Remember why you got into the rental property business? For some of us, it’s lost in the mists of time. Others of us we remember the dreams of a secure future, retirement income or real estate tycoondom. For all of us, the last three are still goals we either had or wished we had thought of.
Unfortunately, for most landlords those dreams have either come up short or turned into nightmares. Many landlords don’t like the business much.
How do you fix it so that you love the landlording business? The biggest complaint I hear from landlords is that their rental property has simply slipped out of their control. They lost the control because their tenants took control. In order to love any business, you have to be in control of it.
You don’t mind if good tenants take control of their homes: that means they keep them neat and clean both inside and out, they insist on having good neighbors, and they want to have a great place to live– just like you want them to. You mind when you have bad tenants taking control. We all know what that means.
What drives landlords out of the landlording business is bad tenants. Fact is, bad tenants are completely avoidable.
Why do landlords rent to bad tenants? Often it is desperation. The rental market is so bad that they feel relieved just to get somebody who will move in. The bad tenant is relieved, too, to find a landlord who will fall for his line of bull. Other landlords wanted good references and a real source of income.
But just because the bad tenant is relieved to find a place to live doesn’t mean he’s going to turn over a new leaf and become a model citizen–count on more of the same behavior that got him evicted from the last place.
Another reason landlords rent to bad tenants is that they operate under the mistaken belief that if they don’t rent to the first warm body who shows up with money, they open themselves up to a Fair Housing complaint, especially if the applicant is a member of a protected class. Even the Fair Housing enforcers don’t profess that. They are only too willing to explain that uniform, objective rental requirements are just fine. In fact, since many Fair Housing enforcers are renters themselves, they are all too aware of how unpleasant it is to live next to a bad tenant, regardless of what “protected class” he or she is a member of.
The biggest reason that landlords rent to bad tenants is that they haven’t figured out just who a good tenant is. To figure that out you need to create those uniform, objective rental requirements that the Fair Housing enforcers allow are okay. Decide how much income is enough; how good references have to be; how good credit a tenant must have; and that everything on the rental application must be verifiable–no exceptions.
Remember these landlord rules:
1. When a bad tenant is living in a unit, you can’t put a good tenant in it, the space is used up until the bad tenant is booted out.
2. Better no tenant than a bad tenant.
3. Tenant selection is the most important job a landlord can do.
Follow these rules and you’ll stay in the landlording business–and even if you don’t love it, you’ll like it a lot more.