How to maximise your profits from being a successful landlord in real estate?
You already know that investing in real estate is a lucrative alternative investment but how do you become that respected landlord, who treats their tenants exactly as they deserve to be treated as well as earning a steady, profit every month? If you follow these tips, it is a viable option for everyone who does their research and goes into it with their eyes open.
The most important thing you can ever do when you become a landlord is to treat your investment like a business and not like a hobby. A lot of private landlords fail because they forget this very basic rule, and do not stay switched on. Remember being a landlord is your job, so treat your property and your tenants as you would your responsibilities at an office, for example. Ensure you are organised and have a decent booking system, which includes for example, a record of when your tenants started renting, how much they paid as a deposit, how much they pay per month and any problems with the flat which you have had to take care of on their behalf. Aside from keeping you organised and on top of things, having a spotless record system will ensure that your tenants cannot spring any surprises on you, such as maintaining that they paid a much higher deposit at the beginning, or even that, yes, in fact they paid August´s rent, and you are mistaken. These are the sort of mistakes that you cannot afford to make. You should also have a system in place which kicks in when you are not present, for example, what happens when the water supply fails, and you are on holiday? A competent landlord ensures these types of maintenance issues can be fixed, without their direct involvement. Recognising that you are a business owner will give you far greater success as a landlord.
Secondly, do your homework and make sure you are not just letting anyone in to rent your property. A mistake like this could become costly and lead to a damaged property, late rent, or even worse eviction, meaning your own pocket takes a huge financial hit. Ensure you screen your tenants before you make a decision; 3 months rent in advance for example, a steady income of at least double the monthly rent, and no criminal convictions are some ideas to bear in mind. In addition, stay true to what you believe in, if this means saying no to pets or young children, then stick to it and do not bow down to any sort of pressure. You are the landlord and have a say in who you choose to rent your property to. On the same token be aware of anyone who wants to give you a year´s rent upfront in cash; as believable as they might be, backing it up with a multiple of decent reasons, is just not the way things are done and should give you cause for concern.
Thirdly, following on from the point above, while it is absolutely legal to screen tenants, make sure you are not discriminating against any “protected classes”, someone´s “race, colour or national origin, religion creed or personal politics, age, sex or sexual orientation,” obviously gives you no right whatsoever to deny them the opportunity to be your tenant, providing they have been screened according to the paragraph above and have passed. You are liable to feel the full force of the law if you are found to be denying an applicant based on any of the reasons above.
Next, guarantee that your tenants pay you monthly on a certain day, by setting up a standing order. This allows your bank to take a regular payment of the same amount at a frequency determined by you. This takes away the hassle of visiting the tenants, and avoids the awkwardness that transpires when you request your monthly rent; even better it does not give them the opportunity to avoid paying you. If your tenant does not have a bank account, or insists on paying cash every month, this is a major red flag and demonstrates that they are not trustworthy tenants, not deserving of your time or attention. Before you get the contract agreed upon and signed, insist they give you their bank details and set up a standing order for their monthly rent. If anything looks fishy at this moment you are free to walk away, having not signed a contract or given them any keys.
Ensure that your property meets the standards you would expect when finding a place to live. This tip ties in very neatly with the one below, and essentially means that your tenants deserve to stay in a liveable property. This does not have to be anything elaborate or expensive, but it does have to meet their basic requirements, such as a fresh, lick of paint, a clean property and workable domestic appliances. If you cannot tick these things off your list, then you do not deserve to be renting out your property. A shoddy property will not earn you any respect from your tenants, and will make trust very difficult during the rest of the working relationship.
One of the most difficult things to do is treat someone with respect, especially if it is someone you do not see eye to eye with. But as a landlord, who owns a respectable business, you must not allow any personal feelings to affect any kind of business relationship. Your tenants simply want to be treated fairly and be dealt with in the same way as any human would want to be treated. You owe your tenants this respect and dignity, and if you play your cards right, you may well be successfully rewarded. Imagine the following scenario: you say goodbye to a long-term tenant of 3 years, and during those three years you have maintained a respectful, working relationship with them and they have repaid you by treating you with the utmost respect. If they have associates or friends who are also looking for a long-term rental property they might throw some much needed business your way. Owning some property does not necessarily make you better than your tenants, but it can make you a successful landlord if you play it right.
Following on from the tip above, you must be respectful towards your tenants but you cannot afford to be too nice. When given a lot of slack humans have a tendency to take more and more, and the idiom, “give someone an inch and they will take a mile,” sums this up perfectly. If you are too nice your tenants will walk all over you and take advantage at the slightest opportunity. As a landlord you must be fair and you cannot allow you tenants to break the rules, as “you open yourself up to years of struggle and compromise that will ultimately lead to huge financial losses.”
Finally, do not suffer in silence. If you need help, get it. There is a wealth of support available to you on the internet, such as real estate forums, blogs, and podcasts and all of these will help connect you to other landlords for free. It is well-known that a new mother needs her village, as a baby can make life very lonely. The same applies to being a landlord. You have the resources to find your village at the touch of a button. It could not be any easier. Once you have found your village you will never stop learning, and will continue to grow both as a landlord and a real estate investor.
Being a successful landlord is definitely possible, if you are organised and have a decent system in place which allows you to run a legal business, as well as protecting yourself against any threats your tenants could make. It is not simply about sitting back, and waiting for your monthly cheque to roll in, it is about being present, trustworthy, and ensuring that your tenants live in a property that meets basic living standards. Run your property as a business, and you will set the right foundations for future success.
