How To Become A Landlord At 25
How To Become A Landlord, Millennial Style
I didn’t plan it. The goal wasn’t to become a millennial landlord, it just sort of fell into my lap, didn’t even know how to become a landlord. I have had GREAT tenants and I’ve had bad tenants. Get ready to hear about both, and what you need to know before, during, and after renting to tenants.
This is going to be a multi-part series where I write about my experience renting out rooms. My steps into renting out the property to strangers who I don’t know. As well as other millennials who own real estate and their successes and learning curve on how to become a land lord.
How It All Happened
I built a home on the lake starting at 24, and it was completed when I was 25. What’s a guy to do with a home too big for just himself? I could afford the payments and still save for retirement, but wouldn’t those rooms be better if they were making money for me as well?
First came my brother, the guy is a real champ, almost as cool as me. He decided to move to the Dallas Fort Worth area and moved in with me. Then came a family friend who I had known for 20+ years, you’ve never met a sweeter, more kind-hearted person. She needed a place to stay while she went back to school for another degree. Naturally I said of course, a house isn’t a home until you fill it with people you enjoy! Almost a year later I had another person move in who I had known for about 7 years but was more of an acquaintance.
This allowed me to pay almost the entire mortgage with rent! By taking advantage of people moving to the Dallas Fort Worth I was able to help out people who needed a place to stay as well as bring in passive income increasing my millennial net worth.
I certainly wouldn’t have expected to be doing this when I built the house but it has provided me with opportunities I wouldn’t have been able to do otherwise. How to become a landlord may seem hard but with this article I will give you the main points on doing it the right way. Learn from my experience!
Make Everyone Sign A Contract
I went 2 for 3 on this one. I wish I had known this before instead of now writing how to become a landlord and knowing it now. The first two tenants turned out amazing and I had them sign contracts. The third not so much, I didn’t make them sign a contract before they moved in and it has caused problems since day one. Pro-rating for moving in early, safety deposit, how often they needed to clean up after their pet, when their move out date was etc. It’s a literal nightmare.
Make sure you make EVERYONE sign a contract. I made my twin brother sign a contract. Business is business and your personal life is your personal life. When it comes to learning how to become a landlord make sure you keep them as FAR away from each other as you can. They’ll touch and overlap every once and awhile but do your best to not let that happen.
What A Great Tenant Looks Like
A wonderful tenant has great credit, a stable job and a stable mind. One of my tenants was a mid twenties college student going back for another degree. She kept to herself, never made a mess, and had a great credit score to back herself up with. She was polite when I met her and she is still sweet as pie now.
Most importantly, she always paid on time or early, and never minded doing more than her share of the housework when others were slacking a bit. You really can’t ask for someone better than this. It’s a dream come true to see that there are great renters out there who will treat your property as their own. It makes being a Millennial landlord a lot easier than you’d think. How to become a landlord? Find these clients and never let them go!
An Ok Tenant Grumbles
I’m going to be totally upfront on this one. The ok tenant was my brother, my TWIN brother. We know each other pretty well you could say, and we know just how far we can push each other. Because of this he knew that he could get away with leaving things out, not doing ALL of the housework he should have. Knowing that I was going to cover it anyway.
He still has great credit, often paid months in advance, and made sure that he kept his room tidy. Would I have loved for him to clean as much as I did? Of course but if he would have done that we would have cleaned the paint off the walls! I’m a bit of a neat freak when it comes to my things.
An ok tenant will make you lose a little sleep but overall when they move out all you’ll have to do is a deep clean and you should be fine.
The Tenant You Don’t Want
There are rules you have to follow when tenants apply to live in your property. Discrimination is real and shouldn’t happen, it’s 2017 for goodness sake. BUT there are a few things that I will tell you are red flags for a tenant you don’t want.
A bad credit score, specifically anything under 600 is a huge red flag. The only way you should be renting to them is if they have good previous landlord referrals and can put down multiple months up front. That way if they forget to pay you can start the eviction process and still have last month/months rent ahead of time.
Knowing how to become a landlord involves knowing your tenant types. A wildcard everyone enjoys hanging out with a wildcard now and again. Not so much living with one. If you are going to be living at the property as well just know you are in for a trip. They may show up to sleep, they may not. It may be at 1 in the morning every night when they get home. If you’ve ever been over to their place its usually not clean and you’ll have heard “I just got back from a trip” “I’ve been working overtime and haven’t had the time” etc. This is something you wouldn’t think twice about as a friend, but as a potential landlord this is a huge red flag.
A stable mind is just as important as a stable job. That fun friend you hang out with every once and awhile usually over drinks. That person may be doing that every night with different people. Having addictions is a real thing in todays society. whether that be food, drugs, booze, any addiction is bad and can cause a landlord to feel uncertain.
If you have to think twice about how someone will treat your property why would you rent to them? If you worry about them letting their pet in when you’re not home, why rent to them? Worried about what they’ll do when you’re not there? WHY RENT TO THEM?
It’s your property, it is your millennial landlord of a choice. Make sure you stick to your guns, you can still be friends with them, and that doesn’t mean you have to let them live with you.
Pets, Pets, Pets
Who doesn’t love a cute little puppy or kitten?! kittens are adorable little fluff balls. They also poop and make noise, sometimes when you don’t want them too. Puppies also slowly destroy everything inside of a home by just living there. Think of an indoor dog as that one college roommate that never cleaned up after themselves. It’s not Fido’s fault, it is the owners. I HIGHLY recommend having a no pets policy. As adorable as they are they are total carnage on your property. Whether that be inside or outside.
My personal experience with allowing one dog, who was a total sweetheart live at the property. In short he got really bored being outside all day by himself. “idle hands are the devils” is an old saying but still rings true. He decided he’d dig for fun, I wish it would have been one big hole but instead it was a lots of small holes all around the yard. He scratched the back door up not because he was trying to make my life miserable but because he wanted attention.
It is NOT the dogs fault, it is just doing exactly what it is suppose to by how it was raised. In short, I won’t be getting my money back on the damages that it has caused. I didn’t charge a large enough safety deposit. So I have to hope that the tenant fixes everything as best they can.
If you are renting to someone with an animal and have no other choice make sure you charge a LARGE deposit for the dog and make sure the rent is adjusted as well. They will tear stuff up, they will break things, its going to happen.
Make sure you clearly define in the contract what the dog can and can’t do. How often the tenant will need to clean up after the pet etc. Being overly specific is your friend on this one. TRUST ME.
Living With Family Or Friends
Being a millennial landlord comes with its own set of challenges. Living with family or friends can make those challenges much more difficult. Keeping your personal life separate from your business life is hard enough as it is without people saying they want a discount, to waive the late payment fee, etc.
What To Do When A Tenant Leaves
One of the smartest thing you can do as a millennial landlord is do a walk through of the property BEFORE and AFTER. By marking everything that is there before they move in gives you the knowledge of what is damaged and what was already there. That way when you do the final walk through no one can say “oh well that was there before we moved in.” Making sure you cross all your t’s and dot all of your i’s is so crucial to a smooth transaction.
Afterwards make sure you deep clean the place and fix, patch, anything that needs fixing. Always try to have other tenants lined up. You don’t want to be stuck paying two mortgages at the same time. Save up enough money to cover damages and when things go wrong. Like the A/C going out or the washer breaking and flooding the place.
When Is The Time To Sell
These are the steps on how to become a landlord. I’m selling my house and the reasons are coming to you next week so don’t forget to check back next Monday!