This post was co-written by fellow WAF, Megan, who is a licensed REALTOR. Learn more about Meg below.
As military families, we have the ability to not only buy homes with 0% down through the use of a VA Loan, but with how quickly we move in and out of homes, we have the opportunity to rent out our homes once we PCS with lower risk than civilians who are seeking out income properties.
When shopping for our home in Washington State while we were stationed at Joint Base Lewis-McChord, I never intended for it to be a rental. But a few things were in play that helped us feel good about renting:
- It was a total flip to a modern, clean design when we bought it.
- The footprint was good for the area.
- The landscaping was minimal.
- Our interest rate was low and the rental market was high, so we were able to list it for a profit.
Not everyone will have the same bullets that need to be checked. This first home served us as a test home for how we would like being landlords. There are many different ways to look at getting into income properties!
Preparing your home
The first question you will come to is, will you work with a property manager to manage your income property. A property manager would allow you to be more hands-off from the gate, or you can do it all yourself! This is not the right answer for everyone, but I chose the latter.
Make all necessary repairs
My goal was to make the home as good as new so that I could expect my renters to give it back to me in the same state. I made sure to patch all our holes and repaint any spots that needed touch-ups. If you are doing this part on your own, as a landlord and as a previous tenant, I cannot recommend quality paint enough! For some of the more major projects, like grout, I hired that out.
Make a decision on yard maintenance
Not only did we need to decide if we wanted to include lawn care into the lease, but we also took a look at our existing beds to see if our plants were well established and low maintenance for renters. If your landscaping is high maintenance, I would consider changing it to low-maintenance or preparing to send out landscapers a few times a year to maintain it as you would like.
Figuring out pricing
We comped all the homes in our area for rent, and then determined what we thought a realistic price could be for ours based on size, location, and age/style.
Megan: An important factor to add in when determining pricing and deciding if this is a good rental is, if you are sure that after expenses, your cash flow is at least enough to put 5-10% of monthly rent into a reserve account. While we don’t want them to, things will break and need to be replaced! Making sure you have extra set aside for when that unexpected hot water heater goes out, is how you will keep financial stress levels down!
We chose to allow pets but added a pet fee per what our state allows. Be sure to check what the laws of your state are. We additionally required a refundable security deposit that equaled the first month of rent.
Staging/Pictures
Megan: This is the MOST important part of getting the pricing you want. Quality, bright photos make all the difference. As well as staging. We’ve always gotten higher than market rents due to our staging.
If you are working with a PM, they are likely taking care of this for you but for doing it yourself, I would recommend being honest with your abilities and the market. I knew that I could take decent pictures and that we were in an easy rental market at the time that I listed so I did them on my own.
The Listing
I chose to list my rental on Zillow and do all of my processing through Zillow Rental Manager. It has been so crazy-easy to use. Through this site, I could schedule showings, run background checks on potential renters, and collect all payments – all at no cost!
Upkeep
Since we are doing this on our own, without a property manager, we have to be a little more hands-on. We made sure our neighbor knew to expect tenants to move next door and have our contact to keep an eye on things. We also have multiple contractors that we have worked with previously (nice part of hiring a crew to do those little fixes at the end!) on hand so we can call for any issues. And of course, make sure our renters have all of our information so that they can contact us if anything comes up. Thanks to a thorough weeding out process, we currently have amazing tenants!
Words of Wisdom!
When choosing a renter, it is wise to choose one whose take-home income is at least 3x the rent. That way you know that your renters won’t be financially strapped by your home, reducing the likelihood of them skipping payments or moving out sooner.
Megan: And be sure to call those references that you asked for on the application! The number of times that I’ve been saved because of something a reference has said is too many. Taking the time to find amazing tenants and not just the first who can make payment is what keeps you from having issues down the line.
There is definitely some risk involved when you become a landlord but hopefully, your experience is a great one, with as few issues as possible!
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Meet Megan
Megan is currently a licensed REALTOR® in Alaska and Florida where she assists people looking to buy, sell, or invest in real estate. She and her husband have a real estate portfolio consisting of long term multi family and short term single family rentals. She enjoys designing each space of homes they flip as well and they are always looking for the next project! Megan loves a good book, wine night, or Sunday football. Her favorite pastime though is soaking up all of the cuddles with her baby, Carter.
