The 15 Landlord Commandments
For people like me, that accidentally started building passive income. Learning the landlord game has definitely been an interesting journey. As with any career path, when your in it, you get to see a whole different side of things. I believe one of the keys to success is the ability to adapt, so as Ive continued to grow my rental portfolio there are some tips that I have learned that can help to ensure your success with rental properties, and the keep them profitable and passive as possile
- Thous shalt Always Screen Tenants. The first line of defense for any landlord against major headaches, and utter destruction. Screen your tenant. Take a look at a persons track record with an online background check. Being able to find a good tenant is the foundation of a strong rental business.
- Thou Shalt NOT Rent To People You Don’t Know. Your friends, your cousins, your moms friends, your brother, ex girlfriends little brother who’s “cleaning up his life now”, these are the people you want to avoid as tenants. When things go left, they will ruin your investment plan.
- Thou Shalt Always Do A Video Walkthrough Before Lease. Self explainatory right, which damages or stains were done before then tenant moved in, become merely hersay, when both parties not video evidence is available. I always do a video walk through with the tenant present. This way when they move out, they know if theres any holes in the wall, we both they weren’t there before hand.
- Thou Shalt Set A Tone For The Relationship. Always be prompt, professional, and reliable with your tenants. Set a standard for the way you run your rental business. Have policies and procedures in place, and follow them. Let tenants know up front what is expected.
- Thou Shalt NOT Discuss Personal Matters With Tenant. This is a big part of professionalism. Some tenants can naturally be friendly, and inviting. Maintain a professional relationship, when tenants begin to think of you as a friend, it can lead to late rent payments, and request to waive late fees, and a plethora of other things, that can undermine the foundation of your rental income
- Thou Shalt Be Clear Whats Expected. On time rent payments, how much are late fees, these are things you need to express . If cutting grass, and raking leaves, or snow removal are the tenants responsibility, make sure this is clear in the beginning. I make sure a tenant knows whats available by including a tenant responsibility sheet.
- Thou Shalt Collect Electric Payments. Come on its 2016, I really hope your not driving to pick up a check from a tenants. Always collect rent via online payment service such as Paypal, or get a deposit only bank card from your bank, this lets tenants deposit your rent payment at any local bank of your choosing. Then all you need to do is check your balance from your app. Work smarter not harder!
- Thou Shalt Answer Your Tenants Calls. Believe it or not I know a few landlords who actually have a callous attitude towards this. A landlord should be accessible, or atleast have a 24 hour property management company in place. The tenant may be calling you to tell you a pipe burst in the wall, you need to be able to address problems fast, the faster you handle it the faster its in the past.
- Thou Shalt Make Repairs Fast. If the fridge goes out or the disposal break go fix it. Remember your tenants are paying you for a fully function living space, when things break fix them fast to keep the space functional. Don’t give your tenants a reason to get upset with you.
- Thou Shalt Fix Things Right The First Time. This is one I learned the hard way, in the beginning, I tried to nickel and dime things, cheap $10 fixes, I learned fast that this just creates an everlasting headache. If I’m fixing the same problem for $10 10 times, I probably could have just had it done right in the first place. Im all about keeping it a passive as possible. If you are not handy, get yourself a GOOD handy man that you can call for repairs.
- Thou Shalt Set Aside Money For Repairs. When its time to replace the water heater, or a leak from the upstairs shower caused the ceiling to sag. This emergency fund will keep you from hurting your profitability. If you fail to plan, you plan to fail, always set aside ATLEAST $75 per month per rental. I find by saving a designated amount, and setting aside, the emotion is removed from the money. When a tenant calls with an issue, instead of thinking, “more money out the window” you think “thats fine we have money set aside for that”
- Thou Shalt Have A Firm Late Fee Policy, and do not defer. Make your tenant sign a copy of your late fee policy before moving in. Let them know what date rent is expected, and how much per day it will cost after that. If you let this slide tenants do not have an incentive to be on time. I need my tenants to make me a priority, the business can only run efficiently with promptness. If something breaks, I fix it fast, I expect my money with the same speed. Now if a tenant tells me they switched jobs and now get paid on a different day, I would be willing to work something out, but never be willing to accept consistent late payments.
- Thou Shalt Always Have Eviction Paper Work Ready To Go. Have all late notice and eviction papers ready to go. I keep a folder with these by my desk. If a tenant doest pay, the late notice is sent, which usually rectifies the issue, but if not, Im ready to follow up with the rest of the eviction paper work
- Thou Shalt Raise Rents Yearly. This is something I wasn’t doing. You will need to check in you area for local laws regarding raising rent but its a good idea to raise rents yearly. This is one of the reasons I enjoy investing being a landlord, they keep up with inflation. Always check what other rentals are going for in the area. As a general rule I raise my rents by $50 per lease renewal. This is about half of whats allowed in my area!
- Thou Shalt Recognize A Good Tenant. If you have a good tenant, know what you have. Be a good landlord, and you will keep good tenants around for many years. These people are the heart of the business, show them respect, and respect their privacy. If you have a good long term tenant that pays well and treats the property good, you will always stay profitable