Posted over 6 years ago

5 Landlording tips from an industry PRO

You have decided you are going to go ahead and give real estate investing a try. Why not, it seems to be the popular thing these days. According to Forbes the real estate industry is the 8th most common Billionaire producing industry in the U.S. So without further ado here are 5 land lording tips from an industry pro that will help you make your fortune.

5 Landlording tips from an industry PRO.

1. BUY DOOR HANDLES THAT HAVE NO LOCK.

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When you change them between tenants you only need to change the deadbolt. This will save you time and money.

  • No more lockouts. It is virtually impossible for tenants to lock themselves out if the only way they can lock the door is when they are outside of the home or apartment with their key in their possession.
  • These are going to be your best friend. The only way to lock the door will be with the deadbolt. This is going solve multiple problems and annoyances.
  • Less keys for you. Time and time again I have purchased a property that has two doors and the owner hands me a bucket or a bag of keys....Why? Too many locks throughout the years. If you have a home you need only one key for the entire house

2.TREAT YOUR TENANTS LIKE EMPLOYEES, NOT CUSTOMERS.

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SIDE NOTE: Why did they cancel Boss with Kelsey Grammer after only two seasons? That was one heck of a show. Personally I think Kelsey can give Frank Underwood a run for his money.

It is human nature to think of a tenant as a customer. They are buying a product from you. You are exchanging shelter for their money thus they are a customer, right? Wrong. In reality they are more like an employee and you need to be their boss. Their job is to pay you money in exchange for the shelter you are providing them. Employees and tenants both need a strict set of rules that must be followed. Customers on the other hand are always right. Employees and tenants do not share that privilege. Good employees make their employers money just like good tenants make landlords money. If they do not do their job they cost you money just like a bad employee costs their employer money. In the event they stop paying you that money you must stop providing them the shelter as soon as possible. This means you must fire them via eviction.

3. ACES IN THEIR PLACES

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Putting some elbow grease into a real estate investment can be a great money saving thing to do. It can really help out your bottom line however, you need to know when you should put in the elbow grease and when you should call in the experts. It is never a good idea to be penny wise and pound foolish. As a rule of thumb there are a few things you want to rely on your aces.

  • Electrical
  • HVAC
  • Plumbing
  • Legal
  • Sales

If handled improperly electrical, HVAC and plumbing can all have serious complications that can lead to injury or even death. This of course is an extreme liability that every landlord should avoid. You can face both financial and criminal consequences.

Skimping on legal won’t necessarily cause you injury or death but it can hit you hard in the wallet. A minor misstep in a legal proceeding or a poorly written lease can put a landlord in a very vulnerable position.

When it comes time to sell your investment you want to make sure you get top dollar. Statistics show that homes sold by a real estate agent sell for considerably higher than those sold without. According to the National Association of Realtor’s 2013 Profile of Home Buyers and Sellers, the average FSBO sales price was $174,900, while the average price for a home represented by an agent was $215,000, a difference of $40,100.

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4. USE BRIGHT PAPER FOR YOUR EVICTION NOTICE.

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When a tenant is behind in rent most if not all states require a landlord to post some type of paperwork on the tenant’s door giving them a certain amount of days to pay, vacate or face possible eviction. In Ohio for instance a landlord is required to post a 3 DAY NOTICE when a tenant is behind in rent. The tenant has 3 days to correct the issue before the landlord is allowed to file for an eviction. When posting these notices use bright orange, green or yellow paper instead of white. Using the bright colored notices will get the tenants attention as the documents look more official and authoritarian.

RELATED: 5 Steps to rent out your house


5. SET OFFICE HOURS.

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What is the number one reason tenants call their landlords at inappropriate times of the day or week? It is because their landlords answer their phone at inappropriate times of the day or week. I am sure we have all heard of a pet friendly fellow named Pavlov. In case you have not heard of Pavlov he is the person who discovered classical conditioning.

Classical conditioning (also known as Pavlovian or respondent conditioning) is a learning process in which an innate response to a potent stimulus comes to be elicited in response to a previously neutral stimulus; this is achieved by repeated pairings of the neutral stimulus with the potent stimulus.

The same concept applies in your land lording career. Just like what was discussed in tip number 2 you need to be the boss and set the rules. If you answer your phone at 11pm on Saturday nights you are conditioning your tenants to know that it is ok to call you at that time because you are accessible. They call you and they receive satisfaction. They will continue to repeat the behavior that leads them to receive the satisfaction they seek. If they know the only time you will answer is during your office hours they will naturally only call you during that time as they know calling you outside of that time does them no good, they only receive satisfaction when they call you at appropriate times.

