5 Unreasonable Landlord Behaviors (& How to Fix Them for Higher Returns)

by | BiggerPockets.com

Landlords’ returns are only as good as their property management.

Unlike owning, say, shares in a mutual fund, bonds, or private notes, holding rental properties is not 100 percent passive. Rental income does require some work—and some skill, to boot.

I see many mom-and-pop landlords make the same mistakes again and again and again. Here are five unreasonable things I see too many landlords doing—and how to make sure you approach your rental management better.

5 Unreasonable Landlord Behaviors

1. Pocketing All Their Cash Flow

Everyone, landlord or not, should have a cash reserve. For personal expenses, financial experts refer to this as an emergency fund.

But landlords need to set aside a lot more cash than the Average Joe.

Remember when we broke down rental property expenses visually? Most landlord expenses don’t come evenly every month; they happen in intensive, expensive bursts. A $5,000 roof bill. A $4,000 HVAC bill. Turnover expenses to prepare the property for new tenants. Vacancies. And so on.

Landlords need to set aside a certain amount of their rental income every month in a separate account to cover these large, irregular expenses. Failing to do so sets you up for a crisis: “What am I going to do?! I don’t have $3,000 just lying around for those repairs!”

You should.

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2. Putting Off Repairs

The corollary to not keeping a rental reserve fund? Putting off repairs.

The longer you let repairs slide, the more expensive they tend to become. Physical problems with your property tend to get worse over time, sometimes quickly.

This goes doubly for roof and plumbing leaks!

But it’s not only the relatively urgent repairs like leaks that should be done immediately. Even cosmetic issues can lead your tenants to non-renew their lease, creating a turnover (which is where landlords spend the most time and money).

Besides, during a turnover you’ll probably have to make the cosmetic repair anyway, to attract better tenants moving forward.

When you conduct semi-annual inspections (more on this momentarily), ask the tenants about any needed repairs. If they name a series of repairs that are needed, and you can only afford to make one or two at the moment, take the tenant’s views into consideration when prioritizing the repairs.

Related: 12 Tenant Nightmare Stories I Swear Are Actually True

3. Not Inspecting the Property at Least Once a Year

At a bare minimum, physically visit and inspect each rental unit at least once a year.

Better yet, inspect two, three, or four times a year.

Why?

First, to catch any needed repairs early, as discussed above. You can’t count on your tenants informing you of repairs—I’ve had tenants fail to inform me of needed repairs because they didn’t want anyone coming to the house and discovering that their boyfriend had moved in.

It also keeps your tenants accountable. You’ll discover the deadbeat boyfriend and can raise the rent (or evict him). You’ll also be able to check for other lease violations and see how the tenants are treating your rental unit.

Beyond catching lease infractions, it also serves as a strong deterrent for violating the lease in the first place. If your tenants know you inspect the rental unit every few months, they probably won’t let their deadbeat boyfriend move in at all.

Nor is it all about discipline and lease enforcement. Inspecting the property shows the tenants that you’re not an absentee landlord and that you genuinely care about the property. That, in turn, sends the message that they should care for the property, too.

Far too many landlords get lazy and never visit their rental units as long as the rents keep flowing in on time. Make the effort—it will pay dividends in the long run.

4. Deducting the Cost of Normal Wear and Tear from the Security Deposit

Landlords can deduct the costs to repair “damage” from the security deposit. They can’t deduct the costs to repair “normal wear and tear.”

Which is all fine and dandy, except “normal wear and tear” is an incredibly subjective term. It leaves plenty of room for interpretation, which can make it a blurry line to draw.

A fist-sized hole in the wall is clearly damaged. A small nail hole in the wall is often considered normal wear and tear. What about a large nail hole?

If a tenant moves out after one year and the walls are covered in scuff marks and needs repainting, it may be considered damage. But if a tenant moves out after five years, the same degree of scuffing is probably considered normal wear and tear.

If there’s one lesson I’ve learned the hard way (many times, to my embarrassment), it’s that you always need a detailed move-in/move-out walkthrough report, complete with time-stamped photographs of every wall, every floor, every door, etc.

Whenever you deduct money from the security deposit, be prepared to fight your ex-tenants in court over it.

5. Not Allowing Pets

Ready for some controversy?

Many landlords absolutely will not allow pets. Hard stop.

And I get it. Pets do cause more wear and tear on your properties. In some cases, they can even create liability for you as a landlord.

Here’s the thing, though: More than two-thirds (68%) of American households own a pet. If you don’t allow pets as a landlord, you’re turning away all but 32% of prospective renters, before even looking at their other credentials.

Worried about pet wear and tear? Charge a non-refundable pet fee or a refundable pet deposit. I also charge $15/month per pet in pet rent.

Related: The Top 10 Rental Features That Attract Cream of the Crop Tenants

Worried about liability? Don’t allow specific breeds that have breed-specific liability and require tenants to buy renters’ insurance that covers pet liability.

The other problem with a blanket policy barring pets? Many renters will simply sneak their pet in regardless.

Regulate pets, charge accordingly, and benefit from higher deposits, higher rents, and an applicant pool three times larger.

Not a “Set It & Forget It” Investment

I’m not one of those real estate evangelists who put everything in real estate and ignore other investments. For example, one of the great benefits of buying index funds for long-term investing? They’re truly passive—I can buy index fund shares, then forget about them.

Rental properties, for all their benefits, aren’t completely passive investments.

Most mom-and-pop landlords have a full-time job, which makes landlording essentially a side gig. A side hustle. A part-time job.

