Do you dream of owning rental property and being a successful landlord? Perhaps multiple investment properties from which you can establish streams of passive monthly income and set your own cushy schedule?
Living the life, right?
Being a successful landlord comes with a lot of demands - creating lease agreements, screening quality tenants, marketing rentals, outsourcing operations and evicting poor tenants…
Many landlords underestimate the responsibilities and quickly become overwhelmed by the amount of work it takes to manage tenants - especially when dealing with multifamily properties.
To help shed some light, we built an infographic highlighting 19 things you need to know to be a successful landlord.These insights are based on over a decade of professional property management experience.
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20 tips to be a successful landlord...
Leasing efforts are impacted by seasonality.
Lease targeting is the practice of strategically scheduling lease end dates to correspond with seasonal prospective resident traffic.
If most prospective residents in a market want to move in the spring and summer, lease end dates should be scheduled for spring and summer.
By scheduling the majority of lease end dates for times when the market is providing the most prospective tenant traffic, occupancy can be substantially increased.
Being a landlord is different than being a private homeowner - it’s a business and should be treated as such.
Approach landlording with the same respect, diligence, organization and planning as any other business venture. For example, do you have any repeatable processes in place to screen quality tenants? What systems do you use to manage maintenance requests if you are out of town on vacation? Are you setting aside 10% of your monthly rental income for upkeep and repairs?
These are all things you need to consider before you become a landlord.
One of the biggest mistakes you can make as a landlord is renting to the wrong person. This can lead to late rent, damaged property, evictions and costly turnover.
Screen your tenants like your business depends on it - because it does.
There are a series of steps that you can take to make sure you are attracting quality tenants to your property.
- - Stable income at least 3x the cost of monthly rent. This ensures that tenants are able to cover rent, as well as pay additional living expenses and utilities.
- - Run a credit check: Score qualifications will depend on the type of rental property. If you offer your rental property to someone with a lower credit score, be sure to increase the move-in deposit and ask for a co-signer to provide additional coverage.
- - Background check
- - No recent evictions
- - Positive referrals from previous landlord
- - Follow Fair Housing laws
Of all the costs associated with being a landlord, the biggest one is vacancy.
It’s a LOT cheaper to retain a tenant than find a new one.
Fix repairs promptly, keep the property in good shape, treat your tenants with respect, and you’ll see less turnover and more cash flow.
State laws govern the provisions of a lease agreement and the way courts govern them.
Many of the common provisions placed in lease contracts are illegal. For example, in many cases it is unlawful to make the security deposit amount higher than one month’s rent.
An attorney familiar with changing tenant-landlord laws can quickly spot lease errors and provide you with a court-tested document.
Reward on-time, advanced rent payments or tenant referrals with movie tickets, chocolates, dinner vouchers, anything your tenant would appreciate.
Follow Fair Housing laws when screening prospective tenants.
These Federal laws make it illegal for property owners/ managers to discriminate on the basis of race, color, religion, national origin, sex, disability or familial status.
In addition to Federal laws, landlords need to be aware of state and local fair housing requirements, which prohibit discrimination based on factors such as source of income and sexual orientation.
A discrimination lawsuit is extremely costly and completely avoidable.
Property condition is at the center of most tenant disputes.
Have the tenant document and sign off on any damages before they move in. Also, shoot video of the property before move-in and after the tenant vacates the property to help document damages.
Do you want to be fixing a busted sink at midnight? How about receiving phone calls at 5:30am?
Set “office hours” or your tenant will set them for you. After all, it’s one of the perks of being a landlord in the first place 🙂
When tenants call outside of office hours let the call go to voicemail. If it’s important - they’ll leave a message.
One exception here would be if you were trying to rent a property. In this case, I recommend answering calls outside of regular office hours.
Don’t try and be a jack-of-all-trades. It'll spread you thin and leave you stressed.
Just because you worked in construction and know how to operate power tools doesn’t mean you should be breaking up the concrete and fixing the plumbing problems.
If you aren’t sure how to put together a solid lease contract outsource it to a lawyer. If you don’t have the tools to fix the bathroom tiling outsource it. If you don’t know how to screen quality tenants outsource it to a professional property management company.
Remember, landlording is a business - and part of running a successful business is know what and when to outsource in order to be more efficient.
And, let’s be honest. Most landlords will have day job. Shell out some money and save yourself the time and hassle, it will make the whole experience a lot more enjoyable.
When it comes to being a successful landlord there is no such thing as a verbal agreement, only a signed contract.
In order to protect your interests and the interests of your tenants, get everything in writing.
This means everything from rental applications, work orders, tenant complaints, pet policiesto codes of conduct.
Setting the right rent for your investment properties can one of the difficult areas of being a landlord.
If the phone is ringing off the hook it could be an indication the rent is priced too low. On the hand, if no-one is calling it could mean you’ve priced too high.
So, how do you go about setting rental rates in line with the current market?
Look in the local newspaper. Pay close attention to location. For example, a 3bd/2ba home in one part of town may rent for $1,000 while a similar property on the other side of town average only $850 a month.
Check the internet for local rental rates. Sites such as RentOMeter, CraigsList and Rent.com can give you a solid indication of rental rates based on location, square footage and amenities.
Join a local landlord association. These groups will get together and discuss local trends in the market.
Always base your rent rates on current market conditions.
Instead of giving tenants access to your personal cell number, set up a Google Voice account - which will supply you with a phone number that will forward through to your cell phone.
Give all tenants and vendors this number and set up a business voicemail on the line.
Route all business calls to that number. When someone rings the call will forward from your Google Voice number to the cell phone you connected to it.
Google Voice also allows you to set a schedule when the phone will ring and when you want it to go directly to voicemail.
Many tenants prefer to pay rent online. It’s faster and often more convenient.
Look into setting up automatic payments, electronic cheques and credit card payment options to expedite payment.
Being a successful landlord requires you to make a lot of tough decisions - denying rental applications, evicting tenants and more.
When you are the owner the tenant will blame you for these decisions.
Fear of this blame will often lead many landlords to start making decisions out of convenience rather than common sense.
Don’t let this happen.
Instead, the owner should be the business entity holding your investments, and you are the property manager.
This set up makes you the middle man.
You can tell tenants “I need to check with the owner” to buy your self time to think about requests. You can inform people that due to repeated violations of the lease agreement “the owner has requested that you provide the tenant with an eviction notice”.
It’s much more comfortable when the tenant hates the unseen “owner”.
Make it clear from day one you will be charging a late fee for overdue rent.
You’re going to get tenants calling to tell you they will not be able to pay rent on time. But, once you reminder them about the late fee it’s amazing how many will find a way to get you the money on time.
The key is to be strict with the policy.
Plus, the extra income will help compensate for the stress of not getting rent on time.
“List it and they will come…”
I wish it were that easy.
Today, there are over 100 million renters in the US. And, a lot of companies and landlords are competing for a slice of the market.
In order to get your property in front of the renter (many of which are millennials), you need to have a presence across multiple marketing channels, including:
- - Internet listing sites such as rentalhomesplus, Craigslist, rent.com and others
- - Advertise in print media
- - Place your property on local bulletin boards
- - Stick a “For Rent” sign in the ground
- - Use facebook ads to promote the rental to people in your community
- - Create a virtual tour video and promote it on YouTube
- - Use Google text and display ads to target people actively looking for a rental property
- - Incentivize referrals from existing tenants
- - Put flyers in the mailbox
- - Build a website and use SEO to drive organic traffic
Renting to family and friends is a recipe for disaster.
Each time you’ll be faced with the following dilemma: Lose the money or the lose the relationship.
Don’t put yourself in that situation.
Make sure you have an air tight lease that sets the terms and conditions for your tenants.
Those terms include who will live there, when rent is due, late payment penalties, pet policy, and basis for eviction. .
It is best to get your lease reviewed and verified by legal counsel before signing. .
Make sure you have the maximum amount of rental insurance, property liability insurance, and any other type of insurance required in your state.
Being a landlord can easily turn into a full-time job. How involved you are in the day-to-day management of your property will depend on how much time you have, how handy you are and how closely you are located to the rental.
An alternative is to hire a professional property management company to handle some or all of the day-to-day responsibilities such as tenant screening, marketing, accounting, maintenance and evictions.Most companies will charge between 5-10% of your monthly rental income, but for many investors and landlords with day jobs the cost will save you time, hassle and a lot of money if you are inexperienced with the marketing and screening process.