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Author Topic: 6 Simple Steps to Landlord Success  (Read 13216 times)

Offline CLTinvestor

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6 Simple Steps to Landlord Success
« on: May 18, 2012, 04:20:08 am »
After years spent managing my own rentals, Iíve learned a few key aspects for successful landlording to pass on to beginning landlords or even homeowners that are thinking of renting their personal homes in this current real estate market.

1. First and foremost, always return calls to your tenants as quickly as possible. Just the same in which you are annoyed or frustrated when a company fails to return your call or offers poor customer service, such is the same in the eyes of your tenant if you give them the same poor level of service. By quickly following up with your tenant, you show them that you care and they will be more apt to re-rent from you in the future as well as to take better care of your property. By also handling maintenance issues and other concerns quickly, even in 48 hours or less, you are respecting their needs (as well as your duties as a landlord) and are demonstrating great customer service that they likely havenít received experienced in the past.

2. Respect your tenantsí privacy. This means not coming over unannounced or doing an exorbitant amount of in-house inspections during the year. Nobody wants to live in a house with a nosey landlord in which they feel their privacy is constantly invaded. Should you feel you need that extra control over the property, you can always do a drive by to be sure there arenít 100 cars parked in the driveway or trash being left about but if you really want to inspect the property from time to time, you need to arrange this in advance with your tenant and have them agree to it. It is also best to have this stated in your lease agreement. Unless you have been receiving complaints by neighbors or feel that illegal activities may be taking place, its best to allow your tenants as much privacy as you would expect to get should you be the one renting the property.


3. Allow good paying tenants the freedom to have a bit of control over the property. For instance, if your tenant wishes to paint the walls, allow them to do so. Of course you need to convey that they will be responsible for any paint on the carpet, etc but should they decide to paint, chances are they will be more apt to re-rent from you year after year. Some corporate owned apartment complexes can have excess turnover due to the stringent rules of altering the interior. From my experience, its better to allow a tenant to paint a couple rooms than to have to find a new tenant every year. Of course, you wouldnít want them to paint a blinding fluorescent orange but you can always have them agree to re-paint the walls if choosing an obscure color. In either circumstance, youíre getting fresh paint on the walls and a happier more comfortable tenant.


4. Offer quarterly or semi annual services. These could include services such as carpet cleaning, pest control, landscape maintenance, or even new appliances. Anything that falls into this category is going to keep your tenants happy. You could even offer them a yearly professional cleaning service for them to use at any time during the year as a thank you for renting. Any of these things might cost $100 or more but not only are you keeping your property in shape but keeping a more loyal and satisfied tenant. While the money spent here may seem like a lot, just think about how much a month or two in lost rent would cost if having to fill a property with new tenants? Better to spend $100 now than $1000 later.


5. Treat tenants with respect and maintain a professional relationship. By showing them respect, they are more apt to show you respect and to respect your property as well. Becoming too friendly with tenants, at least certain ones, can complicate things at times. Itís ok to get to know your tenants well but try to keep the relationship on a professional level. This becomes especially important when dealing with tenant issues or late rent payments. This brings me to my last word of adviceÖ

6. Act promptly on issues of late payment. If rent is to be collected on the 1st of each month, be sure that you are following up and making calls and emails by the 2nd day it is late. Allowing leniency in this situation will only get worse over time. Letting your tenants know that you cannot and will not allow late payments will help keep them in line with timely rent payments. Staying in close communication in these situations is vital.


By following these guidelines you are sure to keep happy satisfied tenants over the years and will likely find that your properties are kept in better shape since the tenants will feel they own the space instead of simply renting it. You will also find you have a lot less stress throughout the year as a landlord. And should you decide to sell, you may even find out your tenants want to be first in line, which could save thousands in sales commissions if they are able to qualify for a loan to purchase your property.

Wishing you the best of luck in your real estate endeavors!
Rory
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Offline kelle711

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Re: 6 Simple Steps to Landlord Success
« Reply #1 on: May 20, 2012, 10:38:44 am »
Great list, I especially like #4 but they are all really good tips.
Goal set. Plan. Execute.
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Offline javipa

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Re: 6 Simple Steps to Landlord Success
« Reply #2 on: May 20, 2012, 05:22:20 pm »
What I'm going to say assumes we want to maintain the highest GSI, not just let the rents go, and create a waiting list for rent bargain hunters...

#4 is an unusual suggestion , but that is a great one.  I've discovered that my apartment dwellers don't necessarily pay to maintain their units very often (shock).  And what do apartment dwellers do after their units start looking tired and worn?  They complain ...or they move ...but they don't always do both. 

Meantime our tenant, living in the now-dingy [din-gee] apartment, sees another apartment around the block that's the same size. However, itís a couple bucks more, but looks all fresh, clean and perky.  And so my tenant thinks to himself, "I'm perfectly happy to pay $20 more, and live in the nicer apartment around the corner.  So, my now-former customer upgrades his digs by moving into my neighbor's building around the corner. Now not only do I have to upgrade the now-vacant unit cosmetically, and correct for normal wear, but I've got a vacancy to fill.

Of course the manager of the building around the corner is no better at managing then I am.  His tenant moved for the same reasons mine did.  And after my neighbor completed cleaning, fixing and cosmetically upgrading his now-empty unit, he also successfully "stole" my tenant.

So, because we both failed to understand that marketing units for rent, also includes addressing normal wear and tear in real time after signing a lease, not just when there's a vacancy, we're now suffering from both a vacancy and a minor rehab job.  Who knew that a tired looking unit would cause a vacancy, and a financial loss?

Either way, the neighboring manager and I both lost tenants, because we weren't paying attention to the necessity of ongoing cosmetic maintenance, which is really an ongoing marketing effort.  Again, our marketing should have included the proactive, cosmetic maintenance of our product.

Still, we both just experienced a self-inflicted vacancy cost, because we failed to cosmetically maintain our tenant's unit.  Sure we fixed the toilet and reattached the towel bar, or replaced the kitchen faucet.  But heaven forbid cleaning the carpets before a vacancy occurs, or offering an annual cleanup at no charge ...despite the existing tenant "being so dirty." 

Now...what would have happened if we completely freshened up our tenant's units (our product), one by one, as their leases were coming due; raised the rent a few dollars just to keep up with the costs, but didn't have to overcome a vacancy in the process?  We would have fewer stolen tenants, less expensive maintenance costs, and less turnover overall.

If I had done it the right way in the first place and avoided an actual vacancy event, I would have done better than my neighbor, who continued to play catch-up every time one of his tenants bailed on his dingy apartment. 

Instead, we just let the tenant rot in his apartment; begrudgingly perform mechanical maintenance, and did nothing to maintain our product's cosmetic marketability. 

So, the question might remain, "How long do we allow normal wear and tear to accumulate?  The unsophisticated owner might say, ďUntil the tenant moves.Ē

It's much more profitable and professional to "keep" the customer we've got, instead of just managing turnover.  So, in this case, overcoming normal wear and tear, in real time, is both an excellent marketing tool and management approach. Why again? Because our marketing should not stop with a signed lease agreement.  It just changes focus.

Of course I'm simplifying the scenario, but tenants that are not taken care of, will move for a variety of reasons, including the fact that the building and units are getting 'old and tired looking,' despite the rents being lower than everyone else.  And leaving rents under market is a cardinal sin for the professional investor.

So, the idea of giving our good, paying tenants, the option of having their carpets cleaned, or upgrading appliances, or even offering to paint their units after say three years, is a more profitable option.

John T. Reed mentions something like this in his management book.  That's where we learned to take proactive, if not preemptive, moves to reduce vacancy and turnover. 

Very good post.  Thanks for sharing.
 :beer
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Alliee

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Re: 6 Simple Steps to Landlord Success
« Reply #3 on: August 21, 2012, 12:10:53 am »
If we are going to be taking over other peopleís problems, and fixing them then we need to know how to succeed where the other landlord has been failing. We need to be prepared. Thanks for sharing your all 6 great tips.

Offline Estrogen Hostage

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Re: 6 Simple Steps to Landlord Success
« Reply #4 on: August 23, 2012, 08:41:43 pm »
I couldn't agree more.

Prompness is very good when dealing with late tenants - this is huge as far as getting resolution to the problems. When I sign a lease with a tenant, I show them the late fees and discuss them. I give a grace period until the third. They get a call from me on the second or third to remind them in case they forgot. On the fourth, there is a $20 late fee. They need to have told me when I will have it and I generally leave them alone until them if it's reasonable (next paycheck). On the 11th, there is another $20 late fee, and they need to get it to me right away. I am visiting them when they are home now. On the 16th there will be an eviction notice on the door and late fees are $20 per day. I won't accept any payment except payment in full.

I feel by discussing this with them right up front I am managing their expectations about what will happen if they are late.

Offline javipa

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Re: 6 Simple Steps to Landlord Success
« Reply #5 on: August 23, 2012, 10:04:24 pm »
Our late fee is $150.  There is no grace period.  The grace period is a full 30 days before it's actually due.

Of course we consider postmarks, but if we haven't otherwise received the rent on or before the due date, it's late.  We won't accept the rent without the late fees after that point (plus the daily late fees).  It can take a month, or two, for our new clients to figure this out.   

When is our due date, you ask.  The first business day of every month.  If the first business day happens to be Monday the 3rd, then Monday the 3rd is the due date. 

We used to be more aggressive and maintained a strict due date of the 1st, but when that fell on Saturday or Sunday, it became inconvenient for us to receive the payments in person.

We've also charged a daily late fee of $10/day just to add insult to injury.  Why?  Because in the tenant's mind, once the rent is late, it's late, and he's lost the incentive to bring the rent is asap since there's no additional penalty. 

I mean, when there's no additional damages, the tenant is hardly concerned about 'how late' the rent was once they've been charged $150. 

So we added the daily penalty to maintain the motivation to pay us quickly.

That doesn't account for the tenants that call us in advance and ask for a couple days.  We're forgiving the first or second time around if the tenant gives us a heads up.

Meantime late fees are rare and not a major profit center after all is said and done.  The biggest upsides are that we're rarely hunting down payments and we know very quickly if a problem is emerging.  Not to mention we can pay our bills early in the month without a sweat.
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Offline Estrogen Hostage

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Re: 6 Simple Steps to Landlord Success
« Reply #6 on: August 24, 2012, 08:29:27 am »
That doesn't account for the tenants that call us in advance and ask for a couple days.  We're forgiving the first or second time around if the tenant gives us a heads up.

Meantime late fees are rare and not a major profit center after all is said and done. 

I also give leeway once during a lease for a tenant that calls in advance.

My goal is to make zero money with late fees. Late fees are there to make sure the tenant pays on time, not to extricate more money from a tenant already in a money crunch.

Offline glass

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Re: 6 Simple Steps to Landlord Success
« Reply #7 on: August 27, 2012, 10:33:49 pm »
Great advice,  I made the mistake of being too friendly with my tenants.  When it came time for rent to be paid, lots of excuses!  No more friendly, just professional  relationships.

Offline javipa

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Re: 6 Simple Steps to Landlord Success
« Reply #8 on: August 27, 2012, 11:39:24 pm »
Great advice,  I made the mistake of being too friendly with my tenants.  When it came time for rent to be paid, lots of excuses!  No more friendly, just professional  relationships.

We 'still' HAVE to be friendly...!  This is business, not a government program where the administrators treat you like crap, because you've got no choice.

We are friendly with all our customers.  They are paying off our mortgages...!

The difference is they're not 'family.'

We just don't confuse our family with our customers.  Otherwise, we're quite friendly and warm with our customers.  However, we only love our family.  My family can get with with bloody murder.  My customers ...not so much.

So, we treat our land-lording like it was a business (it is), where we treat the customers that make us money, like Golden Geese that lay little golden eggs in our basket every month like clockwork.   

We don't kick, taunt, or tease our geese.  Or say mean things to the geese.  We make sure their nests are comfortable.  Otherwise the geese will fly away, leaving us with no golden eggs, and then force us to sift through a bunch of carcass-scavenging vultures to find another Golden egg laying Goose. It's at those times we discover how few golden egg layers there are. 

Instead, we pet our Geese and nurture them; say encouraging things to them; and of course give them a deadline for producing golden eggs...!  Hey we're still not operating charity...!  By gawd, we want our eggs delivered on time!  :shocked

 :biggrin :biggrin :biggrin
« Last Edit: August 28, 2012, 01:55:56 pm by javipa »
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Offline Kirill

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Re: 6 Simple Steps to Landlord Success
« Reply #9 on: September 04, 2012, 07:41:10 pm »
I would like to add one more tip: join ACN. It only cost $500 to sign up but then you sell electricity & gas to your tenants (plus other things, but i don't believe in them as much). if you can get 50 clients of electricity/gas (tenants, friends and family), you have 10% of their revenue. nice small addition to the rent income!

I have to say I have signed up, but if you have several properties that is a good idea.


Offline Moses O

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Re: 6 Simple Steps to Landlord Success
« Reply #10 on: September 29, 2012, 12:22:47 pm »
I appreciate these six steps, because they are more focused/centered on the tenants( customers).
Customers service is key for success in any business and real estate is not an exception.
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Offline jhonkeets

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Re: 6 Simple Steps to Landlord Success
« Reply #11 on: October 01, 2012, 06:27:43 am »
So we added the daily penalty to maintain the motivation to pay?

Offline ForeclosureHomesonSale

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Re: 6 Simple Steps to Landlord Success
« Reply #12 on: October 01, 2012, 11:32:56 am »
The one that I think is very important is number 6 about landlords acting promptly.  As a landlord I get so many phone calls per day morning noon and night and you just want to shut off the phone.  You can't and you shouldn't.  You need to pick it up even though you know it is the complainer who calls you two times a week for the smallest problem. You must stay professional. answer kindly, and get the work finished within a day or two.  To do this you may have to have your own electricians, plumbers, etc...
John Stevenson - Real Estate Specialist
Find the best real estate opportunities visiting ForeclosureDeals.com

Offline jenn_simmons

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Re: 6 Simple Steps to Landlord Success
« Reply #13 on: October 21, 2012, 07:46:33 pm »
Generally speaking, it is best to treat our tenants as friends or with diplomacy though sometimes it's disadvantageous considering the fact that they might abuse you. It is a good idea to let your tenants know that you're aware and strict when it comes to payments/late payments. Also, if the house being rented out is semi or fully furnished, it is highly recommendable to insure the items. My aunt does this- she insures the fixtures and doesn't let the tenant know that they're insured so when there are damages, the tenant pays and the insurance does too! Though I haven't done that as of yet, that idea usually crosses my mind.

Offline Thomasjacob

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Re: 6 Simple Steps to Landlord Success
« Reply #14 on: November 30, 2012, 11:52:03 pm »
I believe that hiring a real estate agent or a property management firm proves to be very beneficial to landlords. They take care of tenants and every problem and issues related to them. Right from maintenance to collection of rent on time. I have personally experienced it. For last 2 years I have been using hunter rentals for my rented apartment in Killeen. I have had no problems or inconvenience till now. Neither do I have to worry about anything. !!

 




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