The Book on Managing Rental Properties

A Proven System for Finding, Screening, and Managing Tenants with Fewer Headaches and Maximum Profits

Brandon Turner, Heather Turner

• Publisher: BiggerPockets
• Year: 2015
• eBook ISBN: 9780990711728
• Topic: Business
• Subtopic: Real Estate
• Index: Business

Experience more freedom, less stress, and higher profits with this must-have real estate guide from the bestselling author of The Book on Rental Property Investing. No matter how great you are at finding real estate deals, you could lose everything if you don't manage your properties efficiently.But being a landlord doesn't have to mean endless phone calls, costly evictions, or daily frustrations with ungrateful tenants. Managing real estate can be fun—and the right toolkit will help you excel!!With the right tenants and tactics, becoming a landlord gives you more freedom, less drama, and higher profits from your real estate business. Whether you're a beginner looking for a quick guide or an experienced property manager, bestselling author and longtime BiggerPockets Podcast host Brandon Turner will give you the inside tour of his successful real estate business. Learn how he's been able to maximize profit, minimize stress, and have a blast in the process. With stories of his own industry wins and losses, Brandon will help you master the tools, tactics, and systems you need to manage your rentals?and supercharge your property management strategy. Inside, you'll learn how to:

• Boost your shot at success by 100x with a subtle mindset shift
  
• Attract the best tenants with low-cost strategies
  
• Spot the seven red flags in potential tenants
  
• Protect yourself with nineteen key rental lease provisions
  
• Find and retain tenants who pay on time
  
• Take the sting out of taxes, bookkeeping, and other paperwork
  
• And much more!
  

Chapter 1

SO YOU WANT TO BE A LANDLORD?

This book was written for anyone who wants to make more money, work less, and have fun doing it.

For anyone who wants to build wealth while still maintaining a life.

For anyone who wants to travel more, freak out less, spend more time with family; for anyone who wants to maintain stability while rocketing their net worth into the stratosphere.

That’s right, effective landlording can accomplish all these goals, and can do so in powerful ways. You might be a first-time landlord, just struggling to get started with your first rental house. Or perhaps you are an experienced property owner, looking to find better ways to maximize your time so you can spend quality hours with your family and friends. Or maybe you are a property manager, looking after other people’s properties for a fee and trying to improve your skills. Whatever your background is, if you want to improve your landlording skills, this book is for you.

We wrote this book for learners—people who don’t have all the answers but are continually trying to improve their skills and pick up new tricks. It’s for experimenters, those willing to hear new ideas and try them out in their own lives, willing to take the risk of trying something new to find a long-term solution to their problems. And it’s for hard workers, those who don’t believe success comes overnight, who are willing to get down and dirty, and not give up with the first failure.

In short, this book is for you. If you want to see the power that effective management can have on your real estate investments and on your personal life, keep reading.

About the Authors

The beginning years of marriage are often the most blissful. Romantic dates, chocolate gifts—and real estate?

That’s our story, anyway.

I (Brandon) first met Heather in college and instantly fell in love. That’s no exaggeration: I remember seeing her across the lawn from my dorm room, and I said to myself before ever meeting her, “That’s the woman I’m going to marry.” Less than four years later, we tied the knot in an outside ceremony in the middle of the Quinault Rainforest, two hours from Seattle, Washington. Instead of the traditional American story of getting solid jobs, moving to the suburbs, having 2.5 kids, and growing old, we decided to buck tradition and invest in real estate, foregoing law school to pick up a paint brush. After selling the home I had purchased before getting married, we bought a fixer-upper duplex together in the small logging town of Hoquiam, Washington, and immediately jumped into the world of landlording, knowing absolutely nothing about what that really meant—other than it sounded like a good idea.

(On a side note, that duplex, we soon discovered, had a very unique history. After repeated complaints from our tenants about people taking photos of the property, we learned that the duplex was the very first childhood home of Nirvana’s frontman Kurt Cobain, who lived in both halves of the duplex during his first two years of life. Sadly, this factoid does nothing for our business, but it’s a great conversation starter at parties and in landlording books!)

Over the next decade, we acquired more and more rentals while continuing to manage them ourselves. We made every mistake in the book (which you’ll hear about in the pages to come) and learned painful lessons along the way. However, we also discovered that landlording success is NOT a mystery. In fact, managing tenants is fairly routine once you learn how to do it correctly. We built relationships with other landlords to learn everything we could from their experiences, picked more brains than any person on earth should, read every landlording book we could get ahold of, and spent hundreds of hours learning and asking questions on the BiggerPockets Real Estate Forums.

Over time, we’ve gotten pretty good at this landlording thing. There is rarely a problem we haven’t encountered before, and most of this has become second nature. Recently, one of our close friends purchased a duplex for themselves in the same manner we originally did. As they began to ask us questions and we noticed them making the same mistakes we did, we realized how new and foreign this whole “landlording thing” must be for them. As we tried to recommend books they should read, people they should talk to, and paths they should take, it occurred to us that no book existed that perfectly described a step-by-step process on how to be a successful landlord. There are some books with good theories, some books with good stories, and some books with good tips, but we wanted to offer our friends and fellow landlords a book that laid everything out in an easy-to-follow guide.

Hence, The Book on Managing Rental Properties was conceived.

What This Book Will Teach You

This book will teach you how to effectively manage tenants in your rental properties. We’re going to share every trick, every tool, every system that we use to manage our rentals. You’ll learn how to run a business that allows you more freedom, less drama, and higher profits. We’ll share personal stories of the mistakes and successes we’ve had, as well as how you can succeed on this journey.

