I’m of the mindset, “cut the crap, and get to the chase”. So that is exactly what I’ll do. We are going to pick right up on step 5!
Step 5: Property Acquisition
So, by now you should have conversations with all of your team members. You have a good idea of how much money you can spend, what it repayment of that debt will look like, and the area in which you want to invest. Now its time, this is where it becomes real. Over the next days, weeks, or months, you will be going to showings, looking at the current properties for sale, and looking for some key points:
- What sort of shape is the property in?;
- What sort of people would want to live in this property?;
- Most important, would you live in this property (after potential renovations)?
All three of those points are crucial. But I am going to focus on the 3rd. The reason being, you are not just getting into the landlord business. This is a real estate, investment, hospitality, and PEOPLE business. Without people, you make NO MONEY. So you need to ensure that if you had to live in this property, you would be comfortable and happy, because that is how you need your tenants to feel. What good is it to take money from hard working individuals, just to let them live in warn down, cold, and empty apartments. You are providing people with homes. As much as tenants need to respect your investment, you need to respect their time, money, and happiness.
Once you are satisfied with all three of the above points, you and your real estate advisor will go about putting an offer in, and going through the nitty gritty of making your dream property, yours. This will include inspections, multiple meetings, and stress. But don’t let that scare you. If this was easy, you wouldn’t have a job, because people would be buying the property for themselves. Now, the fun really begins!
Step 6: Get Tenant Ready
So now you have a property, and your swinging the key ring around like a true landlord. Congrats. This is a huge deal! But don’t wait too long. The harsh reality is, the bank doesn’t care that you have to find tenants, they will demand mortgage payments. So lets go over a couple scenarios you may be:
- You purchased a property, that requires little, to no work to be ready for move-in.
- You purchased a property, that does require work, be it, flooring, demolition, or full painting.
Both of the above scenarios are an amazing spot to be in, one is no better than the other! So lets fast-forward to when you are satisfied with the property, you are ready to start leasing! Here are somethings you need to do before you start looking for tenants:
- Ensure all locks are functional, and you have at least 5 keys.
- Sign up for consumer credit reporting services, in Canada, I use Naborly. This way I can see credit, and criminal history of all potential tenants.
- Sign up for property management software, I use TenantCloud to manage tenants, maintenance, and leases.
- Find a lease template. In Nova Scotia, our provincial government provides a template.
Once you’ve got these in place, you’re ready for the next step!
Step 7: Tenant Acquisition
This can be an intimidating step, but it doesn’t have to be. There are many resources available to market your apartment. For example, in Canada, we often use Kijiji and Facebook Marketplace. However the best bet is to source out a leasing agent / property management company, like us! What that means is, we would take care of listing, marketing, and finding you a tenant. You can even keep as part of your awesome team, to manage your apartment and tenants.
With that being said, I won’t blame you if you want to take this part on yourself, it can be fun for some. Just remember to use those handy tools I suggested in Step 6.
Now, we are both business minded, that’s why we are in these shoes. With that being said, I can’t tell you everything to do, otherwise I might put myself out. But I can say there are some key points you want to see in potential tenants:
- Income (how much money do they make)
- Debt (how much money do they owe)
- Will they have enough to pay you?
- Criminal history
- Rental history
- Overall attitudes
Now that last point is what I’ll call, “Risky”. Meaning, you can’t judge a book by its cover, someone may be having a bad day. It’s also no reason to deny someone. So be careful, as you can get yourself into some legal trouble if you discriminate.
Once you have decided on a tenant, you will build up a lease, I usually operate on a 12 month, fixed lease. Ensure you specify everything that you, and the tenant are responsible for, so there is never any question.
Set a move in date, and congratulate your tenant. You’re both going to be taking a journey together, this is an exciting time.
Make it special for your tenant, be there on move-in day, greet them, ask them if they need anything. A nice touch is a congrats card, with perhaps a grocery store gift card. They can help a lot when moving, and it is a tax write off.
Step 8: Managing the Property and Tenancy
At this point you are by no means coasting. There are many things that you need to think of everyday, here are some:
- Ensuring rent is paid;
- Ensuring all your bills are paid;
- Tenant is happy and doing okay;
- Are there any maintenance requests?;
Congrats! You’re a landlord!
What an amazing accomplishment! You have gone from dreaming, to planning, to DOING! Now make sure you stay involved, stay curious, and don’t get cocky. This business requires stern compassion. Be there for tenants when they need you, but don’t go broke doing it.
This of course was not a conclusive guide to this business, but it’s the closest I can get, while providing a readable overview, that is raw, real, and honest.
Things will come up, and you wont know what to do. It happens to me all the time. Luckily there are resources, including us. We can help with all your property management, tenancy and leasing needs! Sorry for the shameless plug, someone had to do it!
Again I thank you all for taking the time to read, and perhaps even learn a little bit. As always I invite you to like our Facebook page, and subscribe to our blog!