There are only two things leading to success. Luck is the first one. Rare and unstable, it sometimes makes us achieve unbelievable results by simply being in the right place at the right time. The second one is practice. Unlike the first, it’s not about immediate results. It takes time; it requires persistence and diligence. Practice makes perfect, and this saying can be applied to any business and industry with no exception to property management.
Being a successful landlord is not as simple as it may seem at first thought. One needs to learn the basics of landlord-tenant law, stay abreast of recent market trends, master the art of tenant screening, get ready to deal with maintenance requests, to name a few. At any stage of a rental process, landlords should teeter on the edge of the law, customer service, profitability, and common sense. And it pretty much explains why successful landlords are those with a wealth of experience.
But what if you need to start your landlord’s career immediately? What if you have no time to learn the ins and outs of this profession the hard way. If that’s the case, don’t worry. We’ve got it covered. To help you master the art of renting out, we’ve talked to dozens of landlords and asked them to share their experience with you. Most of them agreed. So here’s the list of tips and tricks from experienced to beginners. Study it thoughtfully and you’ll be glad that you did.
On Pricing
Check comparable rentals in the area and price yours at or just under the market
Only price higher if your property has features that would make it more attractive to prospective tenants – i.e. upgraded kitchen, swimming pool, etc. There is a pricing triangle that shows the inverse relationship to pricing and showings. The higher the price the fewer showings that property will typically have.
Rhonda Culver, Investor and Property Manager
Don’t be too aggressive with pricing
A common mistake for all landlords is pricing their units too aggressively, then lowering the price when they can’t find good tenants. Instead, take a lesson from New York City developers and offer incentives instead of lowering the rent. This way you can keep your rent roll high.
Emile L’Eplattenier, Real Estate Analyst from Fit Small Business
Time of year has a big impact on the price
Trying to rent a house out at the end of the year is extremely difficult as most people aren’t looking to move during the holidays. That’s not to say that people aren’t moving, but your tenant pool is a lot smaller than during the summer months. If short-term rentals are an option, I’d recommend doing that to hold you over until the summer months when you’ll be able to get a larger tenant pool and more money for your property. If short-term rentals aren’t an option, ask tenants to sign a longer lease so that it ends in the summer in case they decide to move out after a year. This way, your next tenant will start in the summer months.
Ladan Mahini, Experienced Landlord
Aim higher on price and adjust down based on demand
You’d be very surprised how often you can get $100-$200 more a month ($1,200-$2,400 a year!). You won’t know if you don’t ask! Do your research as far as what the going rate is in the area. Ask too low and you’re missing out on maximizing your return, ask too high and you will lose time by having your property sit on the market.
Justin Taber, Property Owner & Manager at Taber Realty Group
Know the market (or work with someone who does)
Don’t miss the peak of your city’s rental market by overpricing your rental property – you’ll end up dropping the rent in the long run and oftentimes you’ll end up with below market rent. Also, you’re better off taking slightly less rent for great tenants than getting above market rents for tenants that are risky. Save yourself a headache!
Chris Taylor, Sales and Leasing Associate at Advantage Real Estate
On Tenant Screening
Conduct thorough background checks
Although many landlords only look at income, you can often find items in background checks that can save you a substantial amount of money (evictions and property damage can be costly). The types of items you can find in a background check are evictions, criminal records, previous property damage, tax liens or a trail of unpaid bills. These circumstances often reveal things about the character of the prospective tenants. If there is a large unpaid tax lien or judgment, the individual’s’ ability to pay rent may be impaired.
Rhonda Culver, Investor, and Previous Property Manager
You need to understand that credit score, above all else, is your most important criteria for vetting tenants
What good is a great salary or impressive savings account if they don’t use it to pay their rent on time? Even if they’re underemployed or a new hire, someone with great history will find a way to pay the rent on time.
Emile L’Eplattenier, Real Estate Analyst from Fit Small Business
Try to divorce emotions entirely when choosing tenants
While you may feel better offering your rental to someone down on their luck, at the end of the day you need to remember that you’re running a business. Never let personal relationships cloud your view of the bottom line.
Emile L’Eplattenier, Real Estate Analyst from Fit Small Business
Do not rent to someone just because they come recommended
Do your due diligence and check their backgrounds. When someone has a red flag on their background check or credit report, don’t take their explanation at face value. Don’t let your tenants run over you, ever.
Ladan Mahini, Experienced Landlord
Do not take prospective tenants’ word
Screen them instead. And if you see something you don’t like, keep looking! Oftentimes, first-timers are also eager to rent fast, so tenants are not screened adequately.
Andreas B. Johansson, CEO of the Berkovitz Development Group
Focus on how a prospective communicates with you throughout the application process
This will tell you a ton about what kind of communication they will have with you as a tenant. Don’t let them rush your decision and look for people that are open, honest, and willing to do a little work to prove to you that they will be solid renters.
Paul Ronto, Director of Growth from TurboTenant, LLC
Remember, online applications are key
You can text or email the link to a prospect and they can fill it out at home or on their phone. Plus, online applications make it possible to pull screening reports. This means you no longer have to collect paper applications and a fee, which was usually a check that you have to take to the bank, then re-enter that information to a credit bureau and pay them out of your pocket. Instead, it’s all streamlined and you can have results quickly and easily.
