70 Leasing and Management Tips For Single-Family Investment Property

Leasing residential real estate is like any other business. There is a right way and a wrong way to do it.

If done correctly, it can be easy and profitable. If done incorrectly, it can be your worst nightmare. Listed below are the answers to some commonly asked questions when getting started in the leasing business.

How Do I Pick Good Rental Properties?

1. Always pick rental properties in the median price range.
2. Try to stay with 3-2-2 properties if possible.
3. Try to stay with single-family homes to start with.
4. Pick properties close to home to start with.
5. Always pick properties that have positive cash flow.
6. Pick properties that have some type of market advantage.

How and When Should I Try to Rent My Properties?

7. Try to rent new properties before you close on them.
8. Always rent occupied properties 15 to 21 days before move out date of old tenant. (Use monthly pop up file)
9. Never show your properties to prospective tenants until all major repairs are done, property is clean, and bad tenants are removed.
10. If your current tenant is a good tenant, have them show the property for you in return for quick release of deposit or other benefits.
11. Never have a real estate agent lease your property.
12. Invest in a For Lease sign. ($5.00 at Home Depot)
13. List your property for lease in a penny saver or local classified advertisement.
14. Purchase a telephone recorder and dictate a professional message onto it.

How Do I Write a Good ‘For Lease’ Ad?

15. If the home is in a good rental subdivision, start the ad with the name of the subdivision.
16. If the home is not in a good subdivision but is in a good school district, list the school district first (Alief, Fort Bend, etc.).
17. If the subdivision is not a good drawing point, start the ad with the section of city it is in (SW, NW, etc.).
18. Always say something about the cleanliness of the property and list any recent improvements (Very clean, new paint and carpet, etc.).
19. If the home is larger then 1600 sq. ft., list the square footage listed on the county tax rolls or other verifiable source.
20. List name and phone #’s to contact.
21. Finish the ad with the term “Individual”.

How Do I Know What Rate to Charge for Rent?

22. Look up all of the For Lease ads in the newspapers that are in the subdivision you are trying to lease in.
23. If you have enough time, place your first ad in the paper 30 days in advance. Take calls and evaluate the responses you get from the prospective tenants that call.
24. When prospects call about the property, tell them that the property that they are calling about has been leased, but that you have other properties in the same area. Ask them what price range they are interested in and what type of home. Tell them that you have one that sounds just like what they are looking for coming available soon. Explain that this property is nicer than the one in the paper and that it is $25.00 per month more. If they are still interested then give them the address of the property.
25. If this technique scares off your prospects then your advertised price is the maximum you can get.

How do I Pick Good Tenants?

26. When a tenant calls, take control of the conversation. Ask them what size home they are looking for, when they want to move in, where they live now, why they want to move, who is living with them, how good their credit is, do they have leasing references, etc.
27. If the property doesn’t sound right for them, tell them so. If it does sound right for them, start your sales pitch.
28. Tell them that you have a very nice home and that you are the kind of landlord that prides yourself in keeping it that way. Further explain that this is why you always take care in picking your tenants. You will find that the bad tenants will start to get nervous at this point and try to get off the phone. The good ones will respect this concern and ask you the requirements to lease your property.
29. You should always require them to furnish you with previous rental history and a credit report. This way they will know you are serious and will probably spill their guts to you about anything bad you might find out about them.
30. Require that they have been on the same job for at least 2 years. Verify this with their company’s personnel department. The rent should not be more than 25% of their gross monthly income.
31. Tell them up front that if there are any problems with part of their application that you might be able to work around them with a larger deposit.

How Can I do Credit Checks on Tenants?

32. You can sign up for tenant tracing companies, who, for a small fee will check the tenants’ credit and criminal history.

How Much Should I Require as Deposit?

33. Always require at least the amount equal to one month’s rent, and when possible, get more.
34. Whenever the tenant asks for any concessions on the terms of the lease, even ones you don’t mind giving, ask for more deposit.
35. Always require the entire deposit and first month’s rent up-front in cash, before you allow them to move in. Never ever be negotiable on this point!

How Can I Get My Tenants to Pay on Time?

36. Make a big point out of paying on time when you first negotiate the lease. Explain the late charges and inform them that you will collect them.
37. Set the late charge for 1st of the month if the rent is due on the first, and add a $5.00 per day additional late charge after that. Insist that they pay it if their check isn’t either in your hands or postmarked by the 1st of each month.
38. Stop accepting checks from anyone who bounces one on you. Always require they pay both the NSF charge and the late charge if they bounce a check on you.
39. Never take post-dated checks for a date any later than the first of the month. They usually bounce anyway, serving only to prevent you from starting eviction until you get the NSF check back from your bank.
40. For any tenants that are slow payers, send them a 3-day default letter if you don’t receive the rent by the first. Send a 3-day default letter to any and all tenants who haven’t paid by the 3rd of the month, even if they normally pay on time.
41. If you haven’t received a payment by the 1st, call the tenant on the phone and try to save them the late charge. Inform them that you haven’t received their payment yet, but if they will bring it to you today, you will waive their late charge.
42. Remember, in business many things are negotiable with the customer, but never the money!

