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The Professional vs. the Unprofessional Landlord

Jason Hanson
2 min read

Part of being a real estate investor means that every time one of your friends or family has a real estate question they always come to you. And of course, since its friends or family that means you’re never making any money off of them and they think they can abuse your time.

I’m sure you know what I’m talking about. That’s why it is so important never to become friends with your tenants or anyone else you do business with. Once you become friends, your relationship changes forever and it will be hard to charge them for things or fire them from a job, if it ever happens to come to that.

The reason I bring this up is because last week I had a very close family friend come to me and ask for help regarding her first house that she is moving into. She’s a young, single girl and was renting a single family house, but like many tenants had no idea what she was doing.

I told her I had some time available on Tuesday so I agreed to accompany her to meet with the landlord and sign the lease.

When the landlord showed up, he was in shorts, a baggy shirt and had a baseball cap on. When he started going through the lease he literally said, “I borrowed this from a friend who owns a lot of rental properties but I’ve never actually read it.”

We went through the lease and there were several things I had him take out. For example, that she would pay for all repairs on the washer and dryer if they ever broke. And that she was not allowed to have pets. (She had a cat she wanted to bring). The landlord agreed to all of my changes.

The funny thing is, it was a solid lease.

Mine is similar and is landlord friendly, and I have some of the clauses that I made the guy take out. But in this instance I was helping the tenant and not acting as a landlord.

Now, from everything that was going on it was obvious this guy was just some amateur landlord and that this was probably his only rental property. However, the one huge mistake he made was having the property in his own name and therefore signing the lease in his name.

I don’t care if you have one property or 100.

You need to have at least one LLC to protect you in case something happens to your tenants. If my friend happens to get injured in her new place then the landlord is personally liable and he could lose everything he has.

When everything was finished we did end up signing the lease and my friend was very happy to get her new house. On one hand I was worried about this landlord because I knew that eventually he’d probably get himself in a jam, but on the other hand, I buy most of my properties from guys like this so I’m very thankful for all of the amateur landlords out there.

But please don’t be one of them. Form an LLC, stick to your guns and don’t let people change important clauses in your lease, and always act professional and meet with your tenants properly groomed.

Photo: Matt McNier

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.