7 Handy Tips for a First-Time Landlord

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Purchasing a rental property is a long-term investment that can create a significant nest egg for retirement. It’s also more hands-on than other investment types because you’ll have to actively manage the home until you sell it. 

The idea is that you’ll buy a second home, apartment, or condo and rent it out instead of living in it. Your renters will pay for your mortgage and many other expenses associated with the property while it builds equity. 

You can then sell the home once you pay off the mortgage or use the rent you receive as your monthly income in retirement. The arrangement is win-win because renters need somewhere to live, and you want to earn a return on your investment. 

Renting your property to a complete stranger comes with challenges, though, especially if you’ve never been in this situation before. This guide provides some tips a first-time landlord can follow to make the process a little more straightforward.

Benefits of Buying a Rental Property

You’ll want to determine if becoming a landlord is right for you before you begin. Rental properties can be lucrative, but they aren’t for everyone. Some benefits of becoming a landlord include the following:

Tax Advantages

Landlords can receive tax perks on their investments because the rental property isn’t subject to income or self-employment taxes. Your property could also benefit from devaluation, which could lower your annual tax burden. Deductions on insurance, mortgage interest, property tax, maintenance fees, and advertising may also be available. 

Cash Flow

Your rental property provides a consistent cash flow as long as you have tenants paying rent. Most of this cash will go toward your mortgage, property taxes, utilities, and maintenance fees to start, but it becomes income once you pay off the mortgage or own the property outright. Your cash flows are far more predictable than with other investments, too, since you set the amount you’ll charge monthly.

Property Value Appreciation

Rental properties typically appreciate over time, leaving you with a more valuable investment than the one you purchased. You’ll have to pay capital gains tax on this appreciation, but it’s worth the extra tax if the home appreciates significantly over the years. 

Becoming a landlord won’t create instant wealth, but renting out residential real estate can be a steady income source that could appreciate significantly over the years. The result is a nest egg in retirement that you can sell or continue to rent out later in life.

7 Items to Include on a First-Time Landlord Checklist

Becoming a landlord can be stressful because there’s a learning curve. You don’t want to forget to cover any aspects as you rent your property for the first time because this home is a significant part of your future. Here are some first-time landlord tips you’ll want to consider:

1. Complete Safety Checks

An unsafe property could open you up to lawsuits, so you’ll want to ensure the walls, stairs, floors, and roofs are in excellent condition and well-maintained. Tending to the plumbing, ventilation, HVAC system, and water heater is also an essential part of renting your home. The property should have working smoke and carbon monoxide detectors, too, and you’ll want to check the batteries to ensure their functionality. 

2. Clean and Make Repairs

Landlords should deal with any repairs that arise at the property immediately. These repairs could make the place unsafe to live in, and you could experience problems collecting rent from your tenants if you don’t keep the home in excellent condition. Thoroughly cleaning the house before your first tenants arrive is recommended to start the relationship on the right foot.

3. Write a Proper Lease Agreement

Creating a valid lease agreement is a vital part of becoming a landlord. This document includes the rules a tenant must follow when living on the property. It also provides the terms for things like maintenance, damages, pets, deposits, rental amounts, rental duration, and limitations for your tenants. Failure to write a high-quality lease agreement could leave you in a tough spot legally if the tenancy goes awry. 

4. Install New Locks

You probably don’t know who lived in the home before you bought it, so replacing the locks is advisable. Your tenants don’t want past residents showing up in the house or, worse yet, robbing them, but new locks can help eliminate that possibility. 

5. Vet Applicants

Vetting any applicants you’re seriously considering renting to is crucial to becoming a landlord. The vetting process includes speaking with past landlords, collecting employment information, and looking at credit history. This information helps you make better decisions about who will be living in the house you’ve spent your hard-earned money to purchase. 

6. Set a Price

Figuring out how much to charge is an important piece of the landlord puzzle. You don’t want to set it so high that it eliminates most candidates in your area, but putting it too low could attract less-than-desirable applicants. The sweet spot will be based on the current market in your area, so it will depend on the neighborhood and type of property.

7. Collect Damage Deposits and Rent

Determining the amount you’ll charge for a damage deposit and how you’ll manage it is vital before your tenants move into the home. You’ll also want to figure out how and when you’ll collect rent each month, and you might ask for the first and last months’ rent up front. 

Following these first-time landlord tips can help set you up for success as you get your rental property up and running. It’s a lot of work, but the payoff is worth it once you own the property outright.

Get the Help You Need Managing Your Property

It’s easy to be overwhelmed as a first-time landlord, but assistance is available. A property management firm can take care of the extra work, so all you have to do is sit back and collect income from your investment. 

Nomadic Real Estate offers property management services in the Greater D.C. area. Our team of experienced professionals can handle nearly every part of the landlord process, including maintenance, vetting, and collecting rent, eliminating a massive workload from your plate. Contact Nomadic Real Estate for more information on our property management services.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.