Being a landlord is a smart way to create your own income. It’s a shrewd way to provide yourself and your family with a lucrative living without hawking products, traveling to trade shows or getting caught up in the world of e-commerce. One of the keys to being a successful landlord is realizing that you are, in fact, a business owner, and treating your rental property as your product and service. You’re in the business of helping people find a home they can live in at a price they can afford. The following tips and strategies can help you rent more properties to the right tenants and realize the greatest profit over time. With a more efficient and profitable business, you can spend more time in it. With more time and money, you can slowly find new investment properties and rent those out as well. How many of these qualities do you possess?
Know How To Choose The Right Tenants
There are several things you can do to ensure you select the right tenants.
- Make sure the prospective tenant’s income is three times the amount of the monthly rent. Verify their income and make sure you don’t lease to a tenant who simply cannot afford to easily meet your monthly payments.
- Run a credit check to ensure they have no evictions or foreclosures on their record. You’ll also want a tenant who takes paying their bills and maintaining an overall good credit rating a priority.
- Insist on referrals from previous landlords, where applicable. Unless this is your tenant’s very first apartment, they should have at least one previous landlord who will speak to their tenancy record.
- For first-time tenants, or tenants with a less than stellar record, you’ll want a cosigner. Choose the right cosigner by making sure they meet the criteria you’ve set for the original tenant and have clear, easy contact information.
Know When To Set Strict vs. Flexible Office Hours
Having regular office hours lets your tenants know you take your business seriously. It also helps establish a healthy working relationship.
- Don’t limit your office hours to 9-5 when your tenants are likely to be at work. Instead, opt for office hours that cover the early morning and early evening hours as well.
- Have an emergency contact policy (and a clear definition of what constitutes an emergency) in place. Broken pipes or non-working furnaces need to be attended to when they happen.
- A Google Voice number is a great alternative to handing out your cell phone number. It’s a free service that forwards to any number you choose. A Google Voice number lets your stay available while keeping you somewhat anonymous.
- Whether its phone, text, or email, stick to your preferred method of contact. Once you set a precedent with a tenant, it can be extremely difficult to un-set it.
Know How To Automate Monthly Rent Payments
Establishing systems that do much of the legwork for you is a strategic way to keep your landlord business running like a well-oiled machine. Building an efficient process for rent collection is key to your success.
- Establish a PayPal or other online payment gateway account. How does this benefit you and your tenants?
- It takes the angst out of handling cash
- It issues automated receipts
- It guarantees the validity of each month’s payment
- It saves you valuable time
- It allows you to build in an automatic late fee
(You should always charge a late fee to discourage tenants from making late payments)
Know When To Hold ‘Em & When To Fold ‘Em
Every smart landlord knows how to play to their strengths and how to outsource their weaknesses. If you choose to do the property management on your own, there may be other aspects you’ll need to outsource. Do what you know you can do well and in a timely fashion – then learn to outsource the rest.
- Because they involve the safety of your tenant and your property, plumbing and electrical issues should almost always be left to the pros.
- Lawn maintenance and snow removal are tasks that can go either way. They’re simple enough to manage on your own as long as they don’t take time away from activities that might increase your cash flow.
Maintain The Right Documents
One of your mantras as a landlord should be, if it isn’t in writing, it doesn’t exist. A smart landlord protects himself by asking every, single tenant to:
- Sign a dated rental agreement
- Accompany him or her on a pre-rental walk through
- Accompany him or her on a post-rental walk through
- Verify every repair in writing
Stay organized by having a physical or online filing system that keeps these documents at the ready whenever you need them.
Good landlords and good tenants are a match made in renter’s heaven. By providing the best possible customer (tenant) service, maintain well-kept properties, and equipping yourself with the right tools, you can make being a landlord your full-time business and lifestyle.