When I started buying real estate in the early 2000’s, I knew absolutely nothing about being a landlord. I had no idea about local laws or local codes and even less about actually being a good and responsible landlord. What I had done, and this is where the danger started, was read half of a book I picked up at the local library on how to be a property manager. I had attended several local REIA meetings and even hooked up with one local real estate investor that talked a great talk, but looking back, she had no idea what she was talking about when it came to being a landlord. I made many mistakes and was lucky that I was never taken to court, sued or suffered any catastrophic loss in my properties. That learning process taught me a few things about being a better landlord and I came up with a list of 5 things to pay attention to if you want to be a great landlord starting with knowing your local laws.
Know the land-lording laws for your city, county and state
I found out the hard way that there are different sets of laws for different areas of the state, not just the country. I had to wait months to do my first eviction and by the time I was through it cost more than just money. I had wasted so much time chasing my tail and listening to others who clearly had no idea the local laws either. What I should have done was turn to a local property management company to get first hand advice on how to be a better landlord. That is my first piece of advice. Turn to the professionals to shorten your learning curve. I remember taking the owner of a local property management company out to lunch and as long as I was buying, he was happy to answer my questions. From local laws to using a better rental agreement, he was happy to dish out advice gleaned over the years of managing several hundred properties. He was able to guide me through my first disaster and assist me with a much improved rental agreement and addendums to speed up my eviction processes in the future. But he also introduced me to a fantastic eviction attorney. That was my second step to learning how the local and state laws affected me as a landlord and really helped me begin to develop the type of landlord I wanted to be.
That lease ain’t bad, but this lease is better
As I continued down my own personal journey as a real estate investor, my family was developing an investment company in Tennessee. On one of my trips back to see exactly how things were progressing in Memphis, I was introduced to an investor who personally owned over 150 properties. He and his wife were the landlords of those properties and they had developed an unbelievable machine and method for their madness. Part of what made them successful was the ironclad lease they used for closing. They reviewed my lease, and while they said it was a good lease, they gave me a copy of their lease to show my attorney and see if I could incorporate some of their language. Not everything pertained to my state, but what did, we quickly incorporated into our lease including stronger language, better defined processes, shorter timeframes and most importantly a waiver of the long drawn out process for eviction. Improving upon my lease and working with an attorney to incorporate stronger language and terms was a big reason I quickly improved as a landlord. I had much more confidence.
Nice lease, now what?
With confidence in hand, it was time to put that new lease into place and part of what made it so good was my ability to develop certain standards and processes. All of these standards and processes were spelled out clearly either in the contract or in addendums and often in both. From how to report a maintenance problem to how to ask for an extension of rent due, everything was laid out in black and white. I laid out the day rent was due, the day rent was late and the day charges begin. I laid out the exact amount they would be charged and how it was calculated. They had a specific phone number for maintenance and a specific number for rent questions. I went into great detail about how the condition of the property was to be maintained and the exact process that I would take if was not maintained. Then I spelled out the charge to them as tenants. Every detail was laid out and every page was initialed and where there were major concessions on the part of the tenant, such as a waiver of process, they had to initial and sign. These may seem like obvious points, but if you do not have an exact system for handling things from maintenance calls to evictions and it is not spelled out in writing with the tenant, then you cannot have full 100% confidence that your rental agreement is enforceable and saving you time and expense. That is what a great rental agreement and clear process give to you as a landlord. Confidence!
Be consistent and follow through on your terms
If you have paid attention to the first three pieces of advice, then the fourth and fifth are what make you a great landlord. Being consistent can be one of the most frustrating things at times for landlords. If there are any absolutes in being a landlord, pone of them would be that your will and desire to be even handed and consistent with every tenant will be tested. Tenants will pay late. Tenants will face personal and business crisis and each crisis will be presented to you with a request for some sort of give back on your part. It may be relaxing due dates, it could be lowering rent and it could be waiving fees. No good landlord will ever tell you that there is one clear-cut answer every time. That is not the way the world works. But you have to be very careful to consistently apply the rules of your lease and work with tenants within those rules. You will most likely have spent a lot of time and money developing your lease, your process and your good name and you want none of those tarnished by lawsuits or failed evictions because you failed to implement your own rules. That does not mean that you cannot work with tenants. But you absolutely must protect the integrity of your business and find creative ways to help tenants without completely breaking your lease and being forced to listen to a judge allow a tenant to posses your property rent free for 30 more days because your lease is void!
Surround yourself with other landlords
You would never hear successful investors tell you to insulate yourself as an investor and take a go-it alone approach. The same advice goes for being a landlord. I tell fellow property managers, landlords and real estate investors that, no matter your trade, you should always be learning. One of the best ways to learn is to constantly surround your self with quality people who do things the right way. Sharing ideas, stories, successes and failures is a great way to improve what you are doing and to learn how others are improving as well.
Being a landlord is not as tough as it sounds. But, if you do not take the time to learn the necessary laws, develop a great lease as well as systems and then implement those systems consistently, it becomes a lot tougher than it has to be.
Photo: Anthony Easton5 Absolute Rules For Being a Great Landlord by Chris Clothier