You Bought the Property, Now What?

Have you purchased an investment property? 

Congratulations! Now what?

Whether you have purchased a single-family home, a duplex, or a multi-family unit, you’ve taken a huge step toward building wealth through real estate. But now comes the most important part: turning that property into a successful rental.

Owning an investment property only begins with the acquisition. It’s now time to ensure that you maximize your return on investment while minimizing the headaches that can come with renting out a home to tenants. There’s a lot of groundwork that needs to be done before you can find a tenant and start collecting rent.

As professional Albuquerque property managers, we have a lot of experience in helping new property owners get started. So we’ve put together this step-by-step guide, in which we will cover the essentials of what you should do after purchasing the property and before your first tenant moves in. From inspections and insurance to tenant screening and marketing, here’s everything you need to know to get your rental property ready.

Quick Summary: Inspect the property Make sure you have adequate insurance Find a property management partner Prepare to rent with proper pricing and marketing Make the home rent-ready Screen tenants  Sign the lease and the rental period begins

Step 1: Conduct Thorough Inspections

Before doing anything else, it’s crucial to conduct a detailed inspection of the property. Hopefully you’ve taken a good look at the home already, before you bought it. But even if you’ve already had an inspection done, this is a separate step to make sure everything is up to code and ready for tenants. You’re looking for three specific things during this inspection. You’re checking for structural issues, safety issues, and any potential environmental issues.

Structural and Mechanical Inspections You expect your property to be structurally sound and functional. Before you rent it out to tenants, you might notice some areas of concern that could use repairs or updates. The best way to get a complete idea of what you’re working with is to ensure the home will be safe and comfortable for tenants. Common issues to look for include foundation issues such as cracks, shifting, or water damage. You’ll want to take a look at your roof and the gutters, too. Ensure there are no leaks or blockages. Plumbing and electrical systems may have leaks, faulty wiring, or outdated systems that could cause problems for future tenants. Hiring a qualified home inspector or contractor to evaluate these systems is highly recommended. It might cost a little upfront, but it will save you from costly repairs later on. You want to be in the strongest possible starting position as you approach the rental market.

Safety Compliance In Albuquerque, like many places, there are codes and regulations related to rental properties. You cannot rent out a home that isn’t safe and habitable, so one of the first things you’ll need to do is make sure tenants can live there without being in jeopardy. Key legal requirements include functional smoke and carbon monoxide detectors, secure doors and windows, and safe electrical, plumbing, and ventilation systems. Check that the property complies with local ordinances regarding the proper placement of smoke and carbon monoxide detectors, exit routes, and emergency lighting. Proper locks on windows and doors are essential. They’ll need to open, close, and lock easily.

Environmental Considerations Depending on the property’s location, you might also need to check for environmental hazards like lead paint, asbestos, or radon.  Albuquerque is known for its unique climate and soil, which can sometimes lead to issues such as settling or moisture buildup, so addressing these concerns early on is key. You don’t want to come across environmental hazards once you have tenants in place and committed to a lease agreement.

Step 2: Secure Adequate and Proper Insurance

As an investor, securing the right insurance is crucial to protecting your property and your investment. You never know when something unexpected could happen, and while no one likes to dwell on the worst-case scenarios, it’s important to be prepared and covered.

Landlord insurance is a vital protection for property owners renting out real estate, as it covers a range of risks that traditional homeowners’ insurance doesn’t. The key components of landlord insurance include:

1. Property Damage Coverage. This protects your property from physical damage caused by events such as fire, vandalism, storms, or theft. It covers both the structure of the building and any furnishings or appliances provided to tenants, ensuring that repairs or replacements can be made without significant financial strain.
2. Liability Coverage. This helps protect you from legal and medical costs if a tenant or visitor is injured on your property due to maintenance issues or unsafe conditions. For example, if someone slips on a wet floor or trips on an uneven sidewalk, liability coverage helps cover their medical expenses and any legal fees if a lawsuit is filed.
3. Loss of Rent Coverage. If your property becomes uninhabitable due to damage (such as from a fire or storm), loss of rent coverage compensates you for the income you would have earned from renting the property. This ensures you’re not financially burdened during the repair process.

