Experience is a good teacher, and it can make you a great manager. When you’ve spent some time on a job or just plain living you discover what works and what doesn’t; what you should do and what you shouldn’t. In short, you make rules for yourself concerning the way you live and the way you work based on your experiences.
Now I am a landlord and over the years I have discovered what works and what doesn’t; what I should do and what I shouldn’t. As a result, I have developed a set of rules to ensure that I conduct my business well. They assist me with my day-to-day contact with tenants, how to turn bad tenants into good ones, assuring that the tenant will be good even before they move in, and how to operate the business of being a landlord so things stay efficient and actions get done.
I have come up with 13 essential rules that help me be a great landlord. Here they are:
- Always, and I mean always, screen prospective tenants. Having been a landlord for a considerable amount of years, I have discovered what person would make a good tenant and what person could be trouble. I would rather have a tenant that keeps his or her apartment clean, keeps the noise down, and doesn’t break anything during his or her stay. Taking time to talk to the possible renter can teach you a lot about his or her character. You can find out about their background without appearing to be a cop doing an interrogation. Also have a simple form they fill out that provides you with names of previous landlords, where they bank, and a person who can serve as a contact during emergencies and/or a reference. Check out the information and think about your conversation, then decide to accept or reject.
- Insists on a security deposit. Requiring the tenant to invest money in the process will give him or her incentive not to trash the unit.
- Enforce payment of the rent by a specific due date. That means compelling them to pay a fee if the rent is paid late. Again, the tenant is given an incentive to do the right thing.
- Always clean a vacant unit before you show and rent it. This should be a no brainer. A dirty apartment will be a deal killer.
- Turnover units quickly. The longer that apartment stays vacant the more money you lose in rent you should be collecting.
- Treat tenants with respect. The better they feel about your relationship with them the better the chance that apartment stays leased.
- Keep the accounting current. If you let the paperwork go or do it periodically, you will soon be so behind there is no chance to catch up. If you keep up with the flow, then there is more time for you to do other things.
- Plan big repair or maintenance projects ahead. Large repair projects include fixing the water heater when it breaks down, replacing carpet, re-paving the parking lot, re-painting the exterior of the building, and more. You may need to coordinate time for outside workers and delivery of materials as well as movement of the tenants so they don’t interfere with the work. Set aside money each month to ensure that these fixes are financed when needed.
- Keep your business life separate from your home life. That means do everything involved with the property only at your office and everything involved with the family only at home. Keeping the two separate can help to avoid stress in both.
- Document everything. Things happen in the trade of real estate and those things can lead to lawsuits. A tenant may sue over the rent, the condition of the property, and more. You could also become the target of some lawsuit initiated by organizations, neighbors, other landlords, and more. The side with the best documentation is usually the one that wins.
- Turn to professionals. When it becomes time to do one of those big projects mentioned above, trust a professional to do it. You want a professional plumber dealing with toilet, shower, water pipes, and water heaters. Choose a professional carpenter for woodwork repair, a professional painter to paint the exterior and interior of the property, a professional repairman to fix a washer or drier in the laundry room, etc. That would ensure that the item worked properly after the repair, the paint job appeals to the eyes, etc.
- Plan in property management costs. If you start off with a small apartment building, you may be inclined to manage the property yourself. Many landlords do. However, as your property holdings grow, you will need someone to help with the management. Experts suggest that you calculate the cost of management into your numbers as if you were relying on property managers. Do this then the money is there when you ultimately do turn to an outside property management firm.
- Always seek efficiency. As you do the job of a landlord, you will learn new ways to do the job more efficiently. As you discover these methods, incorporate them into your business operation. You will be able to grow if you want to and prosper without getting mired in a tedious routine.
Successful businesspeople know that rules are not made to be broken. They should be used seriously to assure that the operation is more efficient and more profitable.