Advice to New or Wannabe Be Landlords....

12 Replies

So many posts here involve new landlords seeking advice on common landlording problems.  What to do when tenant does not pay rent?  How do I handle unauthorized residents?  My tenant is parking on the lawn!  My tenant is smoking in my non-smoking property!  How do I evict my tenant?

New landlords -- you ARE going to run into these common problems.  You will have more self confidence, be a better manager, act sooner, and SAVE MONEY if you anticipate these common problems and know how to proceed BEFORE YOU PLACE YOUR FIRST TENANT.

1) Print out your local and state tenant/landlord laws and put them in a binder.  READ the laws -- you do not need to memorize them, but have a working knowledge of what is legal or not.  You want to be familiar enough with your laws that you can find the specific section to re-read WHEN an issue arises.

2) Know the legal timelines, proper forms, and legal means of service for your jurisdiction.  My courts helpfully provide downloadable PDFs of legal forms for 3 Day POQ notices, affidavits of service, etc.  I have these PDFs saved on my computer.

3) Spend a morning observing in eviction court.  Look for one or two attorneys who are handling the majority of cases.  These are usually the local flat fee eviction attorneys.  Ask for their card out in the hallway.  Now you have a legal team.

4) While you are at the courthouse, find out where the Clerk's office is.  See if they have information on the eviction process in your locality.  I have found court clerks to be very helpful people, and a wealth of knowledge.

5) Take a Fair Housing course, either on-line or through your Fair Housing office.  Know what is legal and what is considered illegal discrimination.   Most Fair Housing violations come from innocent actions on the part of the Landlord, not intentional discrimination.  Have a written set of rental criteria, and follow the SAME process for all applicants.

6) Know the legal process for serving Cure or Quit notices for lease violations.  Serve early -- learn to nip problems in the bud.  Get that car off the lawn before the landscaping is ruined, or get that tenant out of your house.

7) Have a "landlord speech" ready to give to applicants or at lease signing.  Let them know that paying rent and maintaining the property MUST be their first priority -- you do not "work with" tenants.  Practice this speech until you can say it with confidence.   Tell them at lease signing about your inspection schedule, and stick to it!

8) Have some monetary reserves.  I  know you want to acquire more property -- but this unit needs a cushion to cover vacancies and unanticipated repairs.   Desperate LLs make poor decisions.  You never want to be desperate.

9)  You have a lease -- but what about your other move-in paperwork?  Do you have your pre-rent move-in photos and property condition checklist ready?

When these items are done, you will be a much stronger, more confident, more profitable LL. 

Thank you @Bettina F. .  Really valuable.  Have PDF'd and saved this post to my property management folders.

Great words of wisdom!!

Brian Karlow, Real Estate Agent in IL (#475.162077)
Whoops- - forgot to add #10. Have your screening processes in place before your first vacancy.
This is a great list of valid points. Brings up enough info and suggestions to get on the right path without spelling it all out (which I assume would take a very long time). Out of curiosity, do you have any tips unique to inheriting tenants? Would you still do the "landlord speech"? I ask because this is a very possible situation for me soon.
Originally posted by @Nicholas Richard Ray :
This is a great list of valid points. Brings up enough info and suggestions to get on the right path without spelling it all out (which I assume would take a very long time).

Out of curiosity, do you have any tips unique to inheriting tenants? Would you still do the "landlord speech"? I ask because this is a very possible situation for me soon.

I do not believe that most inherited tenants will ever see the new LL as the authority figure.  I believe that, unconsciously, the inherited tenants have a "we were here first" mentality.

Our building was 100% full when we bought it.  We sent out a new owner letter, introducing ourselves, providing contact information, and and telling the tenants that we would meet with them individually to go over our company's rental agreement.   The previous owner did the usual one year lease rolling over to month to month rental agreements.  We wrote up new leases -- keeping the rent and lease terms (e.g. dates the lease runs) the same for those on leases.  For those on month to month, we put in a 60 day notice of rent increase right in the new rental agreement.  Everybody signed.   We wanted our Class C tenants on month to month, instead of leases.

Our building closed mid-month (which I recommend, BTW.)  Our first test as LLs came on the 5th  of the following month when rents were due.  No rent -- no communication -- from three tenants.  We served 3 Pay or Quit notices, while we were painting the common areas.  The first push-back came when we actually enforced lease provisions.  I had a female tenant get in my face and say "Shawn (previous LL) never did it this way!"  I replied nonchalantly "Shawn wasn't making any money.  That is why he sold the building."  It shut her up.  When I had tenants threaten "we will just move out!"  my response was "We always expect some turn over when a building changes hands."  The key is to project an image that you are an experienced LL and that nothing fazes you.  Have your comebacks ready.  The LL speech would not have worked on these inherited tenants, because the previous LL had taught them that it was OK to ignore lease provisions.  (BTW, 2 got me the rent within hours, the other the next day.)

We did not want a mass exodus, but our plans always were to systematically vacate the units, upgrade each unit and raise rents.  The first non-renewal we gave to a late payer helped shape up the whole building.  Word quickly spread that we meant business.

