by: Matt @ Home & Pocket
January 18, 2025
So you want to have a rental property – Huh.
After years of wanting, waiting, and dreaming – I finally got my first rental property to add to my investment portfolio.
This article is a simple review of my first 6-months into my first rental property – a SINGLE-FAMILY, fairly new build house (less than 5 years old).
Granted it was a home I lived in for four years. It was not one I bought and immediately turned into a rental.
However, i knew when buying I would “never” sell or at a MINIMUM hold for years to come for several reasons:
- I was one of the lucky beneficiaries of the 2020 “COVID” mortgage rate winners (2-ish percent).
- the location in Tennessee – A growing market in the U.S.
- I didn’t and won’t need access to the home equity for years to come – hopefully!
Those three areas combined are what make this rental property a good long-term investment for me. Below are a few things I found to be crucial during the first 6-months of a new property rental.
Several things I’ve experienced and learned in the first 6-months of renting:
- A good property management team is key:
I can not stress this one enough. I also know that this is probably the most debated point I will bring up in this article. I went back and forth on whether or not I was going to hire a property manager (PM). I may have managed the property myself if I was closer, but I didn’t have the ability this time.
A few key things I was looking for from my PM team was Time Savings, Tenant Screening, and Maintenance. Now, I could have done all of these things myself with some self education. However, I lacked the first thing – “Time”.
Rates across the country range from 8%-12% of your monthly rent and I currently pay 10% which is average. I believe for 10% I am getting my money worth of time savings, maintenance support, and a decent -ish tenant.
Below: Property Management Fees in the U.S.A according to Homeguide.com
- A SEPARATE rental property account is necessary:
This is probably the second most significant thing I did preparing for a rental and during the course of the rental.
As well as the most important thing to ensure financial peace of mind.
I was about 18 months away from putting my house up for rent. I made the decision to keep the house LONG-TERM.
That decision was made easier based on those three factors I listed above. After that, I opened a separate bank account.
It was a checking account with a different national bank that I didn’t currently use. I wanted to ensure i had access and customer support available anywhere.
This allowed me to do Two Things:
- Begin saving for the future financial unknowns of a rental property. I knew enough to say, I don’t know what this is going to be like. And I was right. My goal was to save 1.5% of the home value – Plus two months of mortgage payments. This plan was to prepare for basic maintenance and cleaning. It would get the house ready for rent. Additionally, it included having a couple of months of mortgage saved off to the side, in case the house didn’t rent immediately.
Ultimately, I’m glad I did this because it worked out and helped me alot.
The house did rent immediately, but I had more maintenance than anticipated. All was able to be covered from my new rental home bank account.
- Keep my rental and personal finances separate for accounting and managing purposes. Like I demonstrated above, by keeping my rental and personal finances separate, I was able to account for and manage the rental property easier. This is something I hope will make taxes and future payments and maintenance smoothers.
More From Home & Pocket on Investing and Housing Trends:
local friends / family to check on the house: It’s nice having friends still in the area who can do a quick drive-by the property to ensure everything is “ok”.
Now, this isn’t a must have nor a necessary but it is nice to have extra eyes on your investment.
Not that I don’t trust the property manager but, “trust but verify.” I do recommend that YOU personally check on your property a couple of times a year.
Because of my job in the military, I’m a bit hamstrung on my ability to get back there.
Hence the property manager. Still, it is important to have friends or family in the areas to conduct a simple drive by, especially after storms, or local construction events.
- long-term outlook on why you own a rental
I do believe this is an important thing to keep in mind for nothing more than to keep you focused. These first six-months have been a roller coaster for all sorts of reasons but it’s important to not get emotional about the small things.
According to GOBankingRate.com, “the average monthly repair maintenance for the U.S. Homes are $168”.
The small ankle bitter maintenance issues or random tenant issues have been more than I anticipated. However, I have remained cash flow positive on the property every month and that is the important thing for me.
As you can see above, the average monthly repair cost is shown at $168. Lucky I’ve stayed below that when averaged out monthly. And that is the important thing, keep things in perspective.
Sometimes I think there shouldn’t be any maintenance cost because I’m not living there. However, someone is and it’s still your house.
Ultimately, the first six months of my first rental property has been successful.
I planned for 18-months prior to making my primary residence a rental property which allowed me to have some financial peace of mind. Maintenance and minor tenant issues have been the biggest issues thus far.
However, those seem minor as being and maintaining cash flow positive months have been the primary goal.
More to follow as I continue to track and monitor the second half of the year and close out my first year in property rental.
As Always, Thanks For Reading And Be Sure To Subscribe Below.
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