What I Wish I Would've Known Before Becoming a Landlord

Do you ever look back and say, “I wish I would have known that about dealing with tenants?”

Today, let’s talk about things that you should know up front about how to deal with tenants.

What I Wish I Would’ve Known Before Becoming a Landlord

1. You are not your tenants’ friend.

First of all, you want to remember that you’re running a business. You are not there to be their friends. You want to be firm, but you want to be fair with tenants.

Do not approach this like you are their buddy. You can have a relationship with tenants, but make sure it is a business-like relationship. Keep it professional.

I don’t recommend that you become friends on Facebook or social media with them. I recommend you always keep it professional and always keep structure in place in terms of how you are going to interact with your tenant.

2. You’re not ALWAYS right.

The next thing I would say is don’t always try to be right.

Remember, the tenant is living in that property. They’ve got family in the property. There are a lot of emotions involved. Sometimes those emotions can boil up.

Just because you own the structure, does not mean that you own what’s going on inside of the property. It really is someone’s life, and you want to be very respectful of that. You want to make sure that you do not intrude upon a tenant and that you treat them correctly, because at the end of the day, you’re running a business and that business needs income.

Income comes from your tenants paying rent. So again, don’t try to be right all the time. Business is business. You can be right on your own time, but don’t let it affect your revenue that’s coming in.

3. You must enforce your lease.

The next thing I would say is if you put it in your lease agreement, you better be prepared to enforce it. Do not put things in your lease because you want to scare the tenant away from maybe calling in a service ticket item. Don’t include late fee threats that you don’t enforce.

The thing about a lease agreement is it is a bilateral contract that you sign and the tenant signs. You do not have the right to put things in a lease agreement and then not enforce them. This is a contract that they are bound to and you are bound to.

If the tenant does not perform per the lease agreement, you have to enforce the contract. You don’t get to decide when you charge late fees and don’t charge late fees. The lease agreement decides.

Not enforcing your lease could really come back and hurt you down the road. Even if you do something nice and let a tenant slide on your rent, you could have set a precedent with your lease agreement that now you cannot charge them rent because you didn’t charge them one time, depending on a judge and what the judge says.

More importantly, if you don’t charge one tenant late fees, but you charge your other ones, it can be construed as discrimination or a fair housing violation.

So remember, if you put it in your lease, be firm, but be fair. And don’t just put things in there to scare the tenant. That’s not the reason you have the lease agreement. The lease agreement is to make sure that everybody abides by the contract.

4. You have to set proper expectations.

The next thing I wish I would have known about dealing with tenants is the importance of setting proper expectations when it comes to the security deposit. Always remember that when you have a security deposit, that is not your money. That is the tenant’s money that you are holding in lieu of them not performing on the contract.

A lot of times, people will take this money. Maybe they will put it in their personal account, which is called co-mingling of funds—you don’t want to do this. And maybe they spend that money.

It is not your money to spend. It is the tenant’s money that you are holding as a deposit. It should be set in a separate account, and it should be treated as something that you’re holding in case there is damage to the property when the tenant moves out.

Don’t assume that’s your money and you have the right to use it. Because again, that’s where things happen.

The number one reason for lawsuits with the landlord is security deposit disposition. And it’s because they did not set proper expectations with the tenant when they moved in. So being clear and communicating with the tenant is something that you really want to do, and you want to make sure that you set the tone correctly in the beginning of how you were going to disperse funds on the security deposit disposition form.

5. You can’t get involved in tenants’ personal lives.

The next thing I wish I would have known is to not get involved in a tenant’s personal life. A lot of landlords get wrapped up in the personal situation of a tenant, and they maybe loan them money. They do things they shouldn’t have done because they feel bad for them.

Those landlords are not treating landlording like a business. And what happens normally is they end up getting ripped off. Then they get upset. Then they react emotionally.

I’ve never known anyone that makes an emotional, knee-jerk reaction and they’re glad that they did it. Normally, they wish they wouldn’t have said what they said. They wish they wouldn’t have done what they’ve done.

I’ve known landlords that have actually gotten into fist-fights with tenants, and then they have had restraining orders against them. Then, they can’t even go to their own rental property—all because they were so angry and acted on it.

So, do not get emotionally involved with a tenant’s situation. It’s a business, and you want to treat it as such.

6. You are obligated to take care of your property.

The next thing I would say is understand that it is your obligation to take care of this property and make sure that it’s being taken care of. Think about it this way: You own a business and you are the CEO of that business. You need to make sure, as the CEO of your business, that the property is being treated correctly.

That means that you need to do inspections on the property. And if those inspections are proving things are damaged at the property, you need to enforce the lease agreement. These are just some things that you have a responsibility to your company that you are the CEO of to make sure that you’re treating it right.

Don’t let a tenant trash your property and ignore it when it’s time to renew the lease. Don’t listen to all the reasons that the tenant says they’re going to leave.

If the numbers dictate that it’s time to increase rent, increase the rent. Don’t get trapped into the emotional roller coaster of what a tenant is telling you.

You’re running a business. Treat it like a business because this is the most important thing. A lot of times we make a lot of mistakes with tenants because we don’t treat it like a business and we get wrapped up in what they’re doing.

7. You shouldn’t “trade” tenants for rent.

The last thing I would say is do not let a tenant do maintenance on your property in lieu of paying rent. A lot of times that becomes a slippery slope where they say, “I’ll paint the walls if you take $50 off my rent.”

Then you go in and you look. The wall is only painted this high because that’s as high as they can reach. That is not the way that you want to run your business. Keep it separate.

They pay rent. You take care of the property. Do not make deals with your tenants. I know a lot of people that make deals with tenants and normally they end up being sorry that they ever did.

These are things that I wish I would have learned about tenants and how to deal and interact with them.

Remember, they are customers. They are clients of yours. You want to treat them as such. You want to be firm, but you want to be fair with them. They are living in your house, and they are providing revenue for your business model.

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