Cameron Cowan | Knowledge Steward
New investor? Many of our members are either new to the family business or are new rental housing entirely. First off, welcome to the industry and welcome to RHAWA! As a new investor, it can seem overwhelming at first to figure out what to do and how to navigate this industry. There is plenty of information on line and not all of it is necessary for the new investor.
ou don't need to incorporate right away
Ultimately, you have to decide with your CPA and Attorney if incorporation is right for you. However, for most people just starting out, a corporation is just extra taxes, extra paperwork, and record keeping that's simply unnecessary for the small beginning investor. As your portfolio grows, it may make sense to incorporate at that time. However, don't cause yourself the extra paperwork right now. Your just getting started in your rental housing journey. Don't burden yourself down right now with the extra paperwork.
Property Management Software
Here at RHAWA we love simplicity because for most of our members, they don't need an expensive and fancy property management software. In "Keeping Track of the Money" Sharon Cunnington teaches you how to manage your business using an Excel spreadsheet with several tabs. You can even create pivot tables around your data to find out where your money is going. Using that resource (that you likely already have or can get easily) you can keep your business going. Many people start out with a simple ledger book and keep track of their income, expenses, and tenant records. Put down your credit card, don't pay for a fancy software and keep it simple with a ledger book or excel. Besides, why learn yet another new thing?
A website/social media
Having a great website and a presence on social media is important. And eventually, it will be important to have these things in place but right now at the early stages, these are distractions that can be a real time-waste when you're trying to get your business setup and your house or building rented while complying with all laws. Once things have leveled off, then worry about these online properties.
3 Things You Should Do Instead
Take some important RHAWA classes
If you are new the rental housing industry there are some classes that you should sign up for right away: Intro to Landlord Tenant Law, Coping with Seattle's Newest Laws (if you're in Seattle) Managing Your Rentals, and Taking Care of Your Tenants. These classes are regularly offered and help give new landlords a solid foundation in rental housing. These classes go over common problems, questions, and situations that you will soon face.
Get your landlord book together
Just because you're not buying a property management software doesn't mean you don't need to track some things! You do need a tenant ledger to record maintenance requests, rent payments (and dates) and other notes on your tenants. You do need to keep track of your income and expenses as well as your receipts.
Keep your capital up
Expenses will come along. Hot water heaters will go out, appliances will fail, and other problems may occur. You need to be prepared to solve those problems in a timely manner according to the law here in Washington. Even if it's a credit card that you only use for the rentals, keep that open and available so that you can solve problems as they come along. If you can stash away cash, even better. Each month, put some of the rent away in a separate account for those emergencies. This puts you a position to handle whatever might come along.