What I Learned As A Landlord
/My past three posts have been a breakdown of the remodels of the individual units from our triplex. Although remodels are exciting and fun to look at, there were a lot of real life lessons I learned along the way. For example: determining rent prices, credit checks, lease agreements, rental laws, insurance claims, etc. I don't want you to fall asleep or anything... But if you're interested in owning real estate these boring things are inevitable. If you're thinking of being a landlord make sure you either have the funds to pay someone for these things, or are willing to pull up your sleeves and do it yourself.
Check out my Service Page (if you're in Southern California) to see how I can take the boring stuff off your hands. There are plenty of people that will say "oh my god that sounds like a nightmare!", and I would be lying if I said it wasn't...sometimes - but when you get used to cashing those checks, it becomes well worth the effort. Pahl and I were young adults when we bought the triplex - this is all stuff you are capable of learning at any age if you're willing!
Up first, the books. I made a break down every month on Excel of the income received and the expenses paid (with notes if there was additional deposits, loss of rent, etc.). In doing this, it helped with a few things: track profits, track vacancy rates, have record of taxes and utilities paid, and more. If there were ever questions inquired I could pull the spread sheet for that month and year and go "ahhhh yea, I know why that happened". It's easy to send out checks and keep receipts, but come time for taxes or get a call from a tenant regarding something not recent - you look unprofessional, and it takes a lot of your time going through all your papers to find something really simple. Your property should be working for you, not the other way around. Having these really simple systems in place was a huge time saver and made a lot of sense for multiple reasons.
Second, maintenance. There's a lot of it on a rental property. Basically, you better love to clean and paint. Also, it will depend on your area for what this will entail. Are you by the beach? Was there ever a rodent problem? Termites? These things will play a factor in what your annual budget and maintenance schedule will look like. You're living in a dream if your tenants treat your property as if it's theirs. Seriously, and don't raise that tenant's rent if they do! Think about how much value that alone brings to your property before you start getting greedy. If you're not so lucky (don't worry - you are not alone!), you're probably going to need at least a landscape crew and a good plumber on hand. A lot of landlords use a general handyman to do things around the property - and if you know an amazing person to do this, go for it! But usually these dudes are a little sketchy and years of this type of work can take a real toll on the building. I choose wisely about cutting corners to save money because... it shows, not only to your potential renters but also to potential buyers (when you're ready to cash out!), and most importantly - your neighbors. Raise your standards and show pride in what's yours. It is an extension of your "empire" and ultimately your character.
That brings me to my third lesson, showing up! You or someone competent needs to inspect the property so you can stay on top of the maintenance I'm referencing above. Out of site, out of mind - until you get a tragic call from a tenant at the worst time (guaranteed) regarding something you could have avoided and on your own time had you known before it was too late. This includes meeting and screening your tenants personally and renting to the RIGHT tenant! Finding the right fit is key to long term successful tenants! Even after we moved, I scheduled time twice a year to check out the property and clean. I cleaned the laundry room, the windows, replaced batteries and exterior light bulbs, and notified my vendors of attention needed or sometimes work that was not completed as agreed.
And last but certainly not least, actually speaking to your tenants. Yeah, cleaning and showing up to the property will give you a good idea of needed maintenance and other issues... But it also allows you to see your tenants! Don't run - it's ok! You should see them, talk to them, and maybe know a little about them! I want my tenants to invite me in (because I'm not Dr. Evil), because I like to know that they (and my unit) are thriving! Don't ever think you're above anyone. Not only is that illegal (!!!) in some circumstances - but because without your tenants, you're screwed. Ya sure, you can always find another tenant - but you want to avoid turn over like the plague! That just means more money, time, and loss of income for you! In the end, spending the extra time to get to know your renters as normal people and not just direct deposits can go a long way in how they take care of you in return: like paying rent on time, treating the property better, and being more respectful to other tenants. An easy example of this is that I make "Welcome Baskets" when I rent a unit. I keep open and realistic pet guidelines, and I ask everyone to do unto others as they would like done unto them. I don't just post signs passive aggressively in the laundry room, instead, I let everyone know that I've taken the time and expense to install a clock and new keyless entry to the laundry room so we can ALL be more respectful as a whole for the people living near the laundry room. Trust me, every dollar spend on an Ikea clock is worth them knowing you care. What goes around, comes around.
There are so many unique needs to every property, and I may seem like a powderpuff girl in this post... But trust me, I've evicted TWO tenants for not meeting the terms agreed upon. Not to mention vendors I've let go. I can be very nice, but at the end of the day, this is an investment and it's crucial it be treated as such. Please don't confuse being understanding with being naïve. Everything I do is in writing and in accordance with the current laws but is explained with transparency and after much thought. Please leave me a comment if you have any questions regarding landlord-ing! I hope this helps give you an idea of what it's like and what has worked for me.
With gratitude, Lauren
