Being a landlord isn’t as good or bad as people often make it out to be. In most cases, the reality lands somewhere between the two extremes. But if you’re going to delve into the world of real estate investing, you’ll need a few things to be successful.
6 Things to Get Squared Away
While they may not say as much out loud, most people are under the impression that they could be a landlord if they wanted. They assume that it requires nothing more than a couple of contracts, a few phone calls, and mailbox to collect a rent check. But as any experienced landlord knows, nothing could be further from the truth.
Landlording is a challenging profession and you need the right resources and mental capacities to thrive. In particular, you’ll need the following:
To say that things don’t always go as planned in property management would be the understatement of the century. Destructive tenants, late payments, increases in property taxes, issues with neighbors, broken lease agreements…things tend to go wrong quite frequently. You’ll need a healthy measure of patience to be successful.
2. Personal Finance Skills
At the heart of successful property management is exceptional money management. If you can’t get the dollars and cents to add up in the right spots, you’ll have trouble turning a profit and getting the ROI you need to stay in the business long-term.
As a real estate investor and landlord, personal finance skills come in handy. If you’re good at managing your own budget, maintaining a surplus, and predicting expenses in your own life, there’s no reason to think you won’t be proficient as a landlord. (The opposite is true, as well.)
3. A Good Vehicle
If you own a handful of properties, you’ll be doing a lot of driving between them. You’ll also find that you need space to move, carry, and transport various items—such as appliances, furniture, and building supplies.
You need a vehicle that’s durable. Not only will this help you get the most out of the vehicle, but it will also help you on the insurance front. As CheapAutoInsurance.co explains, “Damage to the vehicle is the biggest cost of insurance, so the stronger the vehicle, the less you will have to pay in premiums. Before buying a car, talk to your insurer regarding the quotes on different models.”
4. Basic Handyman Skills
Not every landlord does his own maintenance and repairs, but even if you contract out most jobs, there are certain basic handyman skills that you’ll need to know how to do. For example, it’s helpful if you can:
- Do basic landscaping
- Patch drywall
- Fix a running toilet
- Swap out air filters
- Pull up carpet
- Run a pressure washer
These are all very simple skills that you shouldn’t have to pay to outsource. Knowing how to handle them on your own will save you both time and money.
5. Cash Cushion
In hot markets—such as the what’s happening right now in most parts of the country—most rental properties won’t have difficulty staying leased. However, all it takes is a blip in the market for that to change. Maintaining a healthy cash cushion will ensure you can sustain rough patches.
6. Good People Skills
“Perhaps the most underappreciated art in the rental-housing industry is that of simple communication. A majority of unpleasant issues faced by landlords and tenants seem to sprout from the soil of communication breakdown,” Seattle Times writes.
The significance of communication really points back to the need for good people skills. Whether you’re introverted or extroverted, outgoing or reserved, you need good people skills to navigate the challenges of landlording. The more efficient your communication, the better your results will be.
Are You Prepared?
In all honesty, DIY landlording isn’t a good idea for most people. It’s highly suggested that you hire a property manager to handle some of the “dirty” and “busy” work, so that you can focus on the big picture decision-making. But if you’re looking to maximize your profits and feel like you have it in you to tackle it, have a go. As long as you possess a healthy mix of the aforementioned skills and resources, you’ll be fine.
Anything you’d add to this list?