obvious to myself as well, but when the person that walks
through your door
that's a potential tenant tells you they're in a hurry to move in,
they have three months worth of rent in advance that they can give you.
Sometimes you let your guard down
and you think, well, if they have three months worth of rent,
you know, there's no reason for me to not move them in.
And a background check and all the hassle of it might seem silly to you,
but you cannot do that because that is how you get yourself in trouble.
And that actually happened to me.
I had a guy come in, he seemed like a great tenant.
He had a three months worth of rent.
I told him, Sure, yeah, you can move in.
I'll send you the lease while I get home.
And Ken's like, Absolutely not.
You have to do the background checks.
I told the guy, Listen, it's only going to take a day or two.
I have to do the background check
where he informed me he would not pass a background check.
It's a red flag when somebody is trying to give you
a bunch of money in advance
or trying to get you to waive the background check,
you have to run it. You have to set your credit limits
very clear and your debt to income very clear.
You don't want any wiggle room because you're
looking for the perfect tenant and you will find them eventually.
The number two thing I wish I would have known
before I started to be a landlord is you have to verify they're income
and you can do this through paychecks or you can do this through a bank account
and you can do it through both if you're a little bit suspicious.
So I've had both of these scenarios happen, right
where I have some somebody give me a pay stub,
the pay stubs just look a little funny or I just feel like
I haven't heard of the company.
Then tell them I need to see your bank account
for the last six months that these checks were deposited then.
And in both situations the people can't provide me
with their bank account for me to be able to look and see the checks.
Also, a lot of people are entrepreneurs nowadays,
so they may not have a W2 consistent paycheck
and then you definitely want to get six months worth of bank statements,
make sure that they have some kind of stable income
if they're going to live in your property,
because that's how you're going to come into a bind if they can't pay you
or if they're doing some illegal things out of your property.
Number three tip.
And a lot of these are about move in
because the move in process is almost the most important process
of the whole tenant process is getting the right tenant in there.
So there's number three is to charge an application fee.
You want to charge an application fee
because you want to get rid of all the people that know
they're not going to pass a background check.
If you make it free, then people kind of think, well,
I probably won't pass a background check, but why not just roll the dice?
But when you start making application fee 50, $60, that's a real investment.
So now, now people are thinking to themselves, I'm
probably not going to pass the, you know, credit check.
It's a $60 application fee.
I don't want to lose that money, so I'm just not going to waste anybody's time.
Item number four, get a good security deposit.
So typically what is recommended is one month's rent.
And I think that's a good starting point for your security deposit.
A couple of recommendations
with a security deposit
for one, in most states, you have to have it back to them within 30 days.
So if you know your tenant's moving out, you don't want to wait to schedule
a handyman.
You want that person there the day that they move out,
move out, you really want to walk the unit with them.
Sometimes tenants don't want to do that.
Sometimes they don't have time on the last day
that they're moving out to walk the unit with you.
Either way, you have to have pictures because you can't say
there was a big crack in the wall.
If you don't have a picture to show that if they're going to take you to court.
Secondly, something that I learned from Ken that I didn't do right away,
but I do now.
So initially I told people, oh, hey, you know, yeah,
if you want to patch the walls, that'll save you 5000 bucks.
Is that if they don't do a good enough job, you're going to have to hire
a professional anyways and then they're going to be angry
because then they just patch the walls.
So I always do a nonrefundable cleaning deposit.
Leave it to the professionals that you choose.
Don't leave it to your tenant.
The next point here is email communication.
So I still with
some of my tenants have text communication because that's how I started.
But moving forward,
email communication is a better way to communicate with your tenants.
This is because on text things, things can get too casual
and you want to keep it really professional.
So if you just let them know, I can be reached, you know,
via email here, unless it's an emergency, then you can call or text me.
Then they kind of understand the baseline emails are just
going to always be more professional communication.
Point number six is online rent payments.
So for the most part, the days of picking up a checker done while
I still do this for one of my tenants, everybody else pays me online.
It's so much easier, but you have to be careful what platform you use.
So I like to use Zelle.
It goes to the bank, it's nonrefundable.
I know people that have tried to use Venmo,
but the problem with Venmo is they always seem to side with the sender.
And even though they have a you know, a policy
we're after, I think it's two months, you can't get refunded the money.
They tend to blow by that.
And just for fun the sender anyways also when it comes to rent payments, make sure
that if your tenants are late on rent, you're charging them the late fee.
And if you don't enforce that late fee, the tenant could argue they didn't think
you were necessarily going to enforce the lease for other things like evictions
because you didn't enforce the other parts of the lease like the late fee.
Number seven, be clear on what repairs are covered.
So I'm actually struggling with this as we speak
because I've not done a good job at this on the lease.
It needs to be very clear
what the landlord is going to pay for and what the tenant is going to pay for.
When I started, I basically was fixing everything and all the units
because I never had an issue with anybody taking advantage.
I now have somebody taking advantage, but it's not clear in my lease
what I should be paying for and what they should be paying for.
Everyone's responsibility needs to be laid out in the lease,
so it is very clear to each party what they're responsible for.
Point number eight, your tenants are not your friends.
Let me just repeat that.
Your tenants are not your friends.
I've made this mistake before.
I think a lot of people make this mistake when they first start being a landlord.
You have a lot of different kinds of relationship ups in life.
You have like a coworker relationship, a boss employee relationship,
a tenant relationship, and it doesn't mean you can't be friendly.
I'd say all my tenants think that I'm very friendly,
but I'm not their friend, and that is because issues could come up later.
Legal issues or issues where there's a disagreement
about what you think should happen and what they think should happen.
You need to be able to have that respect from them that you can sit down
in a business setting and hash out whatever disagreement you may have.
They may have a bill from the HRA
because they did something against community rules,
but they think that you should pay it and not them.
They may be a weekly add on rent because they're behind on their bills.
All of these things can and will come up during your lease
and if you're too good of friends
with them and you're sending them emojis and Ella Wells and her has they don't
take you seriously and they're going to try to take advantage of you.
You need to know that you're in control.
This is your property, but you do have to go by the law
and the lease and the lease should make all of those decisions.
But sometimes that can be an uncomfortable conversation.
Please post your craziest landlord stories in the comments.
I would love to read them.