Congratulations, you just bought an investment property. You may be wondering what you do now. We’re talking about what you need to know if you’re new to rental property investing.
Do Your Due DiligenceYou’ll have 30 or 40 days between your contract and your closing date. You need to take care of all your due diligence in those critical first 14 days. In your first few weeks, you can back out of the contract if necessary. Take a look at the history of the house. Do an in depth inspection to determine whether this has been a rental property before. If there are tenants in it currently and it has been professionally managed, ask the management company for the maintenance records and the financials. With an investment property, you can see what the life of that home has been like. These properties are living and breathing. Some of the maintenance problems will be ongoing, and you’ll know what to expect. You can see trends and where money is being spent. If you’re working with a professional real estate company that can help you buy and manage the home, you’re at an advantage. They will look for water damage, faulty electrical issues, bad roofs, and things like HVAC and plumbing problems that can put a strain financially on your first year.
Buy a Home WarrantyNext, we recommend you get a home warranty. That’s going to cover the mechanicals in the house. If you buy the home and then two weeks later your furnace goes out, the warranty takes care of the cost after your $60 deductible.
Placing TenantsAs a new landlord, you’ll need to find a good tenant. Use an advertising service that will syndicate on all the popular rental sites. Have good, professional photos to use with your listing. Conduct due diligence so you know what you can get for rent. You need to know what good tenants will pay.
Leasing ProcessGet the tenant in there and make sure you collect a decent amount of security deposit and the first month’s rent. Require your tenant to have renter’s insurance and use a solid lease agreement. When property owners come to us with problem tenants, the first thing we look at is the lease. It’s hard to manage your property when your lease doesn’t include things like pests. We have a property right now that has mice in it and the lease has no provision for pests or who is responsible for managing them.
There’s a lot that goes into a strong lease. If you are new to investments, find good tenants and make sure you’re prepared to maintain the home. Spending $50 now can save you $500 or $5,000 in the future. If you have further questions about buying rental property or South Jordan property management, please contact us at Property Solutions of Utah.