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About the author:

James Wise is the Broker and Owner of The Holton Wise Property Group, a real estate brokerage and property management company operating one of the largest scattered site rental property portfolios in the greater Cleveland, Ohio area. He has been a guest speaker on several real estate internet radio shows and podcasts. He regularly writes blogs and articles for multiple real estate related websites. He is an active member of the National Association of Realtors® and the Akron Cleveland Association of Realtors®.



Comments (17)

  1. Good advice, especially #2. Tenants will eat away all your cash flow (and time also) if you treat them like customers.


    1. Thanks for reading Wayne H. I did not even think to discuss how much of your time could be monopolized if you do not set the correct precedent. Great point.


  2. This was a very helpful article particularly because it was concise and well organized. I am looking to buy my first rental and these are great tips, particularly the doorknobs! That ne'er would have crossed my mind.


    1. Thanks for reading Matthew Edwards. The doorknob idea has saved us hours upon hours of time and thousands of dollars in supply cost.

      Be sure to come back to this article and let us know how your first rental property purchase went.


  3. Thanks for sharing. The last one is very important. I had serious issues, my tenants used to call me after midnight. Awful experience!


    1. Glad you enjoyed it Donna. How did things go for you after you set office hours? What did you do to ensure communication was on terms you were comfortable with?


  4. Roy is quoting the extra's like painting rooms specific colors an income source for you guys or is it a way to say no but have it be the tenant who declines the idea once they realize it would not be free?

    1. James,

      It's a way for us to illustrate to the tenant the ramifications of their request - you and I both know a 19-year college student who wants her room to be pink is not thinking about the coats of primer and paint it will take to hide the pink once she leaves.    

      In this example, if the tenant really wants the pink room and elects to proceed, then our costs are covered.

      So, in this example, I guess it is predominately a way to allow the tenant to say, No, but it also ensures we are not out of pocket for something incongruent with our normal operations.

      However, we offer other add-on or accompanying services to our clients: discounts on self-storage; the {internationally trademarked ... just in case Al is reading} 'Take Me Home' card; cleaning services, etc.   This winter we've established a trial programme which offers our tenants discounts on ski rentals and packages.

      We are not a landlord, we are an accommodation services provider working our way towards becoming a lifestyle service company.


  5. Excellent, practical post. I especially like the idea of treating tenants like employees. 


    1. Thanks for reading Larry. I think treating them like employees is the only way to go. In my experience a property manager or landlord needs to be fair but remain firm. You give someone an inch and they take a mile. However, I am interested to hear some more perspective from Al Williamson. I have enjoyed his take on the business for a few years now and he always has a thought provoking take on things.


  6. Excellent piece of work James! Tip of the hat to you.

    I don't agree with Item #2. It think treating tenants like employees limits your cash flow opportunities.

    The realm on income opportunities is larger if you consider tenants to be your clients and precede to capture more of their budgets/business.


    1. Thanks for reading Al. I respectfully and strongly disagree with your opinion on #2. Although I am very glad you brought up your point. I think this could be cause for a nice and healthy debate.

      We have been able to sell some other products to our tenants besides housing as well however I still feel like treating them as employees is a must for an investors bottom line.

      Please elaborate on your experience with capturing more of their business. What other products or services have you been able to provide to them? 


      1. James,

        We also treat our tenants - most of them students - more like customers than employees.   

        We even go so far as to make it our practice to not say "No", to a tenant's request.  We require the request to be submitted in writing (e-mail is usually sufficient.  We will then evaluate the and, if it is something we would not normally do, we put a price on it and ask the tenant if they wish to proceed. viz.  Tenants are frequently asking to have their bedroom painted a colour of their choosing.  We give them a price to paint the bedroom (using our staff) to their chosen colour and the cost to return it to our default colour palette when they move.


  7. James, very interesting...Thank you.  I particularly liked the analogy and mental image on #2, the tenant is not always right.  Words to live by in the land lording business.  Treat them nicely, respectfully and give them definite boundaries.  


    1. Thanks for reading Terrence. Where many new investors can run themselves into trouble is the customer is always right thought process. When dealing with tenants you must remove that thought process. If the tenant is always right the investor will never turn a profit. Give an inch and they will take a mile. Thanks for reading, don't forget to share on Facebook & Twitter.


  8. James,

    Very good advice. Thanks for your insight.


    1. Glad you enjoyed it Garrett. Thanks for reading, don't forget to share on Facebook & Twitter.