Folks now I consider landlording and people management the $10 job that earns me $90. That saying comes from the fact that I charge 10 percent for managing properties. I don't manage properties for others anymore, but years ago I did to help keep the wolves away from my door.
If you're just starting out with your investing career and you already have a little experience managing a couple of your own properties, I'm sure your net income is minimal, especially for highly leveraged purchases. If so, you might consider managing a few extra houses to prop up your income. Charge 10 percent because it is worth that much!
Do you need a license to do that? Yes.
Many small mom and pop type investors give up the opportunity to make a ton of money and have a wonderful free “come and go” lifestyle simply because they never see the importance of learning to be a skilled landlord. You don't become a skilled landlord when you acquire houses. You become the owner – that's all. Skilled landlording will take some education.
Basically there's just two ways to learn landlording! You can learn from people like me or you can learn from the tenants! I will tell you right now, if you pay me 10 times more than I charge to teach you, it's still cheaper than learning this job from the tenants.
Every landlord should know and understand landlord/tenant laws in his own area. Once you know the laws your fear of renters or of being intimidated will vanish. An overwhelming number of property owners incorrectly assume these laws favor deadbeat tenants. I can assure you this is not the case. Laws are mostly about equity. It's well to remember there are unscrupulous landlords the same as naughty tenants.
Landlords who learn to act before small problems become big will control most tenants. This strategy works well for collecting rents and also for enforcing your tenant rules. Speaking of rules: many landlords have far too many rules. It's best to keep your list of rules short and enforceable rather than long-winded, without any teeth.
One of the most important questions all landlords should ask themselves is, “What would I rather be, popular or profitable?” Don't let your mind wander here. You don't have to be a greedy person to become a wealthy landlord. What you must be is a fair-minded business person. Fair-minded business means that accounts receivable (rents) are collected in a timely manner and that your business assets (houses) are maintained properly by the tenants who lease them. See how simple this stuff is?
Rent monies are “life blood” to apartment owners. Yet, I know many property managers and owners alike who participate with their tenants each month in a silly little “rent collection ritual.” The tenant starts the game by saying the check's in the mail. Then the landlord begins calling every day or driving out to the property to inform the tenant he hasn't received it yet. Sometimes this goes on for weeks.
Playing this game will only eliminate whatever respect one party may have for the other. It generally leads to more bickering about other matters as well. Don't allow yourself to be part of this game. You'll fare much better if you simply use the “rules” already on the books. I'm referring to your state landlord-tenant civil laws and, of course, your own rental contract terms, agreed to by your own tenant.
Landlords will not be disliked or hated any more than the supermarket cashiers or bank tellers when they demand timely rents. Everyone knows that cashiers will not allow groceries to leave the store until they collect the money. Customers expect that and they don't feel hateful toward cashiers or bank tellers for following the rules.
Landlords who insist on timely rent payments are no different than cashiers in the supermarket.
Over many years, I've discovered the key to easy people management is to keep emotions out of the daily management process. You'll find it's almost impossible when you visit tenants every time something becomes an issue, whether it's about collecting rents or rule enforcement. I have a much better way. If you wish to improve the quality of your landlord life write short notes or memos to your tenants about concerns. When you sit down, think about what you wish to tell them, you'll be surprised how unemotional communication becomes. No shouting, bickering or name calling. Just the facts. Always keep copies!
Enforcement of the “rules”, whether we're talking civil code (laws) or your own house, rules is the best way you develop a smooth running management operation. Preventative techniques are as important to managing tenants as they are for the doctor who manages your personal health. One of my main criticisms about professional property managers is that they very rarely act. Mostly they react! They're always ready and willing to fix the busted door, but only after the horse is outta the barn!