How will you know when you are successful? If you believe you are successful now, how do you know? Most people, landlords included, cannot simply point to a goal and state definitively that they have accomplished it. Every landlord had the plan to be successful when he or she bought their first rental property.
Success is still sitting there waiting for every landlord to grab and run with it. I was curious, so I did a search for landlord New Year’s resolutions and came up with three or four websites that listed at least ten each. The goals in each were remarkably similar even if they were worded slightly differently. All were aimed at getting landlords to do the things that will make them successful in their businesses, but they don’t quite provide the tools to actually accomplish those goals.
- We are to “cut costs” and “watch cash flow.”
- We are to “get better tenants” and “screen better.”
- We are to “prepare a maintenance plan” and “schedule maintenance.”
- We are to “get organized.” We are to “get rid of bad tenants.”
- We are to “enforce late fees.”
- We are to “increase rents.”
- Fluff, fluff and more fluff.
Certainly each of these goals is worthwhile such as they are, but they are fluff. Two more, which rank as the fluffiest were to “be proactive” and “focus on the long-term.”
The essential part of any resolution or goal is that you will actually be able to tell when you have accomplished it. You must have an objective measurement that you can to point to and say, “I did it!” That is not possible with any of the goals I listed above.
Of course, none of these websites provides actual measurable goals because rental property success is measured one landlord at a time. Each landlord’s success is unique to that person, not to some overall, generalized goal such as those the websites listed.
So, let’s take a couple of these goals and see how to put them into practice so you can measure if you have accomplished them.
Get Better Tenants
“Get better tenants” is almost a broken record to many landlords. We all want the best tenants possible renting from us. Okay, how do we know if Richard Renter standing in front of our desk with a rental application mostly filled out (except for the landlords and addresses where he’s lived that he “doesn’t remember,” of course) will be someone whom we would accept as a resident in one of our rental properties? Would he be a “better tenant?”
Since each property is different, attracting different qualities of applicant and tenant, we can’t make a blanket assumption of what exactly a “better tenant” is. That requires carefully crafted rental policies and standards that we can compare each applicant against. Without those, the judgment of “better tenant” is left to our whim and mood at the moment.
Thus, a measurable resolution might be worded, “create rental policies and standards for each rental property that includes minimum income required, minimum length of previous residence required, minimum credit score required, and quality of landlord references [NOW.]” Then decide for each property what those are, write them out, print them, and hand them to each applicant, so you are ready to measure each rental application against them. [AOA has a “sample copy” of a criteria list available under the forms alphabetical section at www.aoausa.com.]
Get Rid of Bad Tenants
“Get rid of bad tenants” is assuredly a worthwhile, profit-enhancing goal, but how do you measure who a “bad tenant” is? That may be a harder one. I have had tenants who irritated me and who made me happy when they moved but who also paid the rent on time and took care of their homes. Were they “bad tenants?” Only when I got the notes with each rent check with complaints such as “light bulbs burn out too often” did I think of them as “bad tenants.” Of course, the far end of the “bad tenant” continuum is the Tina Tenant who hasn’t paid rent on time, if at all, since the first month she lived there and whose boyfriend moved in with her along with his constantly “visiting” friends who have wild, drunken parties every weekend. Obviously, Tina goes.
Somewhere is a midpoint between tenants to get rid of and tenants who are simply annoying. Again, with each property, that cutoff may be different, and for each landlord it may be different depending on a landlord’s ability to tolerate irritation. The important point is that each landlord has to decide where that cutoff is. How many times must the rent be late? How many times do the police have to come? How much damage to the property must there be? Answer those questions about each tenant in each property.
By all means, make New Year’s resolutions. Raise the rent, get better tenants, enforce late fees, get organized, but write down exactly what that means so you can point to your success when you accomplish it. No more fluff, only measurable success. It is your success and you can accomplish it if you know exactly when and how that success has happened.
Bob Cain, president of Cain Publications, Inc. has been a publisher and professional trainer and speaker for 20 years. For over 25 years now, Bob has been publishing information, giving speeches, putting on seminars and workshops, and consulting for landlords on how to buy, rent and manage property more effectively, as well as courses for his own customers through Cain Publications’ subsidiary, the Rental Property Reporter. For more information, visit www.rentalprop.com. Reprinted with permission.