Have you recently invested in a rental property?
This is the beginning of a profitable and educational investment experience, and to ensure your own success, let’s make sure you get off to the right start.
What you do in the days, weeks, and months after your purchase your property can determine what kind of investment experience you have.
Once you’ve closed on your first property, there are a series of steps you’ll want to take right out of the gate. As professional property managers, we can show you how to protect your investment, prepare it for tenants, and set yourself up for long-term profitability.
Quick Overview:
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Organize your time now that you’re an investor. Buying a property is going to require an adjustment in both time management and mindset. You’ve taken on new responsibilities.
It’s important that you begin to think like a business owner. Every choice you make should tie back to your investment goals, which should include steady cash flow, equity growth, and risk management.
Secure Your Investment
The very first thing you should do after closing is protect your property. This means addressing safety, liability, and financial risk right away. Change any locks or security codes. Even if the seller swears they handed over all keys, assume others may still have access. There could be contractors, former tenants, neighbors, or even real estate agents walking around with a key to your property. Changing the locks (or rekeying them) is a low-cost, high-priority step. If the property has keypads, smart locks, or garage door openers, reset them immediately.
Address immediate safety issues. Walk through the property with a critical eye. Look for hazards like:
- Loose railings or stairs
- Missing smoke and carbon monoxide detectors
- Broken locks or unsecured windows
- Trip hazards in common areas or on sidewalks
Correcting safety issues quickly helps you avoid costly liability claims.
Review Your Insurance Coverage
You should have purchased landlord or dwelling insurance before closing, and now’s the time to double-check your coverage. Make sure your policy protects against:
- Fire and water damage
- Liability if a tenant or visitor gets injured
- Loss of rental income
If you purchased an investment property through a lender, they may also require additional flood or hazard insurance. Work with a qualified insurance agent who understands investment properties. We can make a referral if you need expert advice.
Run the Numbers and Know Your Math
Now that you own the property, it’s time to run the numbers with real-world data instead of estimates. Gather what you know about:
- Mortgage Payment. Verify the exact monthly amount, including escrow for taxes and insurance.
- Utilities. Contact utility companies to find out average monthly costs. If tenants pay utilities, set up accounts to cover periods of vacancy.
- Property Taxes. Confirm the current tax bill with your county assessor, as assessments can change after a sale.
- Maintenance & Reserves. You’ll need to have some money for maintenance. A good rule of thumb is to set aside 5–10% of rental income for ongoing maintenance and another 5–10% for capital expenditures such as roof and HVAC system replacements. You never want to be wondering how you’ll pay for a repair.
Compare these figures to your expected rental income. Does your cash flow still look healthy? If not, you may need to adjust your rent strategy or expense planning.
Find Your Property Management Partner
If you’re not already working with an expert property manager who knows the local market and has gathered years of industry expertise, now is the time to establish this relationship. Self-management is an option, but you’ll have to sacrifice your time, commit to a lot of effort, and remain available to both the needs of your property and your tenants.
When you work with a property manager, you can enjoy a hands-off rental experience. You’ll have access to professional tenant screening, leasing, and maintenance systems. And you’ll find you’re dealing with fewer vacancies, less tenant turnover, and fewer legal mistakes.
As a first-time investor, your choice depends on your goals. Now that you’ve bought the property, do you want a learning curve, or would you rather have an expert lease, manage, and maintain your property from Day One?
Invest in Strategic Repairs and Upgrades
Before you list your property for rent, take time to make improvements that will attract quality tenants and maximize rental income. Necessary repairs include anything that’s broken or unsafe. Leaky faucets, broken outlets, damaged flooring; all these things must be addressed before tenants move in.
Once the necessities are addressed, think about value-add upgrades. Small cosmetic improvements can deliver higher rents. Think fresh paint, new light fixtures, or updated cabinet hardware. Modern tenants are looking for energy efficiency and smart home technology as well.
You don’t have to over-renovate. As a new investor, it’s tempting to upgrade everything. But not every market supports granite countertops or stainless-steel appliances. Focus on cost-effective updates that provide the best return on investment.
Pricing and Marketing
Pricing rent correctly is essential. If the rental value is too high, your property will likely be vacant for longer than you’d like. If you price it too low, you’re simply losing money. You’re also not going to have an easy time raising the rent to market rates.
Do your homework. Get some reliable market data from a property manager.
Once it’s priced correctly, think about your marketing. A great property won’t rent itself. You need to attract qualified tenants. Create a strong listing with high-quality photos in good lighting. Write a clear, engaging description that highlights features.
Remember that tenants are constantly scrolling through listings. You have to make sure you stand apart from the competition.
Screen and Place Qualified Tenants
Moving on, one of the things you’ll have to really focus on after buying the investment property is filling it.
You need tenants.
You need good tenants.
Tenant selection is one of the most important parts of being a landlord. The wrong tenant can cost you thousands in unpaid rent, property damage, and legal fees. Here’s how we help owners screen carefully:
- Credit check (look for consistent on-time payments)
- Income verification (typically 3x monthly rent)
- Rental history (contact prior landlords)
- Background check (within legal limits)
Follow fair housing laws and apply the same screening criteria to every applicant to avoid discrimination claims. In California, when you collect an application fee, you’re required to screen applications in the order that they’re received and accept the first applicant who meets all your criteria. This illustrates the importance of a good property management partnership. Not all new rental property owners understand the legal complications that come with renting out property in California.
Use a Strong Lease Agreement
Never rely on a generic lease template from the internet. Your lease should comply with California’s strict laws and protect your interests as an owner.
Key elements to include:
- Rent amount, due date, and late fee policy
- Security deposit terms and conditions
- Maintenance responsibilities
- Rules on pets, smoking, and subletting
- Clear procedures for lease termination and eviction
Be sure your lease references whether your property is bound to rent stabilization laws or exempt from them. Contact us for help in putting together something that can be easily enforced.
Plan for the Long Term
Your first property is just the beginning. To build wealth through real estate, think beyond this one deal and put together a strategy that will allow you to grow your portfolio. Track performance and monitor your cash flow. Look for opportunities to optimize what you’re earning and to make a new acquisition. Stay on top of market trends and industry best practices.
Consult with your management partner.
Buying your first investment property is exciting, especially if you’ve been planning this type of move for a long time. Smart investors understand that buying the property is just the first step in your journey as a real estate investor. What you do next will determine whether your property becomes a steady income-producing asset or a source of stress and an ongoing loss.
By securing your investment, understanding your numbers, setting up systems that will allow you to price, market, and screen, and treating your rental like a business, you’ll have a good shot at success and ease.
Remember that you don’t have to do everything on your own. We’re here to help, and we’ve worked with investors like you many times before. Please contact us at Real Property Management Choice.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
