The Professional vs. the Unprofessional Landlord


Part of being a real estate investor means that every time one of your friends or family has a real estate question they always come to you. And of course, since its friends or family that means you’re never making any money off of them and they think they can abuse your time.

I’m sure you know what I’m talking about. That’s why it is so important never to become friends with your tenants or anyone else you do business with. Once you become friends, your relationship changes forever and it will be hard to charge them for things or fire them from a job, if it ever happens to come to that.

The reason I bring this up is because last week I had a very close family friend come to me and ask for help regarding her first house that she is moving into. She’s a young, single girl and was renting a single family house, but like many tenants had no idea what she was doing.

I told her I had some time available on Tuesday so I agreed to accompany her to meet with the landlord and sign the lease.

When the landlord showed up, he was in shorts, a baggy shirt and had a baseball cap on. When he started going through the lease he literally said, “I borrowed this from a friend who owns a lot of rental properties but I’ve never actually read it.”

We went through the lease and there were several things I had him take out. For example, that she would pay for all repairs on the washer and dryer if they ever broke. And that she was not allowed to have pets. (She had a cat she wanted to bring). The landlord agreed to all of my changes.

The funny thing is, it was a solid lease.

Mine is similar and is landlord friendly, and I have some of the clauses that I made the guy take out. But in this instance I was helping the tenant and not acting as a landlord.

Now, from everything that was going on it was obvious this guy was just some amateur landlord and that this was probably his only rental property. However, the one huge mistake he made was having the property in his own name and therefore signing the lease in his name.

I don’t care if you have one property or 100.

You need to have at least one LLC to protect you in case something happens to your tenants. If my friend happens to get injured in her new place then the landlord is personally liable and he could lose everything he has.

When everything was finished we did end up signing the lease and my friend was very happy to get her new house. On one hand I was worried about this landlord because I knew that eventually he’d probably get himself in a jam, but on the other hand, I buy most of my properties from guys like this so I’m very thankful for all of the amateur landlords out there.

But please don’t be one of them. Form an LLC, stick to your guns and don’t let people change important clauses in your lease, and always act professional and meet with your tenants properly groomed.

Photo: Matt McNier

About Author

Jason R. Hanson is the founder of National Real Estate Investor Month and the author of “How to Build a Real Estate Empire”. Jason specializes in purchasing properties “subject-to” and has purchased millions of dollars worth of property using none of his own cash or credit.


  1. Hi,
    I was wondering for the landlords with 1 or 2 properties, is it worth starting up an LLC? On the assumption that the landlord is not interested in acquiring more properties.

    • Yes!! Just as stated in the article, it does NOT matter if you have 1 or 200 properties. If it’s in your name, it’s YOUR livelyhood on the line when some tenant tries to sue you or doesn’t pay rent, therefore, affecting your ability to pay mortgage. Do not mix personal funds and LLC funds or then your LLC protection is meaningless in court.

      Learn about this stuff before you get involved. It’s a serious thing.

  2. Since government backed loans are issued in your own name, are you then deeding them to the LLtC? Are you requesting permission from the banks? What about the due on sale clause?
    Won’t a good insurance policy take care of this senario? I have a $2 million umbrella extended over my rentals.

    • Max Tanenbaum

      Same question as Lynn. In PA you have to pay transfer tax to deed the property into an LLC. You can’t do that at the time of purchase if you are using a mortgage, as banks will not lend to an LLC. Transfer tax is expensive, so although I plan on eventually moving my properties into the LLC, for now I just over-insure everything.

      I’d like to hear from others regarding this issue…

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