There is a big difference between owning a rental property and being a successful landlord. An average rental property owner fails to maximize their bottom line and often deals with multiple tenant issues every month. After a while these issues start to weigh on everything they do until it gets to a point where owning becomes a burden. On the flip side the successful landlord knows all their expenses and is proactive in dealing with concerns. They have a reliable team in place and very rarely have prolonged tenant problems. They keep the tenant wheel turning year in and year out and see the end goal in sight. There is often a fine line between the average tenant and the successful one. It is usually the little things you do or the small actions you take that make all the difference. Here are five tips to help you become a more successful landlord.
- Strict accounting. The most successful landlords understand they must treat every property like a business. They stay on top of every expense, the best places to find tenants and what they should be proactive about. The first barometer of any rental property is the cash flow. Cash flow can turn an average property into a great one and vice versa. It is not enough to accept your expenses without understanding where they are going and if you can change them. This doesn’t mean you should be cheap with the property and look to cut corners. It simply means you need to know if there is a way to reduce costs for utilities, snow removal, lawn care, seasonal maintenance. It also means you should pick and choose your spots to raise rent or add an application fee in the right market. You need to know, and make notation of, every dollar coming in and going out of your rental property.
- Screen all tenants. Tenants are the lifeblood of your business. With a great tenant that pays every month and takes care of your property you won’t have much to worry about. On the flip side a tenant that is constantly a few weeks late and leaves your property a mess is worrisome for the duration of the lease. While there isn’t any one thing you can do that will guarantee good tenants, you can weed out some bad ones by screening. Screening tenants is more than simply providing an application to fill out. You need to go a step further and follow up with references listed, ask for paystubs and even pull credit. If there is any doubt or concern with the ability to make the payment you need to pass and move on. This can be difficult if the tenant shows they really love, and want, the property but is a must. You don’t want to ever deal with an eviction. An eviction is not only costly but very time consuming. You are better off taking your time finding the right tenant than rushing someone in that you aren’t completely comfortable with.
- Take care of minor problems quickly. Where many landlords get in trouble is by dismissing minor tenant problems. They fail to understand that property problems pop up all the time, especially in homes that aren’t updated. Instead of taking care of these issues quickly they blame them on the tenant and look for justification. In many cases, the problems are caused by years of property neglect rather than anything the tenant may have done. Instead of complaining when the tenant calls about the dryer not working or the toilet overflowing you should get on it as quickly as possible. Not only can this prevent a small problem from turning into a much larger one it develops a sense of trust with your tenants. Tenants want to live in a property with a landlord they know takes care of issues quickly. They are more inclined to go out of their way to take care of the property and even stay for an extra lease or two.
- Build a professional relationship. Another issue that is often overlooked is the relationship you have with your tenants. You can be friendly, but you shouldn’t necessarily be friends with your tenants. There is a time in almost every lease when you will need to put your foot down. The check may come in late or there is an issue with parking or noise that must be addressed. If you are too friendly with your tenant they will think they can do what they please and walk all over you. By the same token you can’t overreact when something doesn’t go your way. Threatening eviction if the rent is five days late is a bit of an overreaction and may not have the impact you anticipate.
- Have team ready to act. As we mentioned, there will always be unexpected issues and concerns with any rental property. Instead of trying to do everything yourself you should have a reliable team of people you can call. Build a relationship with a handyman, plumber, electrician and snow removal company. If services are rendered pay quickly to build loyalty. By doing so the next time you call they will be more inclined to do you a favor. Having a team at the ready you can handle any problems that come your way.
Running a successful rental property isn’t exactly rocket science, yet not every landlord knows how to do it. Use these five tips to help with your next rental property.