8 Lessons from a First Time Landlord
For four months our house sat on a cluttered market with little interest as we bubbled wrapped glassware, packed boxes full of baby toys and grew increasingly nervous.
We couldn’t afford two mortgages and the idea of our home sitting vacant on the market for the looming winter scared us.
We talked sheepishly about renting, hesitant to assume the authoritative “landlord” moniker. “Landlording” seemed so responsible, so adult. Plus we’re both easy-going, non confrontational people who wanted to spend our free time yelling at our children, not managing a rental property.
But we were stuck.
So after much discussion, debating and Googling we decided to cautiously assume the pragmatic title of landlords.
We found tenants within two weeks. A nice couple with jobs strapped with below average credit. But we were attracted by their ability to offer cash for the first month’s rent and the security deposit.
The first year and a half was great. They paid rent on time and asked for very little. And after the rent was collected and the mortgage paid Cindy and I were able to stash a few bucks away.
Then December 1st came and the rent didn’t arrive until New Year’s Eve.
Over the next few months the rent was consistently late. We enforced late fees, made phone calls, sent text messages and mailed letters. We tried to reason and compromise. But late rent became partial rent. Then partial rent became no rent at all.
Spring melted into summer and the last thing Cindy and I wanted to do was champion an eviction, fix up the house and find new renters. So we drafted a new lease that included a payment plan to reclaim the delinquent rent. A plan they agreed to. A plan I was confident would work.
The first date the delinquent rent was due came and went without any payment. Without explanation.
We were out of options. We had no choice but to file for eviction with our local township.
In our two years of being landlords we learned a lot. We learned that a rental property can be a great source of extra cash. But we also experienced the stress and frustrations of renting. The drama and unnerving feeling that the rent maybe late or not coming at all. Here are 8 lessons I learned from my first go-around as a landlord.
1. Know the renting laws
Before you rent your home, you need to know your local and state laws. (Like whether your township require a home inspection before you can legally rent.)
Go to your local township office and request literature regarding rental laws and procedures. This literature will benefit both you and your tenants. I would also recommend reviewing local laws with your tenants before they move in. Even if you don’t understand all the legal vocabulary, the act of reviewing these laws will present you as a knowledgeable and experienced landlord ( even if you’re not).
2. Abide by your lease
Your lease is a binding document that is designed to guide all of your decisions. Let it. Your lease should be transparent and the tenant expectations should be clear. I advise reviewing all parameters of the lease before the tenants move in. Glossing over lease expectations can lead to future problems.
3. Document everything
For quick correspondences a phone call will suffice. But serious matters ,that could lead to an eviction, should be done in writing (I suggest by certified letter). If you do need to evict, clear documentation is critical.
4.Be understanding but firm
Life is tough business. I understand– children get sick, companies downsize, transmissions explode. If you’re a landlord long enough you will hear plenty of reasons why rent is late. Be compassionate and understanding but be cautious and don’t be afraid to enforce your late penalties (and your lease must include late penalties!). You also may try to separate fact from fiction. Don’t get into the business of dissecting truth. You’re not a lawyer. You’re a landlord and it’s your job to adhere to the demands of the lease, to protect your investment and to provide your tenants with a comfortable living experience.
5. Do some market research before you evict
Know the rental market landscape before your house is empty. Consider the time of year and whether it constitutes a high demand of renters. Research the comparable rentals in your market and understand that your house may sit vacant for sometime before you can obtain a new tenant.
6. Be cool
When there is money at stake, when a tenant is refusing to pay rent there is a tendency to make quick, reactive decisions rather then making a sound, logic decision. When faced with a tenant issues– take your time, review your lease, sleep on it, do a downward dog. You’re the landlord, you’re in charge–take your time and think it through.
7. Use a big picture lens
Thinking big picture before you rent your home is important. Consider the following questions– Is your goal to rent as a means of building equity? Is your goal to pay down the mortgage to make a bigger profit when you sell the home? Will dealing with a few weeks of landlord headaches provide you with a lifetime of financial flexibility?
8. Build a relationship
Like any, the landlord/tenant relationship needs to be cultivated with respect and communication. Just because you own the property doesn’t give you the right to be indigent. And though you may not like your tenants–and you don’t have to– you do need to be respectful. Remove your personal feelings from the equation, build a landlord/tenant relationship on respect and you’ll create a positive situation that benefits both you and your tenants.