Congratulations on your recent purchase of your first rental property!
If you're like most people, buying your first rental property is a pretty big deal! There's a lot to think about now that the deal is done – from replacing the locks to getting it ready for tenants, to keeping track of all the money coming in and going out. But don't worry – we've got you covered.
Here are 10 things you should do after buying your first rental property. Happy renting!
Send out a welcome letter and gather tenants information
The first thing you should do after buying your first rental property is to send out a welcome letter to your new tenants. In this letter, be sure to include your contact information as well as the basics of what they can expect from you as their landlord.
We also always include directions for payment and maintenance requests.
You should also include a form for them to fill out with their contact information, so you have it on hand in case you need to reach them for any reason.
As part of this form, we also ask the tenants if there are any issues in their unit. While the inspection will have highlighted most of them, the tenants always have some additional issues that may not have been caught. This simple question could end up saving you a lot of money and bigger problems in the future.
Here is the welcome letter template that we use along with the tenant information form that we ask everyone to complete and submit.
Replace all the locks
The second thing you should do is get the locks changed. You never know who has keys to the property – the previous owner, old tenants, their friends, the real estate agent – and it's always better to err on the side of caution.
Getting the locks changed is a quick and easy way to give yourself and your tenants some peace of mind.
We usually recommend installing some form of smart lock. This could be Kwikset keys, which allow you to rekey the locks without the need for a locksmith, replacing all locks with keypads, or adding Landlord Locks which allow you to replace the key cylinder.
Review existing maintenance contracts
Make sure that you have all maintenance contracts on closing. From garbage removal to routine fire inspections and boiler maintenance, you want to make sure they are still valid, or find new ones if needed.
Tidy up the property
Now that you have the keys, it's time to do a first walk-through of the property as the new owner. If there was any furniture or stuff left behind at the property, now is the time to remove it.
You should also do a general cleaning of the buildings common spaces like hallways, elevators, basement and laundry rooms. Doing so will once again give you a chance to check for any maintenance issues that need to be addressed and make sure everything is in good working order.
It's very likely that the sellers may have ignore outdoor maintenance so take some time to clean up outside the building. Maintaining the lawn, cleaning up the gardens and trimming trees will give your new rental property the wow factor that it deserves, make your new tenants very happy and set the standard for what they can expect moving forward.
Get a security system installed
As a new landlord, one of your top priorities should be the safety and security of your tenants.
One way to do this is to get a security system installed in the building. This will not only make your tenants feel safer, but it will also deter criminals from even attempting to break into the property. Best of all, many insurance companies will give you a discount on your rate when you install the system!
There are many different types of security systems on the market, so be sure to do your research and find one that best meets the needs of your property.
Common security system features to look for include:
Cameras: These can be placed both inside and outside the property, giving you a complete view of what's going on at all times.
Alarms: Both door and window alarms will notify you (and often the police) if someone tries to break into the property.
Lights: Motion-activated lights are a great way to deter criminals, as they will immediately know that they have been seen.
Another way to help keep your tenants safe is to alert the local police department that there has been a change in ownership of the property. Most police departments have a special form for this purpose, which you can usually find on their website.
Address deficiencies noted in the inspection
As part of your due diligence when buying the property, you should have already inspected it and made a list of any repairs or renovations that need to be made. Now is the time to start ticking those items off your list!
This will include things like fixing any holes in the walls, repairing damaged flooring, addressing code deficiencies, and anything else that needs to be done to get the property up to both your standards and the city's requirements.
Before starting any of the work, make sure that you are fully aware of the code deficiencies so that you can properly address them. You don't want to get work done just to find out that it wasn't properly done!
If you're not sure how to complete the repairs yourself, don't worry! There are plenty of contractors out there who would be happy to help you get the job done. Just be sure to get multiple bids and references before hiring anyone, as you want to be sure you're getting a fair price for quality work.
In some cases, you may need to get necessary permits for some repairs or renovations you plan on making. Depending on the scope of work, you may need a building permit, a plumbing permit, or an electrical permit.
Again, it's important to be aware of the requirements before starting any work, as you don't want to get fined for doing something without a permit!
Review the tenants insurance policy
As the new landlord, you will want to be sure that your investment is protected in case of any accidents or damage. The best way to do this is to require that all tenants have their own renters insurance policy and review any existing leases to see the requirements.
The renters policy will generally cover their belongings against any common risks. Risks such as fire, flooding, theft and loss are typically covered by most policies.
Additionally, landlords require that tenants carry a policy with at least $100,000 in liability coverage. This will protect you if the tenant is sued for any reason while living in your property or if they cause any damages to your investment.
Be sure to review all existing policies carefully so that they meet the requirements of the lease, as you want to make sure that it is as comprehensive as possible.
You may also want to consider getting your own landlord insurance policy. This type of policy will protect you from things like fire damage, water damage, and even tenant defaults.
While it is not required, it is always a good idea to have as much protection as possible for your investment!
Hire a property manager
If you don't want to deal with the day-to-day tasks of being a landlord, then you may want to consider hiring a property manager.
A property manager can take care of all the little details for you, such as finding and screening tenants, collecting rent, handling maintenance and repair requests, and even taking care of evictions if necessary.
Some property management companies will even guarantee timely rent payments and cover damages to the property made by tenants that they matched. It's really a no-brainer!
While there is a cost associated with hiring a property manager, it can be well worth it in terms of both your time and your peace of mind.
And if you ever do have any questions or concerns, they will always be just a phone call away!
Set up a new bank account to manage your finances
Now that you're a landlord, it's important to keep track of all the money coming in and going out. This will help you stay organized and on top of your finances, and will make it easier to file your taxes at the end of the year.
One way to do this is to set up a new bank account that is dedicated solely to your rental property. This way, all of your income and expenses will be in one place and easy to track.
You may also want to consider using a software like QuickBooks or Freshbooks to help you keep track of everything. This can be especially helpful if you have multiple properties or tenants.
No matter how you choose to do it, just be sure to keep meticulous records so that you can stay on top of your finances!
Order some new furniture and appliances, if needed
You'll want to make sure that all existing appliances in your new property are working as intended. If there are any issues, determine if the cost of repairs outweighs the cost of purchasing new appliances.
Obviously, depending on the rental price you may want to purchase new appliances but you may be able to purchase used ones in working condition on your local classifieds site.
If you have any vacant units and plan on renting them out furnished, then you will need to order some new furniture. Be sure to get high-quality items that are stylish and comfortable, as you want your tenants to enjoy their stay.
You may also want to consider getting a few things that are specifically for tenant use, such as an extra set of keys, a welcome mat, or even a coffee maker.
These little touches can really make a difference in terms of making your tenants feel at home.
As a landlord, it's important to be prepared for the worse because anything that could go wrong. This means having a solid plan in place for things like repairs, evictions, and even property damage.
My goal is always to make sure that we can improve the property as much as possible quickly and without spending a lot of money. Starting by just cleaning up the property, gathering general information about your new tenants and finally addressing deficiencies are a great way to start and set the expectations for yourself as a new landlord.
So, there are obviously a lot of things to think about after you buy a rental property. But as long as you take the time to do your homework and plan ahead, you can be sure that your new investment will be a success! Just follow these 10 steps and you'll be on your way to becoming a successful landlord in no time.
If you still have questions, please don't hesitate to contact us directly and one of our investment specialists will be more than happy to answer any of your questions. They will also be able explain how ReDeal can help you reach your financial goals by investing on autopilot.