Thinking of investing in an apartment building? Need answers on how to be a more successful landlord with less headaches? Check out these tips!
5 Easy Tips for Being a Successful Landlord
This may come off sounding a little harsh, but I believe the majority of landlords out there are terrible.
Courtesy of The Huffington Post, November 29, 2013.
I’m not just referring to the way they treat their tenants, though that is a problem as well. I’m talking about the way they run their business. I believe being a landlord gets a bad reputation largely from those who fall into this “terrible landlord” group. But in reality, being a landlord is not an impossible task and success can be found.
The following are five tips for being a successful landlord, most learned through mistakes I’ve made in my own landlording journey.
1.) Treat Your Business Like a Business
Many landlords do a terrible job at running their business and I believe this is largely because they don’t see their business as a business. In other words, they treat their investing like a hobby. When you treat your landlording with the respect, systems, and organization that you would treat any other venture, amazing things can happen.
When is the last time you read a great book on business leadership? What systems do you have in place so maintenance concerns can be fixed without your direct involvement?
When you shift your perspective as a landlord from “hobbyist” to “business owner” – and treat your company as such – you will find greater success.
2.) Screen Out the Bad Apples
Perhaps the biggest mistake landlords make is letting in the wrong person. This can lead to late rent, trashed homes, and costly evictions.
People treat their business like a hobby and refuse to follow even simple due diligence on the people who will be living in their properties. What would a bank say if you walked in, unqualified with no income and a 450 credit score, and asked for a large loan? A bank doesn’t run on emotion. You shouldn’t either. Screen like your business depends on it – because it does.
When screening for tenants, I typically require:
· They must make 3x the monthly rent in stable income
· No recent evictions
· No recent felonies
· Good previous landlord references
Be careful not to screen out tenants based on any of the protected classes, or you could find yourself in a lawsuit or in jail.
For the process I use to screen tenants, check out the most in-depth post I’ve ever written, Tenant Screening: The Ultimate Guide.
3.) Treat Your Tenants with Respect
Look – we don’t have to like our tenants.
In fact, I flat-out despise several of mine.
Don’t allow personal feelings to get in the way of a business relationship. Tenants want to be treated fairly and be seen as an equal human, because they are.
Just because you own some rental property doesn’t make you a better person.
Treat each tenant with dignity and respect and it will come back to you in success.
4.) Don’t Be Too Nice
This probably sounds like a complete reversal of what I just told you, and may be harsh, but please allow me to explain.
Your job as a landlord is to be fair, not to be nice. Being “nice” will give your tenants and others the invitation to walk all over you and take advantage at every turn.
“But Brandon, it was Black Friday and I really needed that big screen TV. I get paid again in two weeks. Can I just pay you then!?”
The lease says rent is due on the first, so just as I am expected to fulfill my duties and obligations as a landlord, I also expect my tenant to fulfill theirs.
Humans have a tendency to keep taking more and more when given slack, something I often call the “if-you-give-a-mouse-a-cookie” syndrome, based on the children’s book where a small annoying mouse continues to push the envelope, asking for more and more things after it’s been offered a cookie.
By allowing your tenant to break the rules, you open yourself up to years of struggle and compromise that will ultimately lead to huge financial losses.
There is a difference between respectful and being nice. Choose wisely.
5.) Get Help
No landlord is an island.
With over 28 Million real estate investors in America, (Source: BiggerPockets.com) there are bound to be countless investors in your town who can help you during tough times.
Whether it’s the phone number for a plumber, help dealing with a tough eviction, or just reassurance that you are doing the right thing, reach out to other landlords for help. Landlords love to “talk shop” so look for opportunities to open the conversation.
If you can’t find local landlords, the Internet has real estate blogs, forums, podcasts and more to help you connect with other investors. Take advantage of this and never stop learning and growing as a real estate investor.
A successful landlord is one who doesn’t feel like pulling their hair out every time the phone rings. It’s someone who actually looks forward to the beginning of the month when the rent checks start coming in. It’s someone who runs a tight ship with systems that can handle the big waves that are bound to come.
Success is possible as a landlord, if the right steps are taken. Hopefully this post has helped you take those first few steps in changing your business for the better.