When you become a landlord, stress levels can get very high. In general, the good tenants outnumber the bad ones and you’re able to manage your property profitably. However, there may be tenants who vandalize, are habitually late with the rent or just disappear without notice.
To help reduce or eliminate some of the stressors associated with being a landlord, consider these five tips:
1. Use the Internet to Collect Rent. Collecting rent from difficult tenants is one of the most stressful aspects of the business. Automating the process can make this much easier. Whether you use a pre-made online solution or hire a developer to create one, set up a payment system that accepts credit or debit cards or even automatic bank transfers. This is more convenient for both you and your tenants, and it provides a transaction history for bookkeeping.
2. Outsource Maintenance. Anything beyond a few units can be a headache in maintenance, including painting and cleaning up after sloppy tenants. Hiring a crew to take care of this involves all the problems of recruiting and training employees, managing payroll and benefits, and other concerns.
If you don’t want those additional stresses and don’t need full-time help, outsource these routine maintenance tasks to another company. It may cost a little more than doing the work yourself, but you’ll have more free time and less anxiety.
3. Keep an Emergency Fund. Whether you opt for employees, contractors or the DIY route, you’re still going to pay for repairs and upkeep. Some routine maintenance you can budget for, but events such as careless tenants, storms, litigation or burst pipes are something else. If your insurance policy won’t cover it, or units aren’t inhabitable, you’re losing money. It’s best to set aside what you can from the very beginning so that one major setback doesn’t cripple your cashflow.
4. Find a Property Manager. You could also pass on your landlord troubles to someone else by hiring a reputable property management company or professional. Those with special training and significant experience may be better suited to handle maintenance, budgets and bad tenants than you are. A manager will cost you money, but eliminate the difficulties of being a landlord while you sit back and take the profits.
5. Tenant Screening. Better tenants mean fewer missed rent payments, less property damage and longer tenant retention. Getting good tenants requires screening each applicant to weed out those who may represent a high risk. Screening requires verifying employment, conducting background checks, checking credit scores, calling references and anything else you consider a good indicator.
Be careful in how you turn prospective renters down to avoid discrimination charges. You also don’t want to be too fussy. If you reject one applicant after another, you’ll wind up missing out on rent. Tenant screening is another time-consuming task you could delegate to a professional service.
Being a landlord has been a great source of income throughout human history. It may be a little more complicated today with all the legalities and paperwork, but it can still be profitable and rewarding if you’re thoughtful in spending your time and money.
Source: Dixie Somers/RISMedia’s Housecall