How to think like a landlord results in achieving maximum profits with minimum headaches.
Too bad no landlord schools exist. Sadly, many new landlords read about it online and dive right in. This means many landlords ill-prepared to work as a successful landlord.
The lack of landlord professionalism leads many to failure.
How to Become A Successful Landlord
Follow these tips to create a landlord mindset for success.
Create an Enforcer Mindset
Proper land lording requires discipline and the right disposition.
Expect tenants to push your boundaries. You must defend those boundaries to become a successful landlord.
First of all, you must enforce your lease agreement.
Do the following:
- The rent failing to come on the first requires sending a late rent reminder.
- If the rent doesn’t come by the legally-mandated grace period, you must send an official written eviction warning notice.
- If your tenant still hasn’t paid by the end of the waiting period, you must file a civil court eviction action.
- Ignore the sob stories.
- Don’t bend and give in allowing tenants leeway. They will continue to ask for more time. Allowing tenants leeway trains them to believe your rent is not that important. Why pay on time if your landlord doesn’t care?
- Don’t make excuses as an option.
- Enforce your lease agreements to the letter.
- Let your tenants know they can’t jerk you around.
- Enforcing late fees and filing evictions send them (and their friends) a message that paying the rent on time must be their highest priority.
- Failing to do this makes you lose all credibility.
Maintain the Discipline to Perform Scheduled Work
Landlords perform monthly, semi-annual, and annual functions for their rentals.
As mentioned above, every month requires making sure all rents paid on time. Inspect your rental units every six months. Make sure your lease agreement contains a clause about semi-annual inspections and your rights for access.
Too many landlords fail to make these inspections. Some feel only emergencies or urgencies like a burst pipe require inspections. Don’t wait for something to break when regular inspections catch potential problems and fix them.
Communicate your expectations to your tenants. Let them know you care about your properties and the lease terms and that you care about your tenants too.
Regular maintenance assures that everything works well so you and your tenants won’t experience problems.
Your inspections include watching for signs of unauthorized pets or people living there. Make sure your tenants keep your properties clean.
Use the face time to build better relationships with your tenants. Show them you care by asking questions about their lives, kids, and jobs.
Finally, every year raise the rent (or when long-term leases get renewed).
Too many landlords worry about raising rents. The alternative means rents falling below the market value or not keeping up with inflation. This leads to eventually surprising your tenants with drastic rent hikes which scares them away.
Rentals Require Budgeting
Landlords essentially become small business owners. Like it or not, rentals are a business.
Rental properties contain hidden expenses because of the irregularity when they arise. Repairs, turnovers, vacancies, advertising for new tenants, etc. are irregular expenses.
Don’t let a $4,000 roof bill surprise you. Instead, set aside money every month to pay for unexpected expenses. In other words, learn how to budget for potential expenses.
While you’re at it, learn how to budget your personal finances so you retire with your rental income. Learn about the 4% retirement rule.
Get comfortable with budgeting to get ahead as a person and a landlord.
Prepare for Vacancies
Turnovers create extra costs and work.
When long term tenants move out, re-carpeting, repainting, and replacing appliances require time and money. Just fixing the little items your outgoing tenants wore out or broke takes up your time and adds costs.
Lost rents before new tenants move in hurts when you continue paying the ownership costs like loans, water, and electricity. In essence, turnovers mean spending money not spent if your tenants stayed.
Add the headaches and stress with advertising and screening for new tenants. Negotiating new lease agreements, dealing with contractors to fix things, and performing move-out and move-in inspections. More time and money!
Ideally, you want new low-maintenance, high-ROI, long-term tenants.
Tenants who treat your properties with kid gloves and create a low-impact on your units. A tenant who always pays rent on time sticks around for the long haul relieving you of the headaches, costs, and worries involving turnovers.
Meticulous Mindset about Details, Documentation, and Records
Your documentation, record keeping, and attention to details require a meticulous mindset.
- Do you inspect your units and document the condition before tenants move in?
- Take photos with timestamps of every room?
- Does your lease contain a “condition” statement and inventory which you and your new tenants’ sign?
- All the photos and documents stored in a secure place?
- Records accessible at a moment’s notice on your computer or file cabinet?
Act Professional (At All Times)
Landlord professionalism requires:
- Always maintaining a friendly yet professional distance from your tenants.
- Budgeting your rentals like a business.
- Setting recurring reminders for inspections and maintenance.
Landlords acting like professional rental managers increase their chances for success.
How to think like a landlord requires the following mindsets:
- Unflinching Enforcer Mindset to avoid losing credibility with tenants;
- Disciplined Scheduled Work for proper maintenance;
- Business Budgeting to get ahead;
- Prepare for Vacancies and look for long-term tenants;
- Meticulous Mindset for Details, Documentation, and Records; and
- Becoming Professional Property Managers.
Some people can’t do all these:
- Landlords too friendly with their tenants don’t become enforcers.
- Others not disciplined to perform scheduled work.
- Some ill-equipped to budget.
- Unprepared for vacancies who fail to find long-term tenants.
- Failing to possess a detailed mindset.
- Finally, some never learn how to be professional property managers.
If you can’t do all of these, hire a professional property management company.
Contact Us to learn about how we conduct professional property management services meeting all of the above-mentioned requirements. Let us take all the headaches, worries, and time off your hands.
Steven Rich, MBA – Guest Blogger
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