LANDLORD SKILLS PUT OWNERS IN CONTROL
Most new investors seriously underestimate how important it is to learn landlording skills. Many so-called “Professional Property Managers” suffer from the same affliction. However, I can forgive them because they’re simply working for fees with little prospect of ever becoming wealthy. We investors, on the other hand, have high hopes of becoming wealthy or at least as well off as our neighbor down the street with the Mercedes.
Landlording skills improve your income. Owning rental properties that produce income is without question a very profitable and worthwhile achievement. Most folks who buy properties and stick with it end up a whole lot richer than those who don’t. I’m a good example of this, but I must tell you, there is definitely a catch to owning rental properties.
The catch is if you do not quickly learn how to operate your rentals and handle the tenants who live inside them; you’ll think a lot more about suicide than counting your money. Getting rich is a very strong motivation and will certainly carry you through some rough times. But, tenants who don’t play by our rules can have a devastating effect on our bank account as well as your quality of life as an investor.
I don’t mean to scare the daylights out of you, particularly if you’re just starting out. But, I do wish to call your attention to a very important function of property ownership that often receives hardly any attention. That’s because it’s not a very exciting part of investing. In fact, it’s the part of ownership that turns many would-be investors off.
” .. .it’s the dull part of ownership. “
Landlording and managing your properties is very important. I’ll certainly agree with anyone, it’s the dull part of ownership. Yet it’s a path that must be traveled on your way to the gold mine. I often refer to property management, including people management, as the 10 percent part of ownership that’s necessary in order to receive the benefits from the other 90 percent. The 10 percent figure I use comes from the amount I charged (10 percent of the gross rents) when I used to manage properties for others.
The first rule of good landlording is to treat it exactly like you would any other well run business. Managing your property is a business and the tenants are your customers. It’s your job as a landlord to provide the best product (houses) and the best possible service you can.
Offer your customer the best value in the rental business. That means a clan house or apartment, priced ideally at $10 to $20 below the competition. This is enough to swing many deals your way.
How can you tell if you’re $10 to $20 below the competition? The best way is to study your local classified ads. Then drive out and see what your competition is offering at comparable rents. Adjust yours up or down according to what you observe.
You will hear that deadbeat tenants know all the rules, which enable them to stay in your property month after month without paying any rent. Sometimes the storyteller will say this is so because the tenant has minor children and receives welfare or some other assistance.
Offer your customer the best value.
This is giving far too much credit to the tenant for being street-savvy and knowledgeable. But, chances are the tenant’s success is much more likely attributable to a dumb landlord. Seldom will any tenant stay very long in my property if he or she doesn’t pay rents. After you’ve done a few evictions yourself and learned what papers to file in a timely manner, you’ll quickly build enough confidence so that horror stories won’t happen at your properties. Again, I’ll repeat, know-how is the difference between owners who operate their rental properties successfully and the ones who are simply hoping for the best.
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