You know, there are a LOT of BAD Landlords out there… And unfortunately, they give the rest of us a bad name – those of us who are trying to do things the right way. I used to joke that I wanted to be a “Slum-Lord”, but that was just me trying to be funny. And without even falling to that level, there are many Rental Property owners who fail to run it as a business. And whether you know it or not, owning Rental Properties and being a Landlord is a business!
Welcome to Episode #26 - The Business & Tools of Rental Real Estate Investing & Being A Landlord
So, do you own a Rental Property or two “on the side” – and it is more or less just your side-hustle or maybe even a hobby? Something you just fell into? Maybe you had no intention of owning Rental Properties and becoming a Landlord, but it just sort of happened? You could have inherited a house. Maybe you needed to move in a hurry, such as relocating for a job – and it was just easier to rent out your prior house instead of trying to sell it quickly? Or maybe you got married and your new spouse already owned a house, or you decided to buy a new house together – so you just rented out your old house?
I need to find some official stats on this, but until then I’ll just make one up (hell, I think that's what others are doing most of the time anyway) - so I'll say that 7 out of 10 Landlords came into it by such a means where it was not a thought out plan that was intentionally executed to this end. I have no proof, but that stat sounds about dead on to me.
And for this reason, a person that did not come into being a Landlord with the thought of creating a business in mind, can almost be forgiven (almost) for not treating it as a business. But now that you are one, you owe it to yourself, to your customers (your Tenants) and to other Landlords who you may now be making to look bad – to learn how to be a Landlord and run your Rental Property BUSINESS as just that, a business!
Now to one extent or another, I’ve spoken on much of this already over several different shows – but it needs specific focus. Owning Rental Properties and being a Landlord is a serious financial endeavor. You’ve got many tens of thousands and potentially a hundred thousand or more locked into a property.
It could represent many years of work and savings on your part. And then on the other side, a real person / a family lives in this home. This is where they cook their meals, lay their head at night… They LIVE here! Likely everything they own in the world is present in this home, along with all that is most precious to them (like their children and maybe also pets) – call your rental property their HOME. There is a lot of responsibility to go around – on both sides of that equation.
For their part, you expect the tenant to pay rent on time, follow your lease, treat the home with care, report any issues promptly, and on. And for your part, the tenant expects you also to follow the lease - and as such, make timely repairs of items for which you are responsible, be knowledgeable of and follow the law, be professional in your dealings and handling of all matters, and on.
And you may not know it, and the tenant certainly won’t see it this way – but a large part of your responsibility as a Landlord is to NOT rent to anyone who can't meet your well established and legal rental criteria. For example, if you put someone into your $1,000/mo rental who only makes $2,000 per month of total income – who’s fault is it really, when they inevitably are unable to pay the rent on time (if at all). Sure, it is their fault for failing to uphold their agreement. But I’d argue (and so might a court) that it is even more your responsibility / your fault for putting the person in a situation where they were almost certain to fail. Having proper business policies established for setting your rental criteria (such as a minimum income of at least 3x the monthly rent) – would have been the professional thing to do, and it would have saved you and the tenant from a costly eviction and all the resulting hostility on both sides.
Not only do you (as a professional Landlord running a Rental Property Business) need to have well established policies and procedures – but you need to put a tenant screening and on-boarding process in place that eliminates those from consideration who would not meet your legally established criteria. And then for those who do qualify and for whom you ultimately decide to rent to – you must have systems in place and handle your on-boarding in a way that makes it crystal clear that you are a professional, running a business. Then there's no confusion as to what you mean by your “No Smoking” Policy; your “No Animal (not no Pet)” Policy; your “Authorized Occupants” Policy, and on, and on - avoiding confusion, also helps to avoid conflict.
Run your business like a professional and magically people will respect and treat you like a professional running a real business – not just someone who has a house for rent.
I meet a lot of accidental Landlords who HATE IT. I’ve also met a good number of purposeful Landlords who also HATE IT. The one thing both groups always seem to have in common is that they don’t run it as a business. Or in those few instances where they do – it’s a poorly run business at best. But granted, being in a particularly Landlord unfriend state or city can set you up for failure.
If you're going to do a thing - do it well! But unfortunately, if you're listening to this Podcast, you're likely a person who has already adopted that philosophy - or is at least in the process of doing so. How do I reach the person who's never even considered that they might not be handling their rental properties the right way - as a business?
How do I find the offenders out their and politely say, "hey, you suck as a Landlord. Please listen to my Podcast or read this book so that you might learn how to run your business the right way and stop giving the rest of us a bad name"? Or if they're local, I guess I could say "wow, you really suck as a Landlord. It's embarrassing stop it! You're not cut out for this. You should hire me and Blue Chariot Management to do this for you". Is that an effective marketing message? Persuasive? Should I send mailers like that to all rundown rental properties in my area? I'll go pull a listing of all recent eviction filings and code violations and send that mailer out.
No, I'm just joking about that message, but I will be marketing to local Landlords to get more Property Management clients for Blue Chariot Management. So for those listening to learn or improve your skills as a Landlord - THANK YOU! I'm only putting out the information I've learned from people, books and other Podcasts since I started as a Landlord back in 2015. There's nothing new under the Sun - we're all just building upon what we learned from someone else.
So if you've not already done so, listen to Episodes #18 & 19 for "10 Things That Self-Managing Landlords Need To Stop Doing!" - and also checkout the Books page at: andlandlord.com/books - for a listing of many great books that every Landlord or Real Estate Investor should read. Specific to being the best Landlord you can be and running your Rental Property business as a business - read or listen to "The Book On Managing Rental Properties" by Heather & Brandon Turner of BiggerPockets.com. You'll find it referenced on the page at: andlandlord.com/books.
