You are overwhelmed!
You started the landlord business following your landlord friend’s advice. A couple of properties are already in your kitty.
But you are yet to see any earning. It’s not that your business is not producing any cash flow. But the money goes out as quickly as it comes in.
You never thought this is how landlording would work.
There are issues going on at your rental properties. You had to evict one tenant recently. You have to keep calling the tenants who are late in paying rents. There are some repair issues too.
Your life has taken a turn for the worse it appears. Between your full-time job and your properties, you’re all over the place. You don’t have time for your family. You don’t remember the last time you took a day off. You’re always exhausted.
And yet, you don’t see a lot of return for all that investment.
It looks like you have landed yourself in a mess.
How can you get out of this situation?
There is a way out.
Here is a list of ideas. Implement all of them and see your landlord business excel:
1. Rent Collection is What You Live For
Rent collection is the most important activity of your business. And it should be treated like that. Nothing else is more important than the rent coming into your account on the 1st of the month(or in time) every month.
It is your responsibility to let your tenants know that they can’t take any liberty when it comes to paying the rent in time. And that you would be very strict about following the legal procedure in the wake of late payment and non-payment.
Occasionally, It does work in favour to help out good, long-term tenants in their difficult time. But it’s important to exhibit an aggressive stance in rent collection policy for the better financial health of your landlord business.
2. Your property should never remain vacant
This is almost as important as the rent collection.
Your focus should be built around the strategy to find good tenants and convert them into the long-term tenants.
But nevertheless, when a tenant moves out, you have to find another tenant and this takes time. This is why you should never allow the vacating tenant to move out without giving sufficient notice required by the law.
Another important strategy is to keep building a list of personal contacts who can help to find the new tenant —
- Existing and old tenants
- Fellow landlords
- All your personal contacts from the same area
3. Learn the Art of Tenant Evaluation
Choosing a good tenant is the art every landlord has to master sooner or later.
Here is how the process of the tenant evaluation goes.
- Getting the word out and publishing the advertisement
- First telephonic interview
- Tenant screening process
Further, the tenants screening process involves —
- credit, background and criminal check
- previous landlord reference check
- personal reference check
- employment and income sources check
- in-person interview
As you get transformed from being a novice landlord to a seasoned landlord, your skill of tenant screening improves gradually with the experience and hard work.
4. Be A Knowledgeable Landlord
It’s common sense to become an expert in your subject. This starts even before you become the landlord. But it is as much important that it continues throughout your career. Special attention should be given to remaining up-to-date with the tenancy laws.
Assign regular weekly hours to read the books and surf on the internet. Attend seminars. Meet up the experienced landlord and real estate professionals like realtor, lawyer, appraiser etc. Ask them questions.
Here’s a list of topics you should get familiar with:
- Local and state(or provincial) landlord-tenant laws
- Landlord and tenant relations
- Your state’s eviction procedure
- Maintenance of the rental property
- Rent increase rules
- Real estate market trends
- Rental rates
- How to do marketing and publish ads
- Utility bills
- Preventive maintenance
- Personal and business income tax affecting you
Studiously learning about landlording will help you take solid control of your business. You’d be more involved in your landlord business. This can be very beneficial in the long run.
5. Charge Market Rent, No More, No Less
Periodical rental reports are available for almost every North American states and provinces. It’s a good source for you to remain in touch with the real estate and rental market. Your local Craigslist(Kijiji for Canada)rental advertisement would give you an insight into the current rent in your area.
You should be aware of what is the prevailing rental rate as well as the trend in your area. This knowledge would help you while negotiating with the new tenant. It would also help you at the time of rent increase.
CMA — Comparative Market Analysis is another tool to know the current rent. This is a better method and would determine a more accurate rental rate. Your realtor should be able to help you with CMA.
6. Use the Most Up-to-Date Legal Forms
It’s very important to use up-to-date legal forms while leasing, giving eviction notices etc. Novice landlord would try to find forms from internet sources, which can be old or of a different jurisdiction. This can be a very costly mistake.
Almost all the provinces in Canada have their websites populating required forms and legal procedural instructions. However, it could be very intimidating to learn everything at the initial stage of your landlord business.
My advice is to hire the service of a website like Lawdepot or Legal contracts for the first year of your landlord career. These websites have a very easy-to-use format. It just takes a few moments to create any tenancy related legal documents. After some experience, you can verify the free documents available online for its validity with the latest regulation.
