I rented my first property in September of 2009. Over the last 12 months I rented over 20 more as an owner/landlord. These opinions might be a bit skewed as my sample size is only about 25 units and most of our tenants are interested in entry level single family housing.
Here are 10 realizations I made during my first year as a landlord:
10. Most Tenants in my Demographic don’t have the Internet at Home
Before I started I had a website built that showed all the available properties we had, allowed tenants to give maintenance requests and even on occasion had virtual tours of our properties. But after doing some inquiring, I realized that most of our tenants do not have regular access to the internet.
9. Cash is King
I would say 60% of my tenants pay in cash and handle most of their finances in cash. This came somewhat as a surprise to me, but I really appreciate the fact that cash cannot bounce at the banks (unless it is counterfeit). Some landlords force their tenants to pay with money orders or cashier’s checks, but as long as I am the one collecting it, I am happy to take cash.
8. “Bad Luck” follows Certain People around
There are some people out there that seem to be extraordinary unlucky. One month they get arrested, the next month their car breaks down and the next month they get laid off. These are the people you want to try to avoid by any means necessary. One of my landlord friends writes down every excuse he gets from a tenant, so when they try to use the same excuse again he can remind them they’ve already tried used that one. Poor decisions make for “bad luck.”
7. Extreme Weather Causes the Most Maintenance
From now on I am counting on mild summers, mild winters and no rain. It seems like when it is 100+ degrees air conditioners start breaking and when the rain storms come, things start leaking. This is just a fact of life as a landlord.
6. Almost everyone has a Pet
A different landlord I know, said his pre-qualification question has changed from “Do you have any pets?” to “What kind of pets do you have?” I think that is pretty accurate; we probably have small dogs at 50% of our properties. We don’t allow big dogs or cats though.
5. Set the Precedent or the Tenant Will
Early on, I wasn’t as good at this. I would give tenants slack and now some of them expect it. Saying rent is expected on the first is one thing, but showing up at the door wondering where rent is at is another thing. Once they know you mean business and will hassle them, you start getting paid first!
4. Two Bedroom, One Bathroom Houses are Okay for Me
I know a lot of investors that stay away from smaller houses. I have a couple and they make the perfect rental, you have fewer people living in them, less area to fix and not that much less income. Obviously, if there are very few two bedroom, one bathroom properties in the area, you should probably stay away from them, but some areas are full of them.
3. Shared Walls are more difficult to Manage
I have one duplex and two condos in my rental portfolio. They come with a different set of issues. They fight, they complain about each other and we don’t get that much more out of the income of the duplex (combined) as if we just rented a single family house. I stay away from them unless I get a good discount on them. Some landlords make a living here, which is fine.
2. Signs on the Property are my Favorite Method of Advertising
Since I am an avid internet user; I thought 90% of my tenants would come from CraigsList and maybe other online methods. Boy, was I wrong! My new strategy is, I put a sign up for 1-2 weeks before I do any other advertising. I do this because those people are the most qualified, they know the area the house is in and they know they want to live in that area already. For my last 5-6 rentals, I haven’t needed to do any other advertising.
1. Trust your Gut
Credit scores, pre-qualifications, references are all very important but I have learned that my most important indicator is my own gut. I had one tenant that tried to move-in two weeks later than we originally agreed on. When I said that would not work for us, she told me that if this is how you work I will make it a rough 12 months but she would “deal with it” and move in on the agreed upon time. I told her that I would give her the deposit back and she could find a landlord she could work better with! It works both ways. On occasion we have let people move-in only after paying a portion of the deposit if my “gut” is okay with them.