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More Recommendations For Being a Great Hobby Landlord

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Meet everyone who will be living in the property.

Sometimes renters will hide someone who would not make a good impression - the belligerent father, the hellion kids, the crackhead. Meet everyone on the lease, not just the primary leaseholder. It also gives you more people to question and more people to contradict each other.

Establish a relationship with a handyman.

You DO NOT want to pay retail for every little fix that you need to make. Establish a relationship with someone who will work with you to minimize the cost of maintenance (you also do not want to be personally unstopping toilets, I assure you!) You provide the handyman a steady stream of work and he provides you flexibility and good rates. A good handyman will help you keep the property in good condition and plan for major future repairs.

Do NOT overextend yourself financially.

Investing is NOT the time to swing for the fences! Things go wrong in the rental market. Damage happens, houses sit vacant, rental rates drop and costs increase. If you start the process at the very edge of what you can afford, you are asking for serious trouble. We have always weather downturns well because we invested conservatively. We financed (Sorry Dave Ramsey!) but we never stretched ourselves to make the payments.

Do routine maintenance as you do emergency maintenance.

Work with your handyman to make sure he performs routine maintenance (such as replacing air filter and checking smoke detectors) as he performs call out maintenance. Or, if you have multiple properties near each other, perform routine maintenance on all in one trip. This can save you a great deal of money on travel time and future emergencies. If you allow air filters to get clogged, many renters will simply remove them and let your unit's coil's get clogged.

Allow renters you trust to perform basic maintenance.

We allow our best renters to perform basic maintenance (such as replacing air filters or clearing drains) and to provide us the receipt as a part of their rent payment. Buying an air filter is FAR cheaper than paying someone to go put it in. If they will put it in, I will gladly let them take the cost off their rent.

Use the 1% Rule.

I evaluate properties starting with the 1% Rule. I need to make 1% of the purchase price of the property in rent every month. For an $80,000 property, I have to rent it at $800/month. Consider the intangibles after this (if the area is trending up, maybe I can go a bit lower, if the area is trending down, I'm going to want to get more, maybe even 2% per month on a VERY low-end property.)

Inspect your properties on a regular schedule.

Professionals do this, but hobby landlords often do not. If you can "deputize" your handyman as your inspector, it is even better. You can save on travel for yourself and you can maintain distance from your renters.

Completely separate your charity work from your rental business.

Renting property is a business and MUST be kept professional. If you start doing charity for your renters, it can get out of hand and they can begin to think they can demand more and more. This can ONLY end badly!

Legally maximize your writeoffs.

Deduct from taxes EVERYTHING you legally can! Consider phones, computers, office equipment, office space in your house, lawn equipment, tools, mileage to and from properties, and meals related to rental business. Find a tax preparer who knows what can and can't be expensed.

Establish boundaries with your renters.

Have certain times and methods that you conduct your rental business. Do NOT let it intefere with your primary job or your life. Don't let them know your home address. Use a PO box for business. Do NOT meet them at your home, always meet them at the rental property.

Get good liability coverage.

One early renter went after my wife and me with a frivilous lawsuit. We turned it over to our insurance company and they went to bat defending us! The renter quickly backed down. I am SO thankful we had that coverage.

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