Now before I end this episode, let's speak a little about the tools, software and systems you'll need to be a Professional Landlord. When you start and as you grow as a Landlord, acquiring more and more properties - you'll hear a lot about App Folio and Buildium - which are two of the larger and more popular Professional Property Management Systems for Landlords. I think neither is free and I believe both have a minimum number of units they require you to have or at which it makes sense.
But there are now several cheap and even FREE alternatives. I'm currently using Cozy.co - which is FREE to me as the Landlord, and can also be FREE to the Tenant if they pay their rent with a linked checking or savings account, versus using a credit or debit card.
Cozy makes their money by charging the Tenant upon applying for your rental for the credit and background check - but that's a reasonable one-time expense. Cozy works great, has great features and even great support - but it does lack some desired features, especially now that I'm managing properties for others, so I'm moving over to a different system (I'll tell you what that system is later once I'm sure it's viable solution for me needs). But for the Self-Managing Landlord of only their own properties, I could not recommend Cozy more highly - it's been great!
Cozy will allow you to list your properties for rent, take applications, run credit and background checks (charging the tenants), collect rent, handle maintenance, track expenses, and on... Almost everything you'll need to handle your rental properties as a Professional Landlord.
But Cozy does currently lack a few needed features... First, it will not syndicate your rentals to all popular online portals, like Zillow, Trulia and Craigslist. You'll still have to list to these manually, outside of Cozy, but Cozy does syndicate to several - just not the most popular.
Cozy also does not allow the application to be customized, so you'll benefit from having a pre-screening questionnaire form on your website that potential applicants complete BEFORE paying to officially apply for your rental at Cozy.co. I think I'll do an entire episode on Tenant pre-screening, but after we complete some website changes that are now underway.
And as of my last check, Cozy also does not handle the lease creation and signing process - but they do allow for document storage of the completed lease that you created and handled signing elsewhere. For this reason, I still make use of EZLandLordForms.com for all of my lease needs, as well as, Tenant notices and other documents.
EZLandLordForms.com charges an annual fee per unit, but its reasonable. The system is easy to use and it is packed with all sorts of state specific leases, notices and documents - all of which can be customized to your exact needs. You can even handle the application process through this site, although I prefer to handle that with Cozy.co.
Another site I've found useful is Stessa.com (Assets spelled backwards) - which is great for tracking the value, income, return, expenses and all the various numbers and metrics related to the financial performance of your Rentals. You've gotta know if you're making any money or not. And this site also helps to be ready at tax time. It can even make direct connections to your bank accounts to record and track all income and expenses in real-time.
And while certainly not a complete list, the last site I'll mention, I've mentioned many times before... BiggerPockets.com. This site is not only great for the education that comes from all the books, webinars, podcasts and community forum with over a million helpful users (including myself) - but it has some very useful lists and tools. Here you'll find lists of lenders, vendors, and on... And also some pretty useful calculators. I still run Rental, BRRRR or Flip calculators on BiggerPockets whenever I'm considering another property acquisition.
Stessa.com is great for knowing if or how your existing rentals are performing, but the calculators on BiggerPockets.com are great for knowing if you should buy a given property as a rental in the first place.
So that's it for now... You know if you who sucks as a Landlord. If so, stop giving me and other good Landlords a bad name. Improve by educating yourself and systematize with effective (and legal) policies and procedures. Or get out of the business and sell your properties to me!
If its not a dump in a war-zone and the BP calculator says I'm going to make money at your asking price + rehab needed to bring the property up to my standards - I'll buy it! Single-Family Homes, Small Multi-Family, even Apartment Complexes - if its a good deal, I'm on it... email me at jonathan (at) bluechariot.com. Otherwise, PLEASE start running your rental properties as a business.
Are you a Landlord? If so, did you know that being a Landlord and owning Rental Properties is a business? If not - that's the problem I discuss in this episode of the [... and Landlord!] Rental Real Estate Investing Podcast.
You see, there are a lot of Landlords out there who SUCK at being a Landlord - often because they fail to treat their Rental Properties like a business. Your Rental Properties are both your product and your service, and your tenants are your customers. But this is one business in which the customer is certainly not always right (although I'd argue that may also be true of ALL businesses).
Landlords tend to have a bad reputation. This goes back hundreds of years, and in many cases, this reputation is well deserved. Much of the Landlord / Tenants Laws that exist throughout the world came into being to protect Tenants from abusive, dishonest and unethical Landlords. And in many cases, that pendulum has swung so far in the Tenant's favor, that well meaning Landlords cannot make a profitable endeavor out of owning Rental Properties in such locations.
Thankfully, that is not the case everywhere. Most places managed to strike a reasonably fare balance between the rights of the Landlord and those of the Tenant - as BOTH do have rights. But this does not relieve a Landlord of the responsibility to uphold certain standards. To know the law and uphold it in all dealings with Tenants, as well as, to maintain professional handling of all matters, communication, and on.
We as Landlords don't want to be doing anything TODAY, that further damages our reputation - that bad reputation obtained from past wrongdoing by others in our name. This stigma on the title "Landlord" is one of the reasons many have taken to calling themselves "Property Managers", which is something I'll speak more on in next week's Episode #27 - "Are You The Owner? No, I'm The Property Manager".
So in this episode of the... and Landlord Podcast, I speak about being a Professional Landlord running a Rental Property BUSINESS - and I go into some of the tools that I use to this end.
Businesses have documented policies, repeatable procedures, leveraged systems, tools, and a general consistency of professional high-level operation - from day to day; week to week; month to month and year to year... Always improving at each step along the way. This is exactly what the Landlord and Rental Property profession needs - to be operated as a business!