These are five lessons I learned as a first time landlord. There are many traps and issues that you can run into, here we explore a few of those and how to avoid them.
1) You don’t need a licensed tradesman for every repair.
I remember the first time my phone rang from my tenant Deborah after she had moved in, a retired widow who I rented out my first rental property to. She came highly recommended by a friend of a friend. “My air conditioning is making a weird noise from inside the vent and doesn’t sound good” she stated, “Could you send someone out here?”. I wanted to be a good landlord, I aimed to please. I called a local HVAC company that could send someone out there as soon as possible. When the technician arrived and found the problem he gave me a call. “There was a plastic wrapper in the vent, nothing is wrong with your unit” he explained. “It’s a $75 service call, how would you like to pay that?”. Reluctantly I replied that I’d pay by credit card.
If I had just gone to the unit and inspected this myself with a screw driver, I could have saved myself the money. While the tenant may have really thought that it was a big deal, it truly wasn’t.
You would have thought I’d learned my lesson from that, but I didn’t. A few months later Deborah called me with another emergency, this time her cable television that came with the lease wasn’t working. Same song and dance, I called the cable company to come out, she didn’t have the cable screwed in all the way, $50 service call.
Fool me once, shame on you. Full me twice, shame on me. I learned that unless the place is flooding or burning down, it is best to check the problem and see if I can fix it myself before calling the professionals.
2) Put it in the lease.
My city had an auction on the only condo high rise in town, I purchased one on the 11th floor with beautiful views. With that purchase I inherited a tenant. We will just say that that tenant had been very spoiled by the previous owner of the building. Any time a light bulb went out, she would text me that it needed changed. If her toilet was running, you guessed it, my phone would be ringing. And my favorite call, her bathroom sink was clogged again.
I did a double take on her lease, and these issues were not spelled out in there. You can bet your bottom dollar that on her next lease a few new items were included. All 3 of those items were to be handled by the tenant and at her expense. I have also began giving new tenants a $2 “snake” to unclog a sink without the need to call me. These adjustments have saved a lot of time and set expectations which is also very important with a new tenant.
3) You give an inch, they take a mile.
The honeymoon phase with a new tenant ends immediately when they sign the lease and move in. It is at this point that they will begin to test you. The issue I began to see the most is a request to waive the late fee from their late payment. I learned that when I did this, they would begin to expect that the fee waiver would be something I would do every month. They would also expect other preferential treatment. The tenant is not your friend, and you can’t treat them as such.
The best course of action is to never give them a fee waiver. They signed the lease and agreed to pay the fee if they were late, you don’t have time to freely give to track down their late payment. If you asked them for a financial favor we already know what their answer would be. A big fat NO.
This portrays the message that there is no such thing as a free lunch. If they are late, they owe the late fee.
4) A landlord reference is worthless in this day and age.
I know some landlords might disagree with me on this, but hear me out. I would say that at least half of the “landlord references” that a potential tenant gave me, were not former landlords, but friends of the tenant. One way I learned to work around this is to ask “Oh so Billy said you all are related, how so?”. And when they began saying how they were related, I knew it wasn’t truly a former landlord.
If the tenant actually gives you a real former landlord to call, chances are they just want the tenant out of their hair and do not want any liability. If it’s a terrible tenant, it’s in their best interest to get them out of their property as soon as possible, one way to do that is to pawn them off on you. They may also not want the liability of saying that they were not a good tenant, and that tenant sues them. So they just say that they were great.
I don’t bother to ask for or call former landlords anymore. It’s not worth the time or the games to me.
5) Sometimes it’s best to hire a property management company.
A good property manager is worth their weight in gold, especially at the beginning. There is a ton to learn being a landlord, everything from local landlord tenant laws, people skills, & writing leases. While being a landlord is still a passive investment, there is still time required. Answering your phone at odd hours, taking the time to find a repairman after it is determined they are truly needed, enforcing late charges and the like.
There are of course more lessons that we are still processing, and some that are yet to come. I will share more in the future as they arise. Just remember to you keep smiling, and keep on keeping on.