When you are buying your first rental property and becoming a landlord, there is much to learn. How do you find tenants? What should I charge for rent? Should I update the places to get more rent? How do I tell the tenