Landlording & Rental Properties

7 Things I Wish I Would’ve Known Before Becoming a Landlord

Expertise: Landlording & Rental Properties
12 Articles Written
frustrated-investor

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

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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.

Related: Landlord Emergency Preparedness 101: What Real Estate Investors Should Do Before Disaster Strikes

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.

eental agreement form with signing hand and keys and pen

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.

Related: How to Rent Your Property to the Right Tenants—Fast

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.

Beautiful woman with pots and buckets dealing with water damage in living room

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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Questions? Comments? 

Join the discussion below.

Steve Rozenberg is the vice president of education for Mynd Property Management. In this role, he educates investors about the benefits of small residential inves...
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    Barry H. Investor from Scottsdale, AZ
    Replied about 1 month ago
    STEVE - Great advice all the way around. My favorite is #6. I do inspections every 6 months and the tenants know it is coming. My best guess is that most of them have lived like slobs for 6 months, but when the landlord is coming to inspect - they clean it up - perhaps for the first time in 6 months !! Does not happen all the time, and many just live pretty dirty - but knowing they have eyes on them is important, as you point out. In some cases, if I see something broken, I tell them it is coming out of the security deposit NIOW and I require them to replenish those funds over 2-3 months, so it is actually better for everyone.
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    Thanks @barry it just is a good subtle reminder of things we do not always think about and just trying to bring light to it
    Christopher Smith Investor from brentwood, california
    Replied about 1 month ago
    Very good practical points. I have managers, but I've still dealt with these issues through my managers on occasion. We've allowed tenants to fix things on very rare occasions for very minor rate abatement, but I wouldn't recommend it. Had one tenant do it twice on his own "initiative" and so we had to tell him no more and to always call us, we will handle it.
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    Yes it can become a very slippery slope when allowing tenants to do work.. hard to stop it and draw the line. It can make for strained business relations with the client
    Patrick Pierre New to Real Estate from Garden Grove, CA
    Replied about 1 month ago
    The part about not finishing the paint job because they were too short had me cracking up. But very great advice overall.
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    Thanks.. I wish I could say it did not happen to me in the past.. But almost all of these are hard lessons I personally learned
    Mike Mosee Investor from Eagle Point, OR
    Replied about 1 month ago
    We have pictured, inspection reports done every 90 days so we can keep on top of any seen maintenance issues. So crazy how they don't call to have repair issues done that show up in the inspections. The small cost of inspections is the only way to manage remotely & effectively to let the renters know you care & respond accordingly
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    Setting proper expectations is vital to a successful outcome.. This applies to tenants, contractors, business partners
    Ricardo Torres Rental Property Investor from Orlando, Florida
    Replied about 1 month ago
    great and practical!
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    Thank you very much
    Connor Wentling Rental Property Investor from Rock Hill, SC
    Replied about 1 month ago
    Thanks for the advice, Steve. I'm just getting started, so the timing of this couldn't be better. That said, in your opinion, is there a difference in being friends and just being "friendly" with tenants? To keep costs low right now, I'm managing the properties. That forces me to interact closely with tenants. I'm a naturally outgoing guy and I just enjoy people. I know that I'll definitely have to keep an eye on the "friendship" line and not cross it.
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    I think just always remembering that you are running a business.. That does not mean that you can not be a good business person and treat people with respect. They are the client in my perspective at the end of the day they pay your bills. I think having good business practices, policies and procedures is key to success
    Ana Mateus
    Replied about 1 month ago
    Great article. Although I am not a landlord, yet, I appreciate all the tips. Thank you.
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    @ana thank you
    Dan White Investor from Fox Island, Washington
    Replied about 1 month ago
    Just a few comments. Some jurisdictions are requiring business licenses; Tacoma, WA where most of my rentals are located started this over 10 years ago, Seattle,Lakewood & other cities do too. Here is the reason, by requiring a license the City has control of your business. Licensing is the first step and the cities take years to locate all of the rentals. Then they layer on ordinances, mandatory inspections, Seattle & Lakewood, code enforcement issues lead to a "provisional license" in Tacoma requiring annual inspections. Tacoma now has their own Rental Housing Laws in a 28 page mandatory booklet. FAILURE to follow the "rules" ultimately results in loss of the rental license therefore you are out of business and of course operating a rental business results in lots of severe fines and penalties.
    Brandon Vukelich Real Estate Broker from Auburn, WA
    Replied about 1 month ago
    You are correct Dan White. I also own in Tacoma. You've probably heard the saying, "Don't Seattle My Tacoma." I'm worried Tacoma is following anti-landlord policies making it less and less attractive to retain our properties. Trying to navigate through the constantly evolving laws and ordinances is challenging. It's disappointing as there is soooo much potential for the greater Tacoma market. We'll see.
    Bill Cippola from canton, GA
    Replied about 1 month ago
    Great read. I remember 10 years ago being lazy and not wanting to deal with hiring a painter. Tenant stated he used to paint in a previous job and we traded for rent. Low and behold, he let his 9 and 12 year old paint the bedroom walls and I never traded for rent again!
    Steve Rozenberg Specialist from Houston, TX
    Replied about 1 month ago
    Think of it as a cheap education and what you will not do again :-)
    Davido Davido Rental Property Investor from Olympia, WA
    Replied about 1 month ago
    Nice article Steve. It is thought provoking. Here are two thoughts. 1. While the purpose of a real estate business is profit, it is certainly possible to create profit with friends, even tenant friends. Being firm but fair can be our habit with everyone, including friends, relatives and tenants. (less so with kids and animals). While socializing with tenants can inhibit keeping an effective business relationship with them, -it is certainly possible to maintain a business relationship and friendship at the same time. Some would say that it even enhances our quality of life. One everyday example is the many couples who have obvious business relationships with their best friend (their spouse). 2) In some situations trading tenant labor for rent works better than hiring it out. I trade work for rent, with my 10 tenants every month. We have a system, that is simple and flexible. They are able to do any work on my to do list, at any time of their choosing and at whatever pace works for them. They text their hours at the end of the day, and I reduce their next month's rent by $15/hour (Max $599 rent reduction per year to stay under IRS reporting requirements). I even pay them to send before and after photos $1 each. This system has worked fine for years. By providing my tenants recompense for doing work that they enjoy or for making improvements that they want, I end up with happier tenants, a better property, and the benefit of their ideas. The tenant's tend to become more involved, offer excellent insights, and do jobs that would otherwise be a larger expense for me. The other points you made were quite enjoyable. Especially #2 - "You're not always right." How true.
    Steve Shaffer Investor from Fargo, ND
    Replied about 1 month ago
    Loved point #3! It can't be stressed enough that lease provisions must be followed whether you like it or not. I think one of the more difficult things for us all the time is following the timeline of the pay-or-vacate notices etc. Great article overall.
    Talita Santiago from New Hampshire
    Replied 27 days ago
    Really nice!!!
    Emma Hopegood Investor from New York, NY
    Replied 21 days ago
    Great advice! This was really helpful
    EMMANNUEL CHRISTOPHER from MERRILLVILLE, IN
    Replied 10 days ago
    Only consider using a tenant who is a professional at what you trading for. If licensed, verify their license, check them out, and get references like you would a regular subcontractor. No matter how tempting avoid the amateurs.