7 Tips for New Landlords

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If you’re a new landlord, you’re filled with a mixture of excitement, anticipation, stress, and confusion. But don’t let the uncertainty weigh you down. With a few helpful tips, you can enjoy some immediate success and turn your investment into a cash-flowing asset that speeds up your wealth building process.


  • Buy for Cash Flow

If your only experience buying real estate is buying a primary residence for your family, it’s easy to go into the investment search process with the wrong mentality. You can’t let factors like newly renovated kitchens, lots of square footage, and beautiful backyards sway you. 

Instead, you have to remove your emotions (and, in many cases, your stylistic preferences) and focus on the objective numbers. Cash flow is the only thing that matters.

A rental property is an investment – nothing more. If it gives you a good ROI (and looks poised to do so for many years), it’s a good investment. If it does not produce steady monthly cash flow at a substantial rate, then it’s no good. 

  • Screen Tenants Carefully

If buying the right property is the number one goal, putting the right people in your property is the second most important factor. This means investing in careful and thorough tenant screening. 

When screening tenants, you have to take your time. Don’t accept the first rental application that lands in your inbox. Slow down and study the applications and do a little research. While you obviously have to adhere to the Fair Housing Act (FHA) and avoid discriminating based on characteristics like race or religion, there are plenty of legal means by which you can evaluate an applicant. 

This includes running a background check, verifying income, speaking with past landlords, and meeting in person. 

  • Stick to Your Guns

As a landlord, you have to be firm and consistent. Your tenant isn’t your friend. You don’t have to be rude, but you have to maintain a professional relationship and project your authority. If you have a rule in place, make sure you enforce it.

For example, if you charge a $25 late fee when rent isn’t paid by the fifth of each month, don’t pick and choose when you apply the fee. Charge your tenant an extra $25 the very first time they miss. If you don’t, then you give them some leeway to miss again in the future (with the expectation that you’ll be just as lenient). 

  • Hire a Property Manager

Unless you have a lot of free time in your schedule and are fine fielding tenant phone calls, personally screening all of your applicants, and doing your own accounting, you may want to hire a property management company

For a very affordable fee, they streamline all of the time-consuming, mundane tasks that typically eat up most of a landlord’s schedule. They also have expertise that most landlords lack. And as you scale up and add additional properties, their role becomes increasingly important in allowing you to build a business.

  • Save Up an Emergency Fund

For each property you own, you ideally want to get to a point where you have enough liquid cash set aside to cover operating expenses and holding costs for at least three to six months. This ensures you’ll never be at risk of losing the property, regardless of what happens. You can gradually build up this fund, but it’s highly recommended that you do so before taking any cash out for yourself.

  • Reinvest Your Profits

Once you’ve built an adequate emergency fund, you should consider reinvesting all of your net profit into a dedicated account for making future real estate investments. This allows you to buy a second property, then a third, etc. Buying those first couple of properties can be a slow build, but you’ll eventually have profits pouring in from multiple units. At this point, your portfolio can grow exponentially. 

  • Stay Organized

As your rental property portfolio grows, you begin to accumulate more and more paperwork. Between closing documents, mortgage statements, tax records, and lease agreements, you’ll have enough documents to fill a small storage unit. The key is to stay organized. Create a system and stick to it. (Better yet, rely on your property management company to do this on your behalf.)

Set Yourself Up for Success

Being a landlord isn’t as easy as it looks from the outside. However, it doesn’t have to be impossible, either. If you follow tips like these and proactively look for ways to protect and maximize, good things will happen. You won’t build wealth overnight, but the profits will compound and eventually put you on the path to success.

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