Succeed as a Landlordby
It’s not much of a secret that I am not a fan of managing my own properties. I tried it, learned a lot and then decided to leave it to the professionals. I wouldn’t say I failed miserably but I would say that I discovered that it’s not something I enjoy.
There are few things I love more than accomplishing my objectives.
When I plan my day and it goes as planned then it’s an awesome day for me. When you’re dealing with tenants you can forget about that plan! And you better believe the tenants won’t care about your final exam, your child’s soccer game or your family dinner. If their toilet is overflowing or the pilot light on the furnace went out in the freezing cold of winter then you must deal with that over everything else in your life.
That’s where I failed miserably. I wasn’t prepared for such calls and I certainly struggled with being flexible with my schedule.
Today we look for landlords like me. The tired and cranky landlord presents an enormous opportunity for a real estate investor. If you are prepared to handle the potential problems a property can have and you can spot someone who can’t then you’re quite likely to be able to pick up properties at a discount and be saving someone from an early trip to the grave.
But if you’re going to be taking over other people’s problems, and fixing them then you need to know how to succeed where the other landlord has been failing. You need to be prepared. You need to be relaxed and ready to roll with what is thrown at you.
The top five things you need to do to succeed as a landlord:
1.Be Prepared: Your tenants will call you with toilet troubles, furnace issues and other maintenance requests. Unless you want to be rushing out to the property to handle every little issue it’s a good idea to find a good handyman that you can rely on. We found a great guy that lived just around the corner from the Toronto triplex I tried to manage myself. He was able to pop over in the evenings or on the weekends and check out the little issues. One time the shower was spraying everywhere. Another time the door was sticking. For a small fee he would go over and check it out, and he was almost always able to fix the problem right then and there. Without him I truly would have lost my mind. First of all, at the time the only problems I could deal with were related to toilets. I grew up in a motel and would follow Dad around as he repaired and dealt with toilet troubles in the motel rooms. But beyond basic toilet troubles, I could barely change a lightbulb at the time. Second of all, sometimes I wasn’t even in Toronto when the tenants would call so having someone nearby that could handle the call for me was critical.
If you aren’t sure how to find a good handyman, ask your neighbours. Go to the local real estate investors club meetings and ask them. Or fire up your computer and check online. We found our handyman by asking around. One of my classmates at the time had a handyman cousin the area … and that is who we ended up using.
2. Remember – your customer is your tenant. It’s so easy to forget that your tenant is your customer when they are calling you on Saturday night in the middle of a romantic dinner with your spouse requesting you to fix the pilot light on the furnace (this happened!).
If you owned a restaurant and someone complained about your service, if you care about your business at all, you’d listen carefully to their concerns and try to fix the issue. As a landlord you should treat your tenants with the same courtesy. Remember they probably have options and can move somewhere else. If you always remember that the tenant is your customer and that it’s your tenant paying your bills then I think that everything will be a lot easier to handle as a landlord.
3. The keys to success are in the systems you implement. Find simple systems for managing the emails, voicemails, paperwork and even the keys to the properties. A simple system for the regular things you handle as a landlord will save you time, money and stress.
Let’s take keys for example. The keys to enter each property need to be labeled and stored in an easy to use way.
I can’t take credit for this idea (I got it from Robert Elder ofQuick Start Landlord), but I can tell you that even with just a handful of properties you are going to want to pay close attention to this little trick. It will save you time and money. The trick is to label every key with some sort of code that allows you to identify the address as well as to indicate the date.
Why? As someone who has a key to my aunt’s place, my home, my parking garage, and a friend’s place I can tell you that I already forget which key is which. If I also had to figure out which key opened which rental property I would be standing in front of a house for an hour trying to find the right key. When you add to that the fact that you’ll find yourself changing the locks on the home every few years, you could end up with dozens of keys that don’t even open any doors anymore!
And, while you’re at it, why don’t you go to your local hardware store and buy a little container that is normally used for organizing nails and screws and use it to store the keys for each of your properties? Ahhhh simplicity.
4. Master the art of marketing. I’ve written about this over and over. In fact, in the February 2010 issue ofCanadian Real Estate Magazineyou’ll find an article I wrote on “Attracting the Best Tenants”. That article is all about marketing secrets to make your business successful at finding tenants to rent to. The bottom line is that you need to understand what the tenants in your area want. What are the features and what are the benefits of your property as they relate to the wants and needs of your tenants? This is often things like proximity to a good school, ease of access to public transportation or market specific needs like air conditioning or covered parking with plug ins for vehicles. When you understand what your tenants want you will have no problem composing compelling advertising that fills your inbox and voicemail with messages from prospective tenants.
5. Do whatever you can to reduce tenant turnover– it’s your biggest ongoing expense! Cutting corners will eventually cut your profits. If you try to show a unit without first getting it ready to be viewed, you’ll struggle to attract good tenants. In the end you’ll end up with lower rent rates and a more troublesome tenant renting from you. But the biggest thing you’ll find hurting you in the long run is tenant turnover. It’s almost always better to charge slightly lower than market rent to keep a tenant in there longer than it is to squeeze every dollar of possible rent out of the property but have tenants leaving annually. It’s also better to address tenant requests and concerns as quickly as possible. Keeping your tenants happy in their home and comfortable with you can result in loyal residents. Plus, we’ve found, our tenants are often the best source of other high quality renters. Because they are happy renting from us they tell their friends and we often get emails asking if we have any places available for rent because our current or former tenants have recommended us as landlords.
Many worn-out landlords look at their tenants as a pain in the butt. They weren’t prepared for the calls. They forget that their tenants are in fact the ones paying their bills and should be treated like the valuable customers that they are. They also don’t realize that simple systems like the one I mentioned for keys will make all the difference in streamlining and simplifying your business to make it easy. And finally, inexperienced or tired landlords probably have never taken the time to master the art of marketing to attract new tenants nor have they taken the time to try and keep the good tenants happy in their home.
If you tackle these five success secrets I am confident you’ll find yourself succeeding where other landlords have failed.
Published on February 10th, 2010