7. Don’t be Afraid of Sending Out the Eviction Notice
Many landlords are afraid to send out the notices for any kind of violation for the simple reason of not to annoy the tenant. They think the action would permanently damage the relationship with the tenant.
This is not the right approach. At the time of the signing of the lease, give them a clear idea of your policies in case of lease violations. Once the first violation occurs, you should follow through with your policy. You’d save yourself a lot of trouble if you remain strict with first follow through.
Once you allow the lease violations like late payment of rent, the bigger trouble would follow soon.
8. Don’t Fix ‘Quick and Dirty’
It’s always advisable to use professionals for repairs of any kind. It’s no brainer. The use of a cheap handyman would incur more cost in the long run. Whereas if you employ services of certified professional with good references, not only you’d save money in the long-run, it’ll add value to your property.
Don’t ignore maintenance issues
9. Mistakes are the Gifts From God
Here are some examples of mistakes and consequences —
- Allowing guests without any restriction — Next thing you come to know your neighbour is calling you complaining about late night party of your tenant.
- Ignoring preventive maintenance like clearing the rain gutter before winter — This may result in all the water, leaves and debris sitting in your eavestroughs freezing in the winter and forming an ice dam. This may result in water seeping into your roof in the middle of the winter, costing you dearly.
- Not visiting your property regularly, because you are getting paid regular rent by your tenant month-by-month — Your tenants may ignore outside maintenance(like lawn care) even though it’s their responsibility as per the lease. This may result in the neighbour’s complaint to the city and you may get a ticket.
All such mistakes are your lesson to be learned and not to be repeated.
Remember, every mistake is your opportunity to make your rental operation more efficient, more profitable.
10. Be respectful to your tenant
Always be respectful, reasonable, but firm while communicating with your tenant.
Good faith between you and your tenants should prevail at all cost. The tenants are observed to be taking good care of your property when they like you and respect you.
Whereas they’d tend to create trouble when there is no respectful relationship.
11. Pay attention to your bills
Always be checking your rental properties bills. If utilities are included in the rent, it’s imperative you check the bills frequently to ensure your tenants are not being unreasonable with their use.
Even if your tenant is paying the bill, you should keep a watchful eye on the amount. That is to keep track of the energy efficiency of your property and any potential maintenance issue.
12. Walk Like The Landlord
Being a landlord is a leadership position. You should assume the avatar of the professional landlord in the appearance and conduct. Your tenants should feel that you’re there to resolve all the complaints in time.
The most important part of your conduct is your communication in a timely manner.
You are not required to fix all the repairs immediately. But you are expected to respond to the call from the tenant within a reasonable time. If you are not able to resolve the issue immediately, you should give a reasonable time limit within which you are going to do it.
13. You’re Not a Penny-pincher? Become One!
Work aggressively to grab every penny that you see on your way. It may be an opportunity to make or save. You can make a long list of things to do to improve your profitability. The idea here is to increase your bottom line by increasing income and reducing the expenses.
I have provided the list of some activities here, but that may not be all:
- Increasing the rent annually and at the tenant’s turnover
- Charging extra rent for items such as parking, pet, guest etc.
- Creating new rental heads like coin-operated laundry and pool table
- Undertaking preventive maintenance to save on repairs
- Buying protecting plans for heating, plumbing, appliances etc. to save on repair cost
- By becoming a DIY landlord
- Scrupulously keeping the record of all the expenses for the deduction, to save while filing income tax
Now… It’s Time to Excel!
You saw a dream to become rich by becoming a landlord.
And then the action was taken in the right direction.
You were courageous to buy the rental property.
You deserve to be making money thereafter.
But, that’s not what happened.
Now you understand this business is not just installing new tenants and collecting rent from them. It’s more complex than that.
But, you know what, you can still make it.
All is not lost.
Have you heard the quote?
Everything is hard before it is easy
You have to start following the strategies listed above. As you take control of your landlord business with better management, slowly and gradually you’d see your troubles go away.
You’d start receiving a steady stream of rental income without interruption. Your expanse would decline. You’d have more time for yourself and your family.
For all this to happen, you’d have to excel by implementing the above ideas.
And your landlord business would excel as well!