After reading Part 1 of this series, I am sure you are thinking something along the lines of “That sounds great and all but being a landlord is a lot of work”. Or maybe you’re thinking “I have no experience in real estate, how can I possibly be a landlord?”. You aren’t the only one. These thoughts and many more were cruising through our heads as well, but you can’t let them stop you.

Be Ready to Learn

Now take this with a grain of salt because Jake and I have only been landlords for 6 months now, so we are still learning everyday. That being said, we jump on every opportunity to further our education to be better real estate investors and smarter landlords.

Our go-to site for all thing real estate related is BiggerPockets. We use this website to network with other landlords and ask questions that we cannot find clear answers to. This is also how we were connected to our lender and our real estate agent. There are ample blog posts that cover all topics related to real estate. The member forum is where you can post your questions and browse past questions to gain insight.

The host of the BiggerPockets Real Estate podcast, Brandon Turner, has written many books that helped us learn a lot more about the topic. Our two favorites being The Book on Rental Property Investing and The Book on Managing Rental Properties. Both books go in-depth on the topic with actionable tips and touch on real life examples to help you get a better grasp on rental properties.

Another great resource is Meetup. This allows you to search for local real estate meetups so you can network with landlords in your area and get their experience and expertise on the topic. This was incredibly helpful for us in gaining confidence as well as asking state specific landlord questions.

Lastly, we would even recommend joining Facebook groups that are made up of landlords in your area. You would be surprised how many Facebook groups there are out there. I would bet that there is at least one landlord group local to you, if not, try joining one for the city or town closest to you.

There will be on the spot learning and improvising, but you want to set yourself up for success by gathering all the advice you can so you can make smart landlord decisions when the time comes.

But What About All The Responsibilities?

Well, that’s kind of part of it. Yes, you will have to maintain the property and deal with tenants however assuming you are using one of the loans we discussed in The House Hacking Series: Part 1, you will be living on the property so you really aren’t going too far out of your way.

Some examples of the responsibilities you take on when you become a landlord include:

1. Finding & Screening Tenants
2. Staying compliant with local & federal laws
3. Answering maintenance requests
4. Lawn care/snow removal

These may sound intimidating but that is why it is important to do you research before buying and also build up a network of other real estate investors who have dealt with these before so you can ask them questions and for help if needed.

There is also the option of hiring a third-party to outsource these tasks to, a property management company. Property managers usually charge between 8-10% of rent income. This is an expense you should always add into your calculations when assessing a property, even if you don’t plan to have a manager.

Different property managers cover different scopes of work. For example, you could hire a property manager to only take care of snow removal after any major storm or on the flip side you could hire a property manager to take care of all landlord responsibilities. That being said, you are still the property owner and still should stay informed on what is going since it is your asset.

While Jake and I live at our first house hack, we are managing our property on our own. We plan to continue to do this even when we move out however we think it will be easier to manage since we will have had the first hand experience managing it while being residents.

But What If I Have Awful Tenants?

We get it. This thought is always in the back of any landlords head. With evictions being so costly not only for legal fees but for the lack of rent payments, you want to do everything you can to avoid that.

This is why it is vital to screen all potential tenants. This begins with your ad posting. Whether on Craigslist, Facebook Marketplace or even just a flyer, you want to make sure you are advertising to your ideal tenant.

A great example we found was when a landlord had a listing for an open apartment. This landlord specifically said multiple times that “Good character is a top consideration for application. Tenants must be honest and considerate of others.” then the landlord went further into how they would benefit the tenant stating that “In exchange, I strive to be an honest, considerate landlord of good character myself.” This shows that not only does the landlord care about the tenant, but that all other tenants living in the property will also mosely likely be good people therefore attracting a good tenant.

You should always screen your tenants. This is why landlords charge an application fee. That money is covering a background check and credit check. These are great indicators on whether or not these will be successful tenants. We have heard horror stories of landlords who thought someone seemed nice so they rented to them without any background checksband it ended in an eviction.

Background checks can help uncover any criminal history and credit checks can help you determine if the tenant has had some financial struggles in the past. Both of these will provide great insight on the individual so you can make a well-educated decision on whether or not they would be the right fit for your property.

Some questions to always make sure you are asking the candidate include:

1. Income Verification (monthly income should be at least 3x rent expense)
2. Employer (a stable job that they have been at for a longer period of time is preferred)
3. Prior residences (always call their past landlords for referrals)

A good screening service will cover these for you and make the process relatively painless. There are many of these, we would recommend asking local landlords what they use because laws vary between states. Just keep in mind you want to ask all candidates the same questions to comply with the Fair Housing Act.

Another way of screening is social media. This sounds creepy, we know, but this could save you in the long run. You never know what someone could be really be like. By looking on a social media platform, you could see what their real behavior is like. Even a simple google search can help unravel a serious history on the potential tenant.

Be Prepared

Jake and I have gotten lucky (knock on wood), all of our tenants have been great thus far. That being said, we are prepared for the worst as everyone should be. This is why having an emergency fund specifically for the house is key. You should keep at least three months (3-6 months is recommended) worth of total rent income in a liquid account just incase something happens. You can save this in the same account as your capital expenditures savings or a different one, as long as you are saving for both. We will dive deeper into what CAPEX is in Part 3 of this series.

BONUS: When potential tenants are stopping by to see the place in person, be sure to sneak out and take a peek inside their car. This is a tip passed down to us by many landlords who say if the car is a mess, the apartment will be a mess. This cannot be a reason why you are rejecting a tenant and you must ensure to always stay compliant with your local and federal laws regarding landlord discrimination.

Final Thoughts

Although it might be scary, being a landlord is a great learning experience. Maybe you try it for a year while you live at the property and then decide its not your forte and want to hire out. That’s totally fine. Or maybe you discover it is one of your hidden talents. More power to ya! All in all, the best way to be a successful landlord is to just continue educating yourself on the topic and network with those around you who are in the same boat. And never forget to hope for the best, but prepare for the worst.

Thanks for sticking around til the end! Keep an eye out next Monday for Part 3 of this series where we will discuss finding and analyzing deals.