We bought our building in 2014.  We only have two inherited tenants left, both elderly in poor health. The tenants we placed are better qualified, pay rent on time and are easy to manage.

@Bettina F. - The "we were here first" mentality is something I can't say I'm excited about but something I'm aware will likely be the case. I love the example you gave for the building in regards to the the response from both the tenants and yourself. Having my comebacks ready is something I will definitely focus on developing to try and reduce headache. Even those two you provided there have great value to me. I'm normally an even-keel kind of person so I'll just have to ensure I take that extra second to respond accordingly. Thanks for the feedback!

@ Bettina F. To be honest, I don’t even waste my time engaging them.Tenants will “try you!”You have to train them and shown them who the pack leader is.I make it a point to study the laws and then put everything in writing.Our communication is strictly in writing, much better as it also gives you a record you could use as needed in court.I hate confrontation.I can go there if needed, but I prefer not to because I do not want to say anything that will hurt my chances in a court of law.I also truly, believe it or not, want to be fair even to a tenant that may not deserve it.I agree with you on the challenges of inheriting tenants, that is why I truly, “hate, hate, hate it!”, yet I have no choice but to do just that on my next purchase closing Jan 2nd.We let go of one, and keeping the one that was open to our inspection visit, had the unit looking like we just walked into a catalog and appeared to have no issues making rent payments.The one we are letting go, gave us such a tough time at unit inspection despite being notified of this multiple times by seller’s team.I literally had to request my buyers agent to call seller agent back and ask that something be done to facilitate a thorough inspection, that “I was paying for”.About 45 minutes later, said tenant let us in and tried to play nice.By then sadly the damage had already been done and I truly have no interest in inheriting such a tenant.Long story short, yes I hate the “we have always done this, or we did this…..” Yet, one cannot entirely blame them.People become territorial and some will “push, or try to push” just to see what you are made of.The thing is to remain professional and try not to engage, else you will loose more than your patience.Good luck. J.

@Bettina F. I love your advice and your story because it so closely mirrors my own. Our 4 unit buildings is completely empty of the inherited tenants. I can still remember coming home to my wife after meeting with some of them- I was literally shaking, it was the second building we took over in 2 months and these tenants were the pits. I felt like I was in way over my head- fortunately I had a mentor to re-assure me.

The only thing I would add by way of advice is "paper is your friend." I papered the crap out of those tenants- Each and every interaction was memorialized in a notice to cease or a notice to quit. Every follow-up text, every phone call was added to a "revised" Notice. If I was going to file for eviction it would have been well documented. I removed every one without stepping into court. One guy yelled at my contractor- I drafted and affidavit the next day that the contractor signed- detailing the "verbal harassment," and attached it to a notice to quit.

And while I was initially shaken by being challenged "you can't have me remove that non running car- the last landlord never could." Or "you can't make this building non-smoking!" I never let it show. 

In the other building I immediately removed a tenant upon takeover - son was smoking weed when I did a walk through and they had 2 large dogs in breach of the lease- and every other tenant knew I meant business. Of the 3 out of 5 apartments we renovated, they rent for $700, $550 and $500 more and the 2 we are finishing now will rent for $700 and $800 more. And the added benefit is the rent control is phased out upon vacancy... I welcome my inherited tenants to leave- but they cash flowed when I bought and they all are good tenants- so no worries.

. I felt like I was in way over my head- fortunately I had a mentor to re-assure me.....

The only thing I would add by way of advice is "paper is your friend." I papered the crap out of those tenants- Each and every interaction was memorialized in a notice to cease or a notice to quit. Every follow-up text, every phone call was added to a "revised" Notice. If I was going to file for eviction it would have been well documented. I removed every one without stepping into court. One guy yelled at my contractor- I drafted and affidavit the next day that the contractor signed- detailing the "verbal harassment," and attached it to a notice to quit.

And while I was initially shaken by being challenged "you can't have me remove that non running car- the last landlord never could." Or "you can't make this building non-smoking!" I never let it show. 

Yes! Document everything and be 100% legal. This shows the tenant that 1) you know your stuff. 2) you will go to war if need be. I have also never had to go to court with an eviction. I believe one tenant went to legal aid and was told that everything I was doing was legal, so she ended up leaving without a fight. I know one tenant attempted to turn me into Fair Housing because I got a phone call on my dedicated fax line. This was an unpublished number that was only listed with our Secretary of State when we registered our LLC -- we did not even have this number on our business cards. ("No, we do not have any vacancies at this time. We are doing a major rehab on one unit, but I don't know when it will be available. It will be listed on Craig's list when available. All are welcome to apply!") This is why LLs must know about Fair Housing -- testers will call when you least expect it.

Never let them see you sweat.  Tenants will sense your uncertainty and use it to their advantage.  Project an image of experience and competence no matter what.   That is why you need your comebacks.  If you are caught unaware, learn to say you need to "check with your legal team" or "ask the partners".  You can't work with tenants because in your experience, once tenants get behind in rent, they seldom catch up -- this is true even if "your experience" is reading Bigger Pockets!

P.S.  -- Post your story in Success Stories.  It will help a lot of newbies!

Join the Largest Real Estate Investing Community

Basic membership is free, forever.