Setting yourself up for success as a landlord in 2012
You are already a success if you own rental property. After all, only a small percentage of the American people have made the commitment to invest in rental real estate. For those of us who did it on purpose, being a landlord has sometimes come with more work than we had originally anticipated. And the irritations sometimes make us wonder whose fantastic idea this being a landlord stuff was in the first place.
Even so, every January we sit down and make a list of things we want to be better at in the coming year.
I looked up lists of what landlords are supposed to set as goals and saw lots of nebulous, fluffy resolutions that are al- most sure to never last until February.
We want to be better landlords. But what exactly do we mean by “better?” We want to be more in control of our rental properties. But how do we decide what exactly that “control” has taken hold? We want to make more money on our rental properties. But how much more and when?
Much of being a “better landlord” has to do with being in control of our rental properties. The most common complaint I see and hear from landlords is that they have “lost control” of their investments. They may not describe it as “losing control,” but that is the upshot of the situation. Their tenants are in charge, not them. Tenants decide when to pay the rent, if at all, and act offended if their landlord expects the rent on time. Tenants do things to annoy other tenants and act as if they have a perfect right to be disruptive when their landlord objects to all the complaints. Tenants move in “guests,” who stay for six months, and act put out if their landlords consider those people tenants.
If one of those situations describes someone you know well, it is time to create a plan to regain control. But how do we figure out exactly what it will take to regain that control?
Let’s begin with better tenants. One of the requirements for better tenants is knowing exactly what we consider “better tenants.” We have a couple of ways to do that. One is to think about who our good tenants are now, write down the qualities we believe make them good tenants, and quantify those qualities some- how.
That quantification is the problem, isn’t it? One sign of a good tenant is on-time rent payments. We could create a simple chart for that. It could be a three or five level graph that goes from zero for never pays on time to five for always pays on time.
Same goes for number of times we get complaints about a tenant or have to deal with management issues with him or her. Then there’s quality of housekeeping and “guests.” We could do a similar thing there.
You may be able to think of a few other criteria you would like to quantify, and if those are important to you, you are right. Your definition of a good tenant is what is important, not someone else’s.
How would you use something like that? One would be to create a cutoff for acceptable tenant and keep or terminate tenants based on those criteria. Another use would be in screening applicants. You could create a chart for each applicant and rate according to the references you get from previous landlords. You will know the questions to ask the land- lords because you have your criteria set.
Better at maintaining our properties
I don’t much like working on my own house. Then if a tenant called with a repair complaint, that was beyond dislike. I didn’t want to do that at all. That’s why I have used a property management company for many years now.
I always knew that it is important to carefully maintain my investment real estate, but put off doing that because I hated doing it. Fortunately for me there are people who love working on and fixing things. And usually it is cheaper for them to do it than for me considering drive time and number of trips to Home Depot required to complete any job.
Then there are landlords who thoroughly enjoy fixing things and working on their rental properties. I say “good for them!” The question is, do they have a system, a plan, a goal for working on properties?
Unfortunately, it is not good management to simply show up after something breaks. More businesslike is preventive maintenance. If we do enough of that, we are less likely to get frantic calls on the Friday before a holiday weekend. It also avoids things breaking (mostly at inconvenient times) and costing much more than preventive maintenance.
That means a preventive maintenance plan. A goal for 2012 could include a preventive maintenance schedule. How often will you or a representative do an inspection of each property? When will you send out the repair people for annual inspections of whatever they work on such as HVAC, plumbing or even landscaping?
See the article “Implementing a Preventive maintenance Program” elsewhere in this issue for good advice on how to create your own. Then create your own plan for seeing that your properties remain in great shape and your investment is protected.
Managing who is living in your rental properties may already be taken care of in your rental agreement or lease. Most leases and rental agreements have a clause to the effect that guests may not stay more than a specific number of days before they must be approved as tenants by the landlord and according to the landlord’s criteria.
The way to get this issue under control is by setting a goal of enforcing all the clauses in the rental agreements your tenants signed. Those would be not just “guest” issues but any other problem you might be having with tenants. I know I always hated having to do that since it seemed to usually create some kind of conflict. Fortunately, I never had any real problems with tenants, only irritations. And I thank my lucky stars for that.
Even so, diligence in rule enforcement is never a bad idea and usually a good one. The way to approach it is by using a form that explains the issue you want your tenant to address. It is important to put everything in writing and never, under any circumstances, address problems on the phone or in person. Both of those methods are fraught with the danger of misunderstanding and the landlord saying the wrong thing the wrong way. Get the appropriate form from your local rental owner, landlord or apartment association. Any of those groups will have preprinted forms that use appropriate language and state the problem exactly with no extra words or statements that could be misconstrued or negate your complaint.
Here’s to even greater success in 2012. It is in our hands. But we have to take charge of our success the same way we take care of our rental properties by set- ting specific goals and objectives and by giving them a date by which they must be accomplished. Only then can we be- gin to take total control of our rental properties.