I was sitting around talking with a few other landlords the other day. Some of these folks were new to landlording, others had been in the business for decades. As is usually the case every time landlords get together, the discussion turned towards landlording problems. This time was no different. As the discussion rolled along, something suddenly dawned on me. It seemed to me that many of our landlording problems are our own fault. Let me explain.
Download Your FREE Rental Application Form!
It may seem like a small thing, but having a solid rental application is the first step in finding great tenants. Since BiggerPockets is all about helping you succeed in real estate investing, we’ve put together a complimentary Rental Application for you to use. Download it today and go find some great tenants!
Late Paying Tenants
One problem that always seems to pop up is late paying tenants. Seems everyone has one or more tenants that are always late with the rent, that we have to spend time calling and chasing to get paid. Well, this is likely our own fault.
People respond to incentives. As landlords, part of our job is to create incentives for people to pay their rent on time. This could be in the form of a discounted lease for prompt payment, but it could also be in the form of tough talk, strong policies and follow through. We all hate to be the bad guy and we all want to be liked. But landlording is a business and the rent is due on the first. How many times have you let someone slide? How many times have you accepted partial payments? How many times have you not filed for eviction right away? If you talk tough but do not follow through with actions, your tenants will learn they can pay late and they will. You have created your own problem.
Another common problem is tenant drama. Tenant drama can include late night, non-emergency phone calls, fights between roommates, and other nitpicking issues like parking and utility bills. This drama can drive you crazy as a landlord with the constant calls, the he said/she said fights and never ending requests. Again, much of this is the landlord’s fault. As a landlord, you should have set office hours to take phone calls and only take them during that time. What about emergencies? Good point. You need to define what an emergency is on the front end in your house rules. Your house rules should also state that you do not do tenant drama, that you expect everyone to act like adults and that you will not get involved in roommate disputes. Setting all of that out on the front end will eliminate a multitude of your problems.
Some tenants are just deadbeats. They never had any intention of paying you rent and are going to fight you tooth and nail when you go to evict. Proper screening would have solved this problem, because I can almost guarantee that this is not the first time that tenant has done this. Tenant screening is one of the most important things a landlord does. Do not be fooled or relax your standards just because someone has cash in hand ready to move in. Not conducting proper screening will cause you severe problems.
The All Consuming Job
Being a landlord is not easy. It demands a lot of time and resources, especially once you accumulate a few doors. However, we landlords sometimes fail to remember that we are running a business and every business needs systems to survive, prosper and grow. Systems will give you your time back. Take time to define what you do and develop systems that will allow you to bring others in and replace some if not all of what you do. Then you can begin to recoup some of your time.
Cashflow is king in the landlording business. Many newbies fail to realize this and make newbie mistakes while some experienced landlords seem to forget it. People will either overestimate the income or underestimate the expenses. Again, lack of cashflow is a landlord created problem. Did you try to force the deal by forcing the numbers? Did you buy into the hype? Landlords have to know their market and know their numbers. Anything less is a disaster waiting to happen.
Learn From Your Mistakes
I will be the first to admit that I am just as guilty as the next landlord of creating some of my own problems and not being tough enough, screening enough or letting go sometimes. But over the years, we have worked really hard to reduce our problems and thus the level of stress in our life and it is still a work in progress. Some landlords seem to enjoy the drama and relish crisis after crisis. Not me. I would rather learn from my mistakes and prevent future problems. Sometimes looking in the mirror is where you need to start.
What are some of your landlording problems? Are they self created?