What I Learned While Owning My First Rental Property

Here at MMRE Solutions, we have dealt with numerous rental properties over the course of our investment career. We’ve had a lot of experience dealing with tenants and what it takes to keep a rental property up and running. We know what works and what doesn’t. 

Here are just a few tips we’ve gathered over the years to help those who are just starting out or who are curious to see just what it takes to manage a project as big as a rental property. 

          1. It’s not as easy as it looks

We all have landlord stereotypes tucked away in the back of our brain. Forget it all. In order to squeeze every last drop of income out of your property requires an attentive eye and attention to detail. Many people who choose to be a landlord don’t realize how much work it is really  going to take. 

Now, before you go jumping into the deep end, consider whether or not you have the time and energy to take on such a task. Managing rental properties is a great way of creating passive income, but managing the property will not always be passive. 

          2. Stay on top of your numbers

• One thing that really helped us was digitizing everything. Receipts are incredibly easy to lose. So we found that by putting everything online that it was much easier to share with our teammates. In the beginning, Google Drive was our best friend, but as we got more and more properties, we found a more capable platform that could store all our files in one place. 

• Consistency is key. Taking the time to write down and review your income and expenses is going to save you a lot of time in the long run. I personally use Mint to keep track of all my numbers. Personal Capital is also a great one to use if you’re looking to branch out. 

• Keep your rental property business in a separate bank account. This makes it extremely easy to track where your money is going. When tax day rolls around your accountant will thank you. 

• When you come across anything you don’t know or understand, ask a professional. It will never hurt you or your business to ask for a little help every now and again.  

          3. It’s easy (and costly) to break the law

Many different states have unique individual laws regarding the relationship of the landlord and the tenant. As the landlord, it is in your best interest to familiarize yourself with the laws that apply to the state where you’re leasing.  

Some states have security deposit laws. These laws govern how much time you have to hold onto a security deposit once the tenant has left, assuming any expenses and repairs have been itemized. In some cases, if not returned during the specified time period, the tenant can come after you for double the security deposit.

This, of course, is just one example of many. Be sure to familiarize yourself with laws regarding eviction, and other regulatory requirements. 

          4. Know your tenants

Every one of my landlord friends came to me at one time or another to complain about their tenants. I would go as far to claim that many people that leave the business are because they couldn’t deal with the hassle of whiny tenants. But MMRE Solutions pushed through. Here’s what we learned:

• This is a very obvious solution, yet not many landlords actually do this. If you want to keep your tenants off your phone, make sure your property is in the best shape that it can be. That means, invest in your property. Spend that extra $200 to get a reliable appliance. If you take care of your tenants, they will take care of you. 
• Another option would be to look into government-sponsored programs that pays to rent to economically challenged families. Getting accepted into this program is difficult, so once that person is in they will want to stay in. The tenant is aware that if they trash your property they will be taken out of the program for good.  This acts as an incentive for them to be a good tenant. 
• One last program that has shown promise is forming a syndication of one form or another. I got a group of friends together and we bought a bigger property that generated enough income to pay for good property management. This way I get my share of the income and never get any calls from tenants. 

These are just a few tips we’ve picked up on over the years. If you have any more questions or want to learn more, give us a call at (770) 988-5655.

By: Mike Oborn