Investing in real estate involves more than purchasing a great property. After you have done your homework and found the right rental property for your goals, made an acceptable offer, and closed escrow, you are suddenly a landlord. If this is your first rental property, you’ll be learning the ropes as you go. If you already own other rental properties, you can always learn more about being how to be a good landlord.
If you use a search engine to look for articles and blogs on the topic of good landlords, you’ll find more than you can read. Some may advise you to provide your new tenants with a sort of care package with small welcome-to-the-neighborhood items from local businesses. Another may say that a freshly mowed lawn will make your tenants feel appreciated. While these gestures may or may not be helpful, most of what you’ll read will point to the same essential traits you need in order to be successful as a landlord.
Don’t make the mistake of thinking that being a landlord is a hobby. You can’t just deposit the rental checks and forget about the property until next month and make a profit. Being a landlord involves all the tasks of running any business. You must be physically organized, with all your documents, whether paper or electronic, in relevant files that are easily located. You must also organize your cash flow, so that you can plan for and remember to pay property taxes, homeowners’ association fees, and any other bills when they are due, as well as keeping track of whether your tenants are paying their rent promptly. Set up systems for collecting rent, arranging for repairs, and maintenance work. You might also want to create a website where your tenants can get answers to these questions.
The relationship you build with your tenants is crucial to your success. It’s that simple. You need them as much as they need a roof over their heads, so foster an environment of respect.
At the very beginning, sit down with your tenants and go over the lease and any rules you feel are necessary. Make sure they know what is expected of them in this partnership. Whatever rules you set up, make sure everyone has a copy of the final arrangements. When problems arise, deal with them as promptly as you would expect a problem in your own home to be handled and maintain open communication with your tenant until the problem is resolved.
Although it may seem counterintuitive, requiring your tenants to follow the rules and pay their rent on time will likely earn you more respect. A landlord who lets late payments slide to avoid confrontation, or doesn’t require late fees to be paid, establishes a reputation for being a pushover.
You don’t have to do everything yourself. Even if you live near your property, a second home to maintain is time-consuming. You may find that hiring a rental property management company, like a turnkey property management company, is well worth the cost. If you have purchased a turnkey rental property, that is ready to rent out the moment the last document is signed, chances are the company that sold the property has a branch that handles management. You can set up an arrangement that suits your goals, and a reputable company will keep you informed on a regular basis.
Talk to one of our investment specialists to learn how JWB can help you earn passive income through long term real estate investing.