If you hang out on the BiggerPockets forums you know that at least once a week a brand new landlord… mostly a person who was forced into the landlord role just to cover the mortgage on an investment that went wrong, will make a post… actually it is more of a plea asking for help with a critical tenant issue.
If you have taken the time to read through these pleas… your heart almost goes out to the individual because it seems that the more they discuss their plight, the worst the situation seems to be.
As was the case with a recent post from a very stressed landlord who was nervous about having to evict a tenant who was several months behind in their rent and had this poor landlord literally tap dancing to their tune. This person very clearly was an “accidental landlord”!
Perhaps you know an “accidental landlord” and have watched them struggle to find and manage their tenants. Perhaps you are or were one!
“Accidental landlords” don’t start out with the notion of becoming a landlord. They end up backing into that role.
How… you may ask? Simple… This is the person who paid waaaaay too much for a rehab property. Or, perhaps they gilded the lily regarding the renovation or busted the renovation budget due to inexperience in either estimating the repairs and their costs or poorly managing the contractors. Or, perhaps they just mis-read the market and got caught!
Regardless the end result is that they can’t sell their property without taking huge losses and so they decide, with no knowledge or experience, to become a landlord! An “accidental” one at that!
While I could write chapter and verse how not to find yourself as an “accidental landlord”… instead, and in hopes of helping out any investor who finds themselves on this slippery slope, I am going to focus on just a few of the basics that should be adhered to by any person who finds themselves heading down the path of being a landlord for any reason.
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Tips for Potential “Accidental” Landlords
- Realize that owning rental properties is a very different animal then rehabbing and selling or wholesaling. There are many, many landord/tenant laws and they are different in every state, county and city. Before you jump in or are pushed into becoming a landlord spend some time figuring out what these rules are. They can be found online, through real estate agents, municipalities themselves and in many larger cities through landlord/tenant organizations. Also, seek out and participate in your local Property Owners Association.
- Expanding on number 1 above, you have certain rights as a landlord… and guess what… so does your tenant. Know what those rights are! For instance, in most jurisdictions you can’t turn the power off to the property or change the locks just because the tenant has stopped paying rent. In fact, in Baltimore, Maryland that action would most likely end up with you in jail.
- Find a lawyer who specializes in landlord/tenant issues and come prepared with a ton of questions and a request for a lease that will protect you and comply with local laws. The list of questions – first and foremost, includes “how does the eviction process work?” What is the timeline and what are the costs? In some places going from non-payment of rent to eviction is a matter of weeks. In others, it is a matter of many long months.
- Seek out and hire a professional property manager. As much as it pains me make this recommendation, the bottom line is you may not be ready or able to be an effective landlord. My litmus test is the following: If you can evict a tenant in December, you have what it takes to make the tough decisions to be a landlord. If you can’t evict in December, hire someone who will!
- Remember that your job as a landlord is not to become friends with your tenant. You may be friendly, cordial and respectful, but this is a business relationship — one where if you are lucky, you will get paid rent regularly and if you are not so lucky, you will find yourself becoming very hardened towards people.
I am sure there are many other things you need to know when heading down the path to becoming an Accidental Landlord, but for now, know what you are up against and then make the conscious decision –> Do I want to be an Accidental Landlord or not?
Best of luck!
Photo: Steven Depolo