Paul Ronto, Director of Growth from TurboTenant, LLC
On Landlord-tenant Law & Taxes
When it comes to payment issues, follow the law
Never allow the tenant to pay late without penalty or agree to a payment plan. If you do, it will quickly cascade into a pile of unpaid rent, with the tenant abandoning the property in the middle of the night and the landlord having a major fix up expense on its hands.
Jeff Rohde, Real Estate Expert from Simple Condo Advice
Always read up on the laws in your area and memorize them – they are your best friends
Remember that in most places, the tenant has more rights than the landlord, so don’t let someone move into your home before they’ve paid their security deposit and/or first/last month’s rent. Once a tenant moves in, the law views them as having the upper hand.
Ladan Mahini, Experienced Landlord
Mind the taxes
There is a tax reporting responsibility even when generating negative revenue federally and these responsibilities vary from state to state. Engaging a knowledgeable tax preparer is vital – with so many potential scenarios there is no one-size-fits-all tax situation.
Suzanne Weathers, Owner of Weathers & Associates Consulting
On Checklists & Open Houses
Stick to a smart open house scheduling
We’re just telling everyone “Showings will be on Tuesday at 12 pm or Wednesday at 6 pm, please let us know if you’ll be able to make it!”. This saves you driving back and forth to your properties. We stay at appointments for 15 minutes and if no one shows up we’ll leave. If someone doesn’t call to let you know they’ll be late for a first impression we think they’ll have the same attitude for rent. Value your time!
Justin Taber, Property Owner & Manager at Taber Realty Group
Take move-in pictures and use a detailed move-in checklist
This comes in extremely handy if there are items that need to be paid for from the deposit funds. There are strict rules around using deposit funds, disclosing unreturned funds and the reasons for and also returning deposit refunds within a timely manner.
Rhonda Culver, Investor and Previous Property Manager
Inspect the apartment when a tenant moves out before another moves in
Take detailed notes on the condition of an apartment after a tenant moves out (pictures are great too) and thoroughly inspect an apartment before a new tenant moves in. Have tenants fill out an “Apartment Condition Form” stating any issues with the apartment or agreeing that the apartment was delivered with no repairs needed. If a tenant disputes any deductions from their security deposit you’ll want as much documentation as possible.
Chris Taylor, Sales and Leasing Associate at Advantage Real Estate
On Keeping it Profitable
Get a set of forms upfront or work with a rental agent
The cost of the rental agent can do more than make up for the headaches of DIY. Landlords need at least an application form with details and signature of each adult tenant, move-out and move-in inspection forms, good lease appropriate for your space, and a guarantor agreement for persons with no or damaged credit.
David D. Schein, Licensed Real Estate Broker
Strategically market your property
To get the annual occupancy you want from your rental property, it is critical to strategically market your rental. Take the time to create a marketing plan, and treat your rental like a business. In addition to marketing online, there may be some good local publications or real estate agent connections that will get you the hard-to-find tenant.
Kimberly Smith, Founder of AvenueWest Corporate Housing
Maintain great tenant relations
How quickly are you able to connect with a tenant? Do you have all your leasing and property documents ready ahead of time? How well do you serve your tenants’ needs during their stay? How well do you close your relationship with the tenant through the departure process? If you do all these things right, you will be well on your way to a strong reputation and repeat business.
Kimberly Smith, Founder of AvenueWest Corporate Housing
Don’t have a “No Pets” policy
You can charge more if tenants move in with pets. You are going to change the carpets in a few years anyway, and you will alienate 25% of the market if you do.
Spike Spencer, CEO of Fair Winds Investment Group
How you maintain your unit (paint, carpet, landscaping, appliances, etc.) is important.
A clean unit is the first step to creating a “first impression” that will get you the strong positive reputation you seek. If you want to charge market rates for your property, then your unit must reflect that rate from the first day. Even if you list your unit below market rates, don’t expect that any tenant will put up with mold in the bathroom, worn carpet or a dirty kitchen. If the property smells when the tenant moves in they form an opinion of the property which may get them looking for the next rental rather than staying for the longer term.
Kimberly Smith, Founder of AvenueWest Corporate Housing
Treat your property as a small business
Don’t befriend your tenants, it’s a business relationship. Too often I see new landlords getting their first property and then picking a tenant like they’d pick a friend. They were the same age, same hobbies, would be buddies outside of the tenant/landlord relationship. This tends to go poorly when the tenant is late on payments, or they are requesting upgrades or fixes.
Glenn Carter, Real Estate Expert from Condo.Capital
Remember that real estate success is not luck
Real estate, like any investment market, consists of patterns that repeat themselves or cycles. When evaluating any real estate investment you will need to think about and calculate your property cash flow, you will need to know how you are going to leverage your investment capital, understand what your equity is, figure out what your potential appreciation is and, most importantly, do some risk assessment.
Kimberly Smith, Founder of AvenueWest Corporate Housing
If you made it here by reading, not scrolling, then you’ve got reasons to be proud of yourself. Because even though no advice can replace the years of experience, you’re one step ahead of other newbies anyway. Unlike the majority of novices, you understand how to set the right rental price, how to conduct successful open houses, how to get the most out of tenant screening, and much more. This knowledge is more than enough to kick-start your landlord’s career and succeed.
