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How To Be A Successful Landlord
Are you wondering what it really takes to become a successful landlord? Well, once you purchase rental property, there are definitely some "cardinal rules" that must be followed if you wish to achieve any level of success. Application of these rules is pretty important and will either make or break your experience as a landlord. We'll combine these rules into a step-by-step "owner's manual" for becoming a success in the landlord business.
Owner's Manual for the Successful Landlord
Before discussing some of the requirements that are needed to achieve success as a landlord, lets first discuss what the definition of a successful landlord is. Based on my experience and humble opinion, success as a landlord simply boils down to creating a "win-win" situation for both you (as landlord) and your tenants. This occurs when you provide good, safe housing to respectful tenants in exchange for their regular rent payments.
So, in order for you to create this kind of situation, the following cardinal rules for becoming a successful landlord have to be applied…
1.) You'll have to minimize your risk when buying residential investment property. This is done by making sure that the property can produce enough fair market rent to at least support itself and is in sound physical condition. Unless you can buy property very cheap, the last thing you want to have is a property that needs a lot of repairs that can be costly and time consuming.
So, hire a licensed property inspector to do a complete inspection of the property for you and make the purchase price and sale of the property contingent upon the results of the inspection report. Also, check the neighborhood and make sure it is stable and can offer a good supply of qualified tenants for the property.
2.) As mentioned above, your rental property must be able to support itself with the rental income produced each month. The ability of your property to generate a positive cash flow every month can be the largest contributor to your success as a landlord.
3.) The condition of the property should be well maintained, meet all local housing codes, and not require any major repairs or upgrades. Also, the rental property should not present any dangers to tenants such as broken stairs, lack of railings, fire hazards, etc.
4.) A standard policy for
screening tenant applicants
must be adopted and strictly followed. Of all the rules for becoming a successful landlord, screening your tenant applicants is THE most important one. It's so important it bears repeating…screening your tenant applicants is THE most important rule for becoming a successful landlord, period. All the other rules literally go out the window IF you fail to screen your tenants properly. Good tenant applicants all have the three crucial qualities known as the
triangle of success
.
5.) Set up a property management system for operating your property. This includes provisions for keeping track of the property's finances, paying bills, recording rent payments, sending out notices to tenants, etc. A basic property management system that is uncomplicated will be a big help in making your landlord business operate smoothly and professionally.
6.) The location of your rental property , as mentioned in the first rule above, will play a large role in the quality and type of tenants that you'll be able to rent your apartment units to. If your property is located in a poor, run down neighborhood with high crime and unemployment, then the chance of finding tenants who will regularly pay their rent when due and maintain your property may be very difficult. On the other hand, if your property is located in a stable area with good employment levels, then your ability to find qualified tenants to rent to are obviously much better. Such a benefit is needed to be a successful landlord.
7.) Treat your tenants as customers and your rental operation as a business, not as a sideline or hobby. Be respectful and cordial with your tenants, but don't become a friend, at least not while they're renting from you. If you do, the tenant may take advantage of the situation and neglect paying the rent. Also, make repairs to the property when needed and take care of tenant issues in a timely manner.
8.) Lastly, how you manage the rental income or cash flow from your property will determine the amount of money you'll have available for future repairs or down payments on additional rental properties. In this manner, it pays to be frugal with the rent and allow it to build up in a "rainy-day" fund to meet your future financial needs.
That sums up the basics of how to be a successful landlord. For more in-depth information on this topic, please visit The Landlord's Library book collection.
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