You want to invest in real estate. You want to buy a property and rent it out for the income and appreciation that real estate investment provides. But you don't do it because you've heard about the nightmares that come with being a landlord. But not every tenant-landlord relationship has to be a nightmare. Here are four easy ways to avoid the nightmares often associated with being a landlord.
Screen your tenants
When a real estate investor acquires a property to rent, the first thing they want to do is get it rented out. It's understandable; the sooner it's rented, the sooner you start earning income. It's tempting, therefore, to rent it out to the first person who's interested. But that person, while first, might not be the best candidate. It's important, if you want to avoid rental property management nightmares, to vet any potential renter of your home.
What's their credit history? What's their legal history? What is their history as a renter? You can, and should delve into this information before renting to anybody who shows up interested in your place. Finding good, worthy tenants is the first step toward easy land-lording.
Set the ground rules
Before anybody moves into a residence there should be a set of rules in place. If you don't want to take phone calls about a clogged toilet at 1 a.m., let your tenant know that. If you DO want to be alerted to something that's more of an emergency, say, a fire, tell them that.
A tenant-landlord relationship isn't that different from other relationships you have in your life. You wouldn't let your boss overstep their boundaries at work, and you wouldn't condone a new boyfriend or girlfriend seeing other people if you've agreed to be exclusive. When you enter a relationship with a tenant, set up parameters just as you would in those circumstances.
Get it in writing
Along those same lines, a solid lease is your protection against nightmares. Don't just download the first generic lease you see on the internet. Solicit aid from a property management company or attorney who will help you craft a lease to your liking.
A lease is a legal contract. Make sure the one you draft for your new tenant explicitly details when and how rent is to be paid, who is responsible for what, maintenance-wise, and how any disputes are going to be handled. Lay out expectations and consequences for failing them in any document you submit to a tenant for signature.
Go with honey, not vinegar
Most people respond positively to kindness and receptiveness, rather than rudeness and denial. Make no mistake, tenants are not your friends, but that doesn't mean they should be treated as adversaries.
Know your tenants' kids' names. Call them back when they leave a voicemail, even if you don't want to. Send them a card around the holidays or their birthdays. In general, making friends is easier than making enemies, right? So the easiest way to make sure your tenant-landlord relationship isn't adversarial is to treat your tenants like friends, rather than enemies. People respond to relationship cues reciprocally. Always keep that in mind.
There are bad tenants, no doubt. But there are also bad landlords. If you're interested in real estate investment, you can avoid the landlord nightmares you've heard about by sticking to the key principles mentioned above.