Overall, landlord insurance provides peace of mind by safeguarding your property and financial investment from unexpected costs and risks. Take time to shop around for different insurance providers to find the coverage that fits your needs.

Consider additional policies or riders such as flood insurance, especially if your property is in a flood zone or near the Rio Grande. Umbrella insurance can also be a valuable way to protect yourself against any extra liability protection in case of a large lawsuit.

Step 3: Hire a Property Manager in Albuquerque

You might think that property management isn’t really necessary until you’re ready to rent your new property. Honestly, the sooner you hire a property manager, the better your chances at finding a good tenant, establishing the right rent, and staying in compliance with all state and local laws around rental homes. Don’t wait. Partner with an Albuquerque property management partner as soon as you can.

Thinking about managing on your own? It’s possible, but if you want to avoid the common mistakes that new landlords make, we’d encourage you to re-consider the DIY route. Managing a rental property requires time and attention to detail, especially when it comes to tenant communication, maintenance requests, and handling late-night emergencies. As a new investor, you can benefit from a partnership with a professional property manager to take care of these tasks. 

There are dozens of benefits to hiring a professional. You get our expertise in tenant management. This is invaluable when it comes to screening effectively, enforcing leases, and providing the type of tenant satisfaction that ensures your rent is paid on time and your property is well-cared for.  

We save you time, too. Property managers handle the day-to-day operations like rent collection and accounting and maintenance coordination. We are always looking for ways to increase your earnings and reduce your expenses. The relationships we have with maintenance professionals and the technology we invest in to ensure we’re delivering the best services also lead owners towards higher earnings and less stress.

Property management is important, but make sure you’re choosing the right property manager. You’ll need an expert who is well-versed in Albuquerque’s rental laws and market. You want an industry professional who has deep ties to the local neighborhoods. We’d love for you to consider our team at Blue Door Realty. 

Step 4: Market and Price the Property

Once the property is ready, it’s time to find a tenant. But before you can attract renters, you need to set the right price and market your property effectively.

Pricing Pricing is one of the most important factors when renting out a property. If you just bought a property and you’re new to the rental market, the temptation is likely to be to set the rental price too high. You think you know what it’s worth. And you know how much money you want to make. The problem is this: the market really dictates your price. Not you. When you overprice your property, you risk long vacancies.  You don’t want to price too low, either. When you do that, you won’t maximize your return. You’ll essentially leave money on the table, and you’ll find it’s very difficult to come up to market rates once you start on the low end of the pricing range.  To determine the ideal rent price, research the current market in Albuquerque and look at similar properties in the area. You’re comparing property type and condition, but pricing is really dependent on neighborhood and zip code. While online sites such as Zillow can be a decent starting point, you really want the best data and most up-to-date numbers. For that, you’ll need your Albuquerque property manager. We have insights and analytics that drill down into local property listings and competing properties.

Marketing Once you’ve established a price, it’s time to do some marketing and advertising. This is the first step in attracting high-quality tenants.  Make a good first impression. The listing matters. A lot.  Most homes are rented online today, so you’ll need a compelling listing that gets the attention of tenants who are scrolling through available properties on their phones. Once you have a good listing with fantastic photos and concise, informative descriptions, you’ll want to post that listing. We use popular rental sites such as Zillow and HotPads and Facebook Marketplace.  We also use our own website and perhaps most importantly, we use social media. Facebook, Instagram, and neighborhood groups can be a great way to spread the word about your available rental property. Albuquerque has a strong sense of community, and social media can help you tap into local networks. Don’t underestimate the power of a “For Rent” sign in front of the property. Sometimes, local word-of-mouth can bring in great tenants.

Step 5: Prepare the Home for Renters

Now that the property is priced and marketed, it’s time to ensure the home is move-in ready. You want your property to be attractive and functional. Showings are going to be important. First impressions are going to last. Make sure tenants find your home attractive. You want them to imagine moving right in. 

