We can’t all be the perfect landlord (I know I’m not as much as I try!), but there are definitely a few signs that could indicate you could be heading down the path of becoming a bad landlord.
If you recognize one of these signs, you should be okay. Just correct the problem and you should be able to ditch that bad landlord stigma.
If you recognize two or three of these signs in how you’re running your landlording you’re going to have to make a decision about where you’re heading. You can continue down the pathway towards being a bad landlord, or you can do a bit of a course correction and straighten yourself out.
Finally, if you see four or five of these traits showing up continually with your rentals, it’s time to sell. You’re giving the good landlords a bad name and it’s time for you to move on!
Are you ready to find out about these signs?
Sign #1 No Written Leases
Listen, you need a written lease and you need it signed by all the tenants [over the age of 18] residing in your property. If you don’t have a written lease you’re leaving yourself open to misunderstandings, potential problems and a ton of ambiguity.
Your written lease should address potential issues before they become issues such as rules regarding smoking, pets and even subletting (where allowed, some areas the “rules” don’t let you dictate what is always allowed or not allowed).
It should break down responsibilities for grass cutting and property maintenance where applicable. And it should include what the repercussions for transgressing those rules specifically are. It should cover all those details that could be rather vague, unless they are pointed out and it needs to protect you as much as possible within the local laws that govern landlord and tenant rules.
By not having your lease signed it’s just as good as not having one and the big problem is situations without written leases become a situation of he said/she said. This ends up being a situation where there is no proof you originally told them it was non-smoking, or that they couldn’t start a rabbit breeding factory in the spare bedroom (no pet policy).
So if you’re serious about being a landlord and you don’t have leases in place, go find some.
It may involve spending a bit of money with a lawyer or it may involve buying them from a local landlord association. Whatever you spend will pay for itself time after time and year after year going forward by reducing problems, headaches and even evictions when things do go bad.
Sign #2 You Haven’t Inspected Your Property in Over a Year
Ideally you’re visiting your property and doing at least a quick inspection every three to six months, but worst case you need to at least get in there yearly, even if they seem like great tenants! A lot can go wrong in a year; heck a lot can go wrong in three months!
That beautifully renovated property with the new carpet and high end hardwood may need to be replaced if you find out your tenant has been rebuilding his leaking motorbike on it over the winter months.
The little leak underneath the kitchen sink that the tenant didn’t catch could require completely gutting the kitchen and replacing everything. And these are the obvious things you’ll notice just by visiting and taking a peek!
With quarterly or every six month visits you can replace furnace filters which will extend the life of your furnace, you can replace smoke detector batteries which could save lives and your property and you can even notice potential problems that could grow into huge problems if left unrepaired.
If you haven’t visited a rental property of yours in the last six months stop reading now and start scheduling a visit before continue on! Don’t be a bad landlord or a landlord who suddenly has to deal with a very expensive repair in the near future!
Sign #3 You Refer To Your Property as “It’s Only a Rental”
If you’re referring to your rental property, your expensive investment, as “it’s only a rental property” you’re setting yourself up for failure.
If you’re creating a mental environment where you’re not thinking of your property as someone’s home, where you’re potentially allowing sub standard work, lower grade finishes and even ramshackle repairs to be done, you’re setting yourself up for failure. And that’s what happens if your property is just a rental.
When you start referring to your property as only a rental you’ve already established you don’t care about it and it’s not long before it starts to become neglected (refer to Sign #2).
It’s too much work to go inspect it, it’s too much expense to do proper repairs (after all it’s just a rental) and in no time flat you start seeing your tenant turnover sky rocket and your vacant periods increase.
Then after a year or two of losing money you become another one of those landlords who say real estate doesn’t work and sell off your potential asset. It’s not just a rental it’s a long term investment that can reward you handsomely over time and with proper care and attention. Remember that, or save yourself time and start planning to get out now.
Sign #4 You Ignore Your Tenants
There’s nothing as annoying as getting interrupted when you’re out having a nice evening out with a spouse or girlfriend or even your family.
It’s freezing out and they don’t have heat so you need to get on that and not ignore it!
OK, that’s one of the worst case scenarios, but even if it’s something simple like a broken dishwasher, clogged sink or slow drain in the bath tub, they shouldn’t be ignored.
How you handle situations with your tenant can directly affect how long your tenant stays with you and if you keep them happy by dealing with issues in a timely manner they will stay much, much longer!
If you can reduce tenant turnover to once every few years, it will make a direct impact on your bottom line.
Tenant turnover leads to vacant months with no rental income, extra time spent on advertising and meeting prospective tenants and money flowing out of your pocket as you cover expenses related to the property like water, heat, insurance, taxes and mortgage payments with money out of your bank account.
Even if you don’t have an answer, don’t leave your tenants hanging. I currently have a tenant in a property about two hours from me with plumbing issues (not a water leak, but a shortage of hot water, probably a tank that simply needs flushing).
I don’t have an answer right now, but I’ve replied back to her that I should have an update later this afternoon. I’m keeping her in the loop, I’m acknowledging there is an issue and I’m addressing it and she knows I’m not ignoring her!
So don’t ignore your tenants. If you keep them happy and keep them satisfied you’re a good landlord, (not a bad landlord who can’t be reached), you’ll be rewarded with longer term tenants and more cash flowing into your bank accounts!
Sign #5 You Don’t Treat it Like a Business
I bring this up a lot, mostly because it’s important, but also because failing to treat your landlording like a business can lead to you failing. And failing with a property can be an expensive lesson.
The more you treat the entire rental business exactly as a business, the more you’ll do to set up the proper practices to help you succeed. This can involve moving from using a simple spreadsheet to track your income and expenses to moving to dedicated software of customized accounting systems that allow you to track and control much more of your business.
It involves moving from picking a tenant because they seem nice to having a proper system in place to screen tenants, places to acquire credit and criminal reports as necessary and understanding the local laws regarding rentals and how they apply.
If you treat it haphazardly you make mistakes, or take shortcuts and those mistakes and shortcuts cost you dearly. I’ve seen landlords use free leases they found online that were invalid because they didn’t refer to local laws.
I had a landlord try and evict a tenant using an eviction form from the incorrect state (it gave the tenant another free month of rent as he had to resubmit the correct form after the fact).
These are the shortcuts that backfire on you and are another reason that can cause you to quit the rental business. Set yourself up for success.
Don’t Take Shortcuts
Shortcuts are attractive because they may get you started in the direction you’re heading faster, but shortcuts don’t always provide the results long term you’re looking for.
If you’re serious about being a successful landlord, become an educated landlord, learn to manage your properties as if it is a business and it will all become easier and simpler to either carry on as is, or to expand later. If you’re doing it right it gets easier.
And if you’re dropping a ton of money into real estate already, what’s another little bit to make sure you’re doing it right.
Money spent on having the proper leases, money spent on getting the software to make your job as a landlord/property manager easier and time spent making sure you have systems in place all come back to reward you as you move along your rental property ownership path.
Lining up accountants and lawyers familiar with real estate make your life simpler and more controlled long term. These are all parts of your long cut to long term financial wealth so try not to stray.
[Editor’s Note: Join AOA today; attend our FREE landlording seminars; download FREE forms; use our low-cost tenant screening service and call us for help BEFORE you make that mistake!]
Bill Biko has become “the Educated Landlord” through both training and the school of life. With almost a decades experience of land lording Bill’s been mentoring and assisting landlords for the last five years and you can find more of his tips and articles to make your life as a landlord easier, more profitable and less stressful at www.TheEducatedLandlord.com.