Whatever you want to call it, it does require some work. Not daily work, and sometimes not even monthly work, but work nonetheless.

Far too many landlords think they can simply sit back, collect rents, and call it a day. That’s unreasonable, for any landlord who wants to earn a decent return.

Improve your property management, and improve your returns!

What unreasonable landlord behaviors have you witnessed (or experienced)? What do you do differently now as a landlord, than you did before?

Share your thoughts and tips below!

About Author

Brian Davis

Brian is a landlord and long-time personal finance and real estate industry expert, who offers a range of free landlord resources through his company, SparkRental. Check out SparkRental’s free rental property calculator, or take our free video course on buying 2-4 unit rental properties, among other free landlord resources.

Message me if you’d like me to write for you about real estate or personal finance!

23 Comments

  1. Dave Rav

    I want to make a few comments about capital and major repairs. I say this NOT to disagree with your points. Landlords should definitely maintain savings for unexpected repairs.

    Want to bring up the fact that more and more (of the reputable) HVAC and roofing contractors are now offering financing. These are two of the biggest costs of managing a property, and if you don’t have the $$ to pay in full, financing is an option. Some even offer low or no interest. Options are good, guys!

  2. Susan Maneck

    Re: pets
    I now allow my tenants to have a cat without any deposit? Why? Because I have paid huge sums getting rid of rodents at houses without cats with little success. Yes, cats can mess up the carpets but I replace them with laminated flooring first chance I get anyhow.

  3. Perry Bronaugh

    How do make the management company pay for damages they were suppose to make sure
    didn,t happen.Urine smells to knock you down.No pets allowed.both bathrooms desrtoyed.
    Windows broken ,drywall tore up in garage,and bedroom.Ant hills,and cockroaches everywhere.
    Appliances tore up.No more management Co for me.We lived out of town then move to our
    properties are,and this is our surprise.

  4. Joseph M.

    Great article. I have a line item in my leases that state that the owner (or PM) will verify the smoke/CO detectors and fire extinguishers are in good working order at the minimum of twice a year. I have my team do this when we change the time on our clocks. It is a great reminder for everyone AND it is viewed by the tenants as a safety inspection. Of course, any repairs = an inspection. Always!
    I also invite pet owners to rent our places, within reason! Nice lady with a cat, no worries…please come. Nice lady with SEVEN cats, NO VACANCY! Also, check your insurance policy as certain breeds of dogs can violate your insurance liability coverage.

  5. Dave Rav

    Couple of reactions to comments @Susan Maneck @Perry Bronaugh

    With cats, yes, typically low maintenance. Beware of urine stains and smells penetrating the subfloors. You will find yourself having to replace that to get rid of the bad cases of smells. As for carpets, they can rip and tear up edges. I find this is typically the case near doors, corners (esp if owner keeps them in room door shut).

    As for prop managers … alw remember *nobody takes care of your things like you*
    I don’t care what anyone says. You will be your property’s best advocate and will have the most keen eye. Like you, I’ve been burned by a PM. They repeatedly let tenants stay in my units for 3 to 4 months rent free, before evicting. Alarming! Not only was this enabling continued bad payment habits, it made it nearly impossible for the tenant to catch up. If they couldn’t afford a months rent , odds are they won’t be able to pay 4x that amount in due time. (Though, once I did have a tenant pay $2500 rent in arrears using tax refund. Equivalent of 3 mos rent).

  6. terese schwartz

    Inspecting your property at least once a year is really great advice! My question is if you find damage (broken door handles, light fixtures, knocked down mailbox, for example. Can you repair these items and deduct it from the tenant’s security deposit and then require the tenant make up the deficit?
    How would you word that in the rental agreement?

    • Brian Davis

      You can, but then you’re left with less security deposit to cover other damage or issues. Ideally, you give them the chance to make those sorts of minor repairs themselves. If they fail to do so, the consequence is they have to pay for your contractor to go in and do it. If they fail to pay, you can deduct it from the security deposit as a last resort.

    • Dena Waldon

      When we inspect a unit and find that there are damages, we ask the tenants to repair the damages themselves and give them a time frame. Then we go back and check the property to make sure the repairs are completed. If not, then we send our maintenance crew out to repair and add it to their ledger as a tenant charge. They quickly see how easier it would have been to repair it themselves. We also state it in the lease as well.

    • Anthony Wick

      My lease states any repairs under $15, the tenant is to handle. Over $15, I handle and bill the tenants directly and immediately. It never comes out of their damage deposit until they move out. I’m hoping to keep as little of their damage deposit as possible.

  7. Anthony Wick

    No on pets. It isn’t like owning your own pet in your house. Tenants do not care if their pet tears apart your carpeting or drywall or doors, or ruins your lawn. They do not care if their cat urinates everywhere.
    And that measley $50 a month or $500 deposit may barely get your property back to rentable condition.
    I’ll change my mind when the only people applying to rent have pets. Until then, 1/3 of the rent pool is plenty to choose from. Not to mention, they will never tell you they can’t pay rent on time because they had an unexpected vet bill that month.

  8. Eric Guerra

    Dena and Anthony both great ideas, I will defenetly implement it on my contracts. Why wait until tenants move out only to find out they did not up keep the place, did not completly clean the unit before moving out ,or even worse they do both of these and on top leave with out payng the last months rent, in the mean time your tring to evict them.
    Leaving you short one months rent, short on deposit to cover repairs, and short of money to clean up.

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