Here’s what to focus on.

• Clean the Property

Do you know any good tenants who will be willing to move into a dirty home? We don’t, either. A clean home is essential for attracting tenants. Have the carpets cleaned, the windows washed, and the bathrooms scrubbed. A fresh coat of paint (especially in neutral tones) can also go a long way in making the property feel new and welcoming. It has to look clean and it has to smell clean. 

• Make Repairs and Upgrades

Is there a good reason for tenants to choose your home over all the others on the market? Good tenants are looking for well-maintained homes that have been recently updated. Make sure that all repairs are completed before listing the property. This includes fixing leaky faucets, replacing light bulbs, repairing broken appliances, and addressing any cosmetic issues. 

If your budget allows, consider adding upgrades that could increase the appeal of the property, such as:

• New kitchen or bathroom fixtures
• Energy-efficient appliances
• Fresh landscaping for curb appeal
• Smart home technology features

It’s about standing out in a competitive market. Even small, aesthetic improvements like new hardware on drawers and a tile backsplash in the kitchen will make a difference. 

• Schedule Showings

Be ready for tenants to see the home. Freshen up the landscaping and curb appeal. Make sure there are no mops leaning against walls or food in the fridge. The home should be empty, clean, and full of possibilities when potential tenants come to see it. 

Step 6: Tenant Screening in Albuquerque

It’s hard to think about tenant screening when you’re buying the property, but now that you’ve bought it and everything is ready for a resident…it’s time to find one.

Tenant screening is one of the most important steps in the rental process. A good tenant is key to a smooth and profitable rental experience, while a bad tenant can cause headaches, including late payments, property damage, or even eviction.

As property managers, here are a few of the things we screen for:

Screen for Financial Responsibility We have to ensure that potential tenants can pay the rent on time every month. So we look for a steady income and a responsible record of paying bills and managing debt. Typically, we will require that a tenant’s income is 2.5 to 3 times the monthly rent amount. We verify that income with pay stubs or bank statements and tax forms.

Tenant Background and Credit Checks In addition to income, we’ll run a background check and pull credit reports. This can get tricky if you don’t have the resources that a property manager does. For example, a local eviction check isn’t enough. You need to do a national eviction check. Talk to us at Blue Door Realty and we’ll make sure you have all the resources you need for adequate screening.

Rental References and Rental History On the rental application, we’ll always ask for the tenant’s previous landlords. When they meet all of our initial criteria, we’ll reach out for a reference. This can help us determine if the tenant has a history of being responsible and respectful toward property. Always get a tenant’s permission in writing before you do any digging into their backgrounds and relationships.

Step 7: Sign the Lease and Set Expectations

Once you’ve found the right tenant, it’s time to finalize the rental process.

• Create a Solid Lease Agreement

The lease agreement is the legal contract between you and your tenant. It should clearly outline the rent amount, payment due dates, security deposit, length of the lease, maintenance responsibilities, and any other terms or rules. Make sure this lease is compliant with New Mexico laws and enforceable in Albuquerque. We can provide you with a template if you need one.

• Collect the Security Deposit

The security deposit should be collected upfront and should be equal to one month’s rent. In New Mexico, the security deposit limit is one month’s rent for leases shorter than one year. For leases of one year or more, the limit is not restricted to one month’s rent, but if you collect more than one month’s rent, the excess amount must be held in an interest-bearing account. 

• Walkthrough the Property

Before handing over the keys, conduct a move-in walkthrough to document the property’s condition (ideally with photos) so you have a record in case of future disputes.

As a new real estate investor in Albuquerque, turning your newly acquired property into a successful rental requires planning, preparation, and a strategic approach. From inspections and insurance to tenant screening and marketing, each step is crucial for ensuring you get the best tenants and maximize your rental income.

By following this guide and staying proactive, you’ll not only attract great tenants but also establish a strong foundation for your investment property. Let’s do this together. Contact us at Blue Door Realty. We provide residential management support as well as HOA management in Albuquerque.