In Chapter 2 you are going to learn about the process of transitioning how you think about your landlording business. You’ll learn the subtle differences that separate those who manage properties as a “hobby” and those who manage properties like a business.

Chapter 3 is all about getting your property ready to rent and what you need to have in order before getting there. You’ll learn about the importance of market research in getting top dollar for your property. We’ll also talk about property condition and the mistakes many landlords make when trying to get their property rent-ready.

Chapter 4 will focus on the Fair Housing Laws and making sure you stay out of legal trouble in your landlording business.

In Chapter 5 you’ll learn how to market your property to get the most qualified applicants begging to rent from you. We’ll share the best advertising tips, locations, and processes for making sure your property is filled quickly.

Chapter 6 is all about saving you time when trying to pick tenants by mastering the art of “pre-screening.” You’ll learn how to apply the 80/20 rule to your landlording to help you weed out the duds and only deal with great prospects.

In Chapter 7 we’ll talk all about the application process, and include a sample application and other sample forms that you can use in your own business. We’ll walk you through each step of the screening process—including running background and credit checks, and obtaining references and verifying income—and go over the red flags to look for from tenants. We will also go over how to accept or deny an applicant.

Chapter 8 is all about the lease—but don’t worry, this isn’t a bunch of legal theory! This chapter is all about how to find a good lease, what to include, and how to protect yourself as a landlord. We have also included a sample lease for your reference.

Chapter 9 will introduce you to our system for managing tenants and dealing with day-to-day interactions with tenants, including every landlord’s favorite pastime: collecting rent and getting paid.

In Chapter 10 you are going to learn about handling the problems that will pop up in your landlording business—because there will be plenty of problems. It’s how you handle those problems that will define your landlording career.

Chapter 11 discusses the topic of bad tenants and how to remove them from your property, both through the legal system and through some controversial yet powerful strategies.

In Chapter 12 you’ll dive into the world of contractors, discovering the best way to find, harness, interact with, pay, and manage these individuals fundamental to your business.

When we get to Chapter 13, we’ll look at the process of moving a tenant out of your property, focusing on the strategies that will keep the most money in your bank account.

Chapter 14 will look at the organizational structure of your business, from the office supplies you must have on hand to the bookkeeping that will not only keep you organized, but legal and profitable.

In Chapter 15 we’ll wrap everything up by looking at thirteen principles for being an incredible landlord. We’ll pull together all the lessons gathered so far and make sure you are left feeling empowered to create a landlording business that will help you achieve your most ambitious life goals.

Finally, in the appendix of this book we have included samples of all the forms we use in our landlording business for your reference.

What This Book Won’t Cover

This book is geared toward the management side of residential rentals: how to be a landlord. As such, we will focus very little on the investment strategy side of things. We’re not going to teach you how to find incredible deals or how to finance those properties. We won’t spend time on how to acquire rentals, build an investment strategy, set goals, or analyze the numbers. These skills are incredibly important to have, so Brandon wrote an entire comprehensive book on this one subject titled The Book on Rental Property Investing. We highly encourage you to pick up a copy of that book as well if you are looking to build a real estate empire.

Furthermore, this book is not going to teach you a bunch of theories that don’t actually work. Everything in this book is actionable. It is designed to help give you tangible ideas for improving your landlording business based on our personal experience and the experiences of others within the BiggerPockets.com community.

What is Landlording?

Perhaps before going any deeper, we should all get on the same page. What exactly are we talking about here? What IS landlording?

Landlording, also known as property management, is defined for the purpose of this book as the business of protecting and growing one’s real estate investment through the careful placement and oversight of tenants. Now let’s break down that definition into several distinct parts.

Notice that the definition begins with the idea that landlording is a business. Whether you are managing one small rental property that you own or managing thousands of properties for hundreds of different owners, landlording IS a business. We’ll spend most of Chapter 2 talking about the concept of property management being a business versus being a hobby. You might be tempted to skip this chapter to get onto the actionable meat, but that would be a mistake. Looking back on our own lives, if there is one thing we would change, it would be to understand this fundamental concept from the start.

Next, the definition moves to that of “protecting one’s investment.” Most people have separated the idea of their “investment” from that of “management,” but we believe the two are one and the same. Landlording is an integral part of the investment and the driving force behind success. While you can invest in a lot of things (gold, stocks, mutual funds) without much management, real estate is a different beast. Its success is not dependent upon the market, but upon the manager. That’s right: Success in rental property investing is dependent upon the effective management of that asset. You could purchase an incredible real estate deal that would turn you from a mill worker to a millionaire, but without good management, you’ll be back at the mill in no time.

Now, management does more than just protect wealth, as the definition explains; it also gro...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Table of Contents
• Chapter 1: So You Want to be a Landlord?
• Chapter 2: The Eight Business Attributes of A Successful Landlord
• Chapter 3: Initial Steps
• Chapter 4: Fair Housing
• Chapter 5: Advertising Your Vacancy
• Chapter 6: Tenant Pre-Screening
• Chapter 7: The Application Process and Tenant Screening
• Chapter 8: Signing the Rental Contract
• Chapter 9: Managing Tenants
• Chapter 10: Dealing With Problems
• Chapter 11: Getting Rid of Bad Tenants
• Chapter 12: Dealing With Contractors
• Chapter 13: What To Do When Your Tenant Moves Out
• Chapter 14: Business Organization and Bookkeeping
• Chapter 15: Thirteen Principles for Being an Incredible Landlord
• Appendix
• Acknowledgments