If you’re embarking on your first experience as a landlord, you’re probably experiencing a mixture of excitement and worry. Excitement over the potential financial return of your real estate investment, and worry over what might go wrong.
The truth is landlording isn’t as easy as it used to be. Renters' rights laws in many states have forced landlords to be more professional than ever, and rightly so. That means the key to succeeding as a rental property owner is being professional.
Managing a Business
Managing a rental property is the same as running a business. You offer a product and you have customers (though just one at a time.) Running any business haphazardly will likely lead to failure. So the most important thing you need for success is the commitment to managing your property as a business and with professionalism.
Knowing the Laws
As a professional, you have to understand the laws concerning your rights and duties. You can find books written on this topic, but since laws vary from state to state, you may need to contact a local property management association to find a publication that outlines your rights and duties as a landlord in your state.
Providing Customer Service
The next key to success is thinking in terms of providing excellent customer service.
In your experience, you’ve probably encountered a business owner or maybe even a past landlord who acted as if you should feel privileged that they would even deem to speak to you. As you well know, treating customers that way is not a recipe for success in any business.
Some property owners don’t see the point in treating tenants as valued customers. It’s not like they’re going to be repeat customers renting half a dozen properties. But treating customers well pays dividends in any business.
With quality tenants, maintaining an excellent customer relationship helps the tenants feel good about your product (your house!) so they have more interest in taking care of it. They’re more apt to be sure the rent is paid on time. They’re less likely to look for a new place to live because of a difficult landlord relationship, sticking you with a vacancy to fill. As a bonus, when they do eventually move, they may recommend you highly to friends looking for a place to rent, reducing the time your house sits vacant.
How do you provide excellent customer service? Just as you would in any business. Be prompt, fair, and courteous. Return phone calls and respond to requests quickly. Take pride in your product and be sure it presents well. Treat your customers the way you expect to be treated.
Selecting Quality Tenants
The worst thing that can happen to a landlord is renting to bad tenants. The lost rent before you can legally evict them and the damage they can potentially leave might easily wipe out several years worth of profit on your rental.
To succeed in your business, you need to position yourself so you can legally rent your property only to quality tenants. You need to have in writing the qualifications your rental applicants must meet in order to become your tenants.
While you can’t discriminate based on a number of legally protected factors, you can discriminate based on credit history, employment and references. You can require six months of verifiable employment and a positive reference from the employer, a minimum credit score, and positive references from the previous landlord.
Of course, the applicant is not likely to give you references that will be negative. You may need to become skilled at asking questions in a variety of ways and reading between the lines. But an applicant who can’t get his employer, previous landlord, and at least one other person to lie convincingly on his behalf is probably the applicant you were trying to avoid.
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