How do I keep my repair costs down?

43. Buy properties that aren’t falling apart when you purchase them. Try to stay away from homes 30 years old or older.
44. Inspect your properties at least every 3 months. Tell the tenant that you need to change the A/C filter, and while you’re there, look around at everything.
45. Repair everything that is broken immediately before small problems turn into large ones that cost a lot. Note! This also lets the tenant know how you feel about your property, usually encouraging them to have more respect for it also.
46. Always respond to tenant’s complaints immediately and solve the problem completely. Nothing will create more tenant abuse than a landlord that doesn’t respond to their needs.
47. Always do preventive maintenance at least once a year, (caulking the tub, clean the A/C unit, paint, etc.).
48. Don’t require your tenants to pay any deductible on maintenance that is not their fault, unless they don’t inform you of the problem and it creates more damage.
49. Paint all of your homes the same color. This makes it easy to match the paint when it becomes necessary to do touch ups.
50. Use strong chemicals to remove spots on carpets. When carpets become too discolored to just clean, try having them dyed.
51. Pick good tenants that care about the home they live in, then keep the home in good condition so they don’t want to risk losing it.

How do You Keep From Being Driven Crazy by Tenants?

52. Proper preparation prevents poor performance.
53. Have prearranged maintenance contacts that will solve your problems for you.
54. Screen your phone calls with a phone recorder.
55. Never lose your cool and get mad. That just makes things worse. Instead, diffuse the situation by guaranteeing the tenant that you will do everything possible to solve the problem as soon as you can. Show sincere concern and keep them informed of the progress. Don’t make them call you for updates.

How do you evict a tenant?

56. Never harass the tenant in any way when they don’t pay. Stay as friendly as you can in the event they can get caught back up. Remember also that you still have to get them out of that house without them destroying it!
57. Deliver a notice of default in person with a witness, either by handing it to the tenant, leaving it in a conspicuous location inside the house, or delivering it by certified mail. Alternately you can pay a Constable $10.00 to do it for you.
58. Inform them that in accordance with the lease they signed, failure to bring current all past due rents, late charges, and penalties owed (listed below), or vacate the premise within 3 days, will force the Lessor to file Forcible Entry and Detainer.
59. If they don’t comply within 3 days, go to the local courthouse and file. They will give you a court date and notify your tenant to be there also.
60. On the court date, the judge will tell your tenant that they have five days to get out.
61. If they are not out within five days, go back to the courthouse and get a sheriff to go to the house and evict them.
62. If they are not gone by the time the sheriff gets there, he will put their belongings out in the street and you can change the locks.

How do You Manage Being an Out of Town Landlord?

63. You must get a local property manager to do it for you. Never try to manage the property yourself.
64. Set up strict requirements for the manager to follow and if he doesn’t follow them, then get someone else.
65. Look into Section 8 Housing as an alternative when the properties are in low rent areas.
66. Try to sell the home on a contract for deed or a lease purchase agreement.
What type of lease agreement should I use?
67. It is recommended that you use TREC or HAR preprinted forms. They cover most all contingencies and are written to follow Texas State laws.
68. For your convenience we have included a copy of a TREC Lease Agreement and Pet Agreement.
69. Also provided is a Lifestyles Unlimited® Inc. Rental Application and Rental Applicant Qualifications form.
70. These forms may be copied and used by you or your associates.

Comments

  1. kelly lewis says

    Thanks so much for these valuable tips. We are leasing out our first and only home that was my mothers. She passed in 2008 and it’s taken us a very long time to get it ready. I was wondering where the forms you mentioned at the end of these tips are? Those would come in very handy right now.

    Thanks again for shairng all your knowledge.

    Kelly

  2. I agree that it’s wise to choose single family properties when starting out. It might be tempting for some people to jump into the deep end, so to speak, with property management, but it’s smart to start slow. It’s certainly possible to work one’s way up in the future, so it’s smart to get a feel for things early on.

  3. These are all awesome tips, especially the ones dealing with rental rates. It can be hard to get a feel for how much you should be charging for an apartment. Good tenants can make or break the whole experience. I think it would be better to wait a bit longer than to settle with tenants who could cause drama. Thanks for sharing!

  4. This is an excellent list. I think there’s a lot to be said for the fact that most successful real estate investors/landlords that I know followed these guidelines (or similar ones) on their first few properties. Of course, some of the things on this list might differ depending on the market; especially if you’re in a vacation-home market like Orlando. Glad I came across this list though – I may link to it in one of my blog posts, if that’s okay. Thanks again!

  5. My husband and I are thinking of renting homes, and so I’m really glad I’ve found this helpful information! I know now that I should start with single family homes first, and pick the homes near us. I think we’ll have to do some digging for some good neighborhoods to start out with first, so thanks for this help! I feel more confident in this now!

  6. Great post!
    Thank you so much for sharing this post.

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