I'm preparing to purchase my first SF rental property and want to make sure that I am as good a landlord as I hope my tenant will be. I have a lease agreement which outlines what is expected from both parties but I wanted to know if there are any specific things I should be doing to make sure this goes as well as possible.
Screen, screen, and screen again. Listen to your gut instinct when it comes to screening tenants. if it don't feel good move on to the next. Learn to say "no". Don't waiver on security deposits or when rent should be paid. Good tenants understand the system. Bad tenants try to game it (you). Your lease is NOT there to "outline what is expected from both parties" Your lease is there to tell the tenant what he or she can and cannot do and what their obligations are. You wouldn't ask your tenant for a loan, so make sure your tenant understands that you don't loan money to them in the form of late payment. Don't worry about being "as good a landlord as I hope my tenant will be". Just expect your tenant to be as good as you want them to be. Be responsive to your tenants communications and requirements (within reason). Tenants are not your friends. This "business" is all business - keep it that way. Sorry to be so blunt but reality has a way of slapping you in the face if you go into something with your eyes closed. Good luck.
1. Know your local landlord-tenant laws and make sure you fully understand them.
2. Have a local real estate lawyer review your lease. Best money we ever spent was paying an attorney to write our lease; we’ve only had to make minor tweaks over the years.
3. Read quality landlording books. There are several recommended on this site. Take notes!
4. If possible, join your local REIA so that you have local support when questions/issues arise. Utilize the knowledge of those seasoned landlords who have already made mistakes and learned from them. These individuals will also have connections with people who matter in the industry, and that always helps.
5. Search BiggerPockets whenever you have a specific question; the forums are full of people ready to help. But you’re already on top of this one.
Hope that helps! We’ve been landlords for over a decade now, and I regret to say I did not follow all of this advice when we were first starting out...instead, we often learned the hard way. In short, reading quality books and networking locally are two of the most impactful things you can do to be successful!
1. It's gonna get ugly and savage, Mark. It may take some time to get there, but it will always get there. I used to think that it was all because I invested in borderline C/D properties. No, I've learned better by reading this forum. Everyone has tenants who go through personal crises. I would ask you to remember this for those times -- whenever you choose to do a tenant in distress a favor or cut them a break, always ask yourself if you're really helping someone or just enabling their self-destructive behavior.
2. Learn how to advertise like crazy so you can minimize vacancy and still screen like crazy.
3. Never, ever. ever dress better or drive better than your tenants anywhere they or their friends might see you. You must never give the impression that you have a very happy marriage or a very troubled one. Never tell your tenants you're going on vacation. If you do go, it's because you have a sick relative somewhere who needs to see you before they go on to glory -- the best kind of story for that is an expensive one, like a blind half-brother with a rare blood disease who is only free of constant pain in this one remote high-altitude institute in the Cascades...something so outlandish no one would make it up that at the same time implicitly explains why you need the rent checks to be on time. And work on that cover story! Make sure the institute has a website. Be able to talk about how you drove there from the right airport in the snow. Suspicious people love Google.
4. Don't take it personal. Your tenants will be neither the best communicators nor the sharpest tools in the shed. You are a landlord. There is psychological baggage that comes with that. Your tenants will have a constant, grudging resentment for anyone who has more than they do, especially their landlord. They will really make any excuse to dislike you, no matter what you've done for them. They will always make fun of you behind your back and will try to say clever inside things to your face to laugh about after you leave. They will lie stupidly, like little backward frightened children. It's the baggage talking.
5. Learn to recognize the common structure of a stupid sob story. It will always present the tenant as totally innocent and always end with "I just don't know what to do!" No matter how obvious the solution is, that you give them something to help them, they will repeatedly profess that they just don't know what to do.
6. Never try to help a tenant improve their credit rating. Never talk to them about financial literacy. They will automatically think it's because you want to get rid of them or look down on them. You own the roof over their head. That's a powerful thing.
7. It's none of your business what goes on behind their closed doors if they're not breaking the law, and getting in their business will only bring you grief.
8. Just because they mowed the lawn and bought mulch to spread around the shade tree out front doesn't mean the poison ivy isn't growing like crazy around back.
9. Never let a tenant fix anything. You will regret it eventually.
10. Learn the laws that govern landlord-tenant relations in your area well. The first time you evict, pay for an experienced lawyer to help you through the process. It will not be cheap. Consider it a tuition payment.
11. Whenever you have a question that the books and your constant reading can't answer, hit the BP forums with it, especially this one. Don't get offended no matter what anyone says here, in whatever tone. Who are we to judge you? If someone's life is so miserable that they need to try to cut you down to feel better, well, leave them to their misery.
12. Make sure all the property's neighbors know you and have your business number.
13. Prepare for junk. All tenants love their junk. My theory is that since there is such massive insecurity in not owning the roof over their heads, surrounding and in some cases burying themselves in junk is like self-medicating against the anxiety. The junk will always come with stories attached to it. A bong is not a bong. It's a cherished time machine of nostalgic memories of the very best of good times spent with inseparable friends during an unforgettable, seminal period of the tenant's life. No matter if you have to haul it out to the utility trailer with the rest of their junk next week. That bong stands for everything to them in the moment they tell you about it, and you had better respectfully keep a straight face as you hear the Legend of the Bong and not imagine the sound it'll make as it hits the bed of your utility trailer.
15. Keep your sense of humor. Sometimes it will be all you have in the face of things as cruel as finding out that they left their animals behind without food or water when they skipped out, or as malicious as lying about you to everyone in the neighborhood for months, or as painful as discovering that yes, you do need to spring for four thousand bucks of unexpected expenses in January to change out the furnace that went bad at just exactly the wrong time.
@Jim K. I'm guessing from your post that you're a VERY experienced landlord! That made me laugh! All the best.
Thanks Jim, What does a good advertising strategy look like ? What advertising is best, which ones yield the best tenants ?
@Mark Andrews Take your time when screening tenants. Do your due diligence. Check and verify everything. If a prospective tenant is in a rush to move, usually it's a red flag unless they tell you upfront why they need to move. Be sure you work with honest and reliable people. Usually, it's the past landlord who can verify how they really are with their rental history. Good luck!
Cant most of these headaches be avoided by buying properties is nicer neighborhoods and charging more for rent?
Get some education, Mark. Start with good books that have been written by highly professional landlords and people with a significant stake in this business. Free unvetted advice in real estate investing forums is usually worth exactly what you pay for it.