I’ve been renovating my rental property this week and haven’t had enough time to pick a Blog Post of the Week! Instead, you get obscure ramblings from an over-caffeinated blogger….I’ll have a Blog Post of the Week! again next week for you. Have a great weekend!
I Never Wanted To Be A Landlord
When I was an advisor, I’d hear horror stories from my clients with tenants. Early on I learned that I probably didn’t have the stomach for some of the negotiation and strong-arming that it takes to work with tenants. I prefer REITs for my real estate exposure.
But, after my home didn’t sell when we moved to Texas, I realized that I had two choices: short sale or try my hand at tenants. I opted for choice #2. I wasn’t completely green. I’d read extensively about landlord/tenant contracts, strategies and tactics so I could be useful to clients. While “fun” might not be the right word, it’d be educational to try it first hand.
The surprise? I didn’t know how much I’d like it.
I’m no Donald Trump and am still too much of a pushover. I want to be a little more callous with my tenants because they realize they can get away with stuff (and do). An example: my tenant the last three years was late with her rent EVERY MONTH. The good news is that I wrote a $100 late fee into the contract, which she gladly paid EVERY MONTH. I got used to her checks two weeks late and came to enjoy the $1,200 extra income from her.
Lessons Learned From Landlording
Is landlording a word? Probably not (Pages doesn’t think so….), but I’m running with it. That’s the kind of rebel I am.
- Don’t rent a furnished place unless you’re okay with everything being ruined OR you write penalties into the contract. None of our furniture matched our new house (of course, that would be made too much sense….), so we left most of the furniture there. My tenant, a school teacher, was excited about getting a home with nice stuff. Imagine my surprise three years later when my sofa, living room chair and desk were all destroyed. She apologized a ton, but no cash exchanged hands.
- Bolster your reserves or keep credit handy for surprises. We had a water leak, tree fall down, bathroom fan breakdown and flooding in the basement. If I didn’t have a reserve, there would have been trouble.
- Either live close to your rental or find reliable help. There are many people who will collect rent, fix up the house or manage the property, but most aren’t very good (according to my clients who were in real estate). You need great help or have to do as much work as possible yourself. I live halfway across the country from my rental, but have a great handyman, Dave, who is a quick call away, charges reasonable fees and responds lightening fast. To make sure he’s happy, I pay him the SECOND his bill arrives (that’s overstatement, but you know what I mean).
- Try to complete each “fix it” project yourself at least once, even if you’re going to find help.
- Remember that it’s a relationship with your tenant. My main goal is to have my tenant stay in the house. I’ve tried to make sure the house is well-maintained and I’m accessible so my tenant stays around. That said, I also need to keep up with economics. I’ve looked at rental prices in the area and raised the rent once in the past three years. I was poised to raise it again before I found out she had to move out (through no fault of mine…her son wants her to stay in his house while he’s away on business for two years. I can’t beat “free rent.”)
Are you a landlord? Have you rented from a good or bad landlord? Share your success or horror stories in the comments!
Photos: For Rent: Charleston’s The Digitel
We’re landlords for the MIL’s property (someday it will officially be our property) in another state. My mom and her friends “flipped” it for us after we moved the MIL out, and my mom still works a little bit as a property manager.
However, the tenants are people who were friends with MIL and are, in general, quite easy to work with. Or, perhaps, like you, I’m a little too lenient. We get partial rent checks, late rent checks, etc. all the time. I think they’re still officially $500 behind, but I haven’t even paid super close attention to that.
They are interested in buying the condo when they can afford it, and that works for us. We’re happy to be out of state landlords while we have tenants we know. If they were to move, we’d sell the place, so we might as well sell it to them.
I’d say the biggest thing I look for in a landlord is that they’re local. It’s just too much for either party when they’re not, and as a tenant I want to know that my problems will be fixed in a timely manner, either by the landlord or a local, reliable property manager.
I think I want to try this but need to get some other things out of the way first. It seems like a great way to have some side income and a good way to diversify.
i have friends that maintain rental properties and make a good living off of it.. but i know that it just isn’t for me.. i just don’t have the DIY skills, and would have to hire out a maintenance person.. to make that worthwhile, i would have to have a fairly large number of properties, and i don’t know if and when i would ever be able to take that leap.
The rewards can be big but there is a tremendous amount of risk and time that goes into being a landlord. Personally i was never willing to take on that risk and time, so it was never for me, though it was tempting.