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. If you have any additional tips, I invite you to share them in the comments below the post!
1.) Treat Your Business Like a Business
As I mentioned earlier, 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. However, when you treat your landlording with the respect, systems, and organization that you would treat any other business venture, amazing things can happen.
For example, when is the last time you read a great book on business leadership? Or, what systems do you have in place so maintenance concerns can be fixed without your direct involvement (in case you happen to go on vacation the day a water supply line breaks!?)
When you shift your perspective as a landlord from "hobbyist" to "business owner" -- and treat your company as such - you will find far 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.
This ties well with number 1, because 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, completely unqualified with no income and a 450 credit score, and asked for a large loan? A bank doesn't run on emotion, and you shouldn't either. So screen like your business depends on it -- because it does.
- They must make 3x the monthly rent in stable income
- No recent evictions
- No recent felonies
- Good previous landlord references
For the step by step 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.
However, don't allow personal feelings to get in the way of a business relationship (see #1.) Tenants want to be treated fairly and be seen as an equal human, because they are (no matter your personal feelings toward them.)
Just because you own some rental property doesn't make you a better person -- so don't act like it.
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 maybe a little 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" they say "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 / Memphis Invest National Survey of Residential Real Estate Investors) there are bound to be countless investors in your town who can help you out 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 (or wrong) 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 is full of real estate blogs, forums, podcasts, and more to help you connect with other investors for free. 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.
Please share your thoughts in the comments below and let's chat!