One of the biggest problems for new landlords and part-timers is preparing themselves for the task. Simply because you own rental properties doesn’t automatically make you a qualified landlord. The fact is many property owners find out the hard way that there’s a lot more to landlording than meets the eye.
Landlording is a serious business when you own and operate income-producing real estate. I don’t mean serious in the sense that you need to worry or be uptight about it. What I mean is landlording is necessary for the production of income “ YOUR income “ and that’s why it’s so serious.
There are basically two ways to learn this job. You can educate yourself by seeking out those who teach it and are good at the job themselves or you can learn it from your tenants as you acquire properties. I can tell you its much more civilized learned from experienced folks that show what they’re doing.
Avoid personal conflicts over such matters as lifestyle, housekeeping (inside) and moral issues. They are not your business. If you feel compelled to change your tenants’ lives, try praying for them. All matters relating to their tenancy should be kept strictly business and within the rules set forth in your rental agreement. Obviously, it would be a poor business decision to keep unruly or destructive tenants because that costs you money. Making money is top priority in the landlord business as it is in any other business.
It is your business to see that rents are collected and that rules and regulations in your rental agreement/contracts are obeyed. You should never allow any tenant to intimidate you. It will almost always lead to poor decisions on your part. One of the most common mistakes landlords make is to allow a tenant’s urgency to become their urgency.
After doing this job for many years, I’m hard-pressed to think of any situation so urgent that there is not enough time to think it through. For example, when there’s a fire at my property, the local fire department will handle everything. I’m protected by my fire insurance policy on the building. Should someone expire in my house, I can’t be of much help. The county coroner is the one you need for this situation.
Leaky pipes, broken windows and hot refrigerators are not urgent. They are simply normal problems that go with the territory. Your job is to be as responsive as you can to your tenants. Never allow yourself to be stampeded into a bad decision simply because your tenants are yelling for you to do something.
Know the Laws
Every landlord should know and understand the landlord-tenant laws in his own state and local area. Equally important are the rules concerning habitability. Habitable means your house is safe and legal to rent. Your insurance will not protect you if you knowingly violate safe housing rules. If they audit your property and find problems, they’ll likely cancel your policy.
Once you know and understand laws, your fear of renter intimidation will vanish. An overwhelming number of landlords incorrectly assume these laws tend to favor deadbeat tenants. This is not the case. Laws are mostly about equity and there are unscrupulous landlords as well as bad tenants.
It doesn’t matter whether you rent $100 shacks or $10,000 a month castles, the rules are exactly the same. In pro-tenant states like California, there are severe penalties for what they call slum landlording. Slumlords are owners who milk the rent monies from their properties, but never contribute a nickel for upkeep. This is very short-sighted and in the long run leads to disaster.
Most states have statutes that specify the minimum habitable standards for your town. Even if they didn’t, common sense dictates adhering to minimum living standards.
Landlording is not a question of luck or picking all the right tenants. You’ll also need all the expertise you can get. Landlording is a business. My best real estate purchases come from sellers who have been driven bonkers by their tenants. They can’t handle them and are forced to give up their property.
Learn all you can about the business, know the job well and you’ll find it pays big money in the long run!
Jay P. DeCima, known as Fixer Jay of Redding, California has specialized in fixing up ugly houses and small apartment buildings since 1977. Jay’s latest book, Investing in Fixer Uppers, was voted number one on Chicago Tribune’s Top 10 Real Estate books list. Jay also writes the informative monthly newsletter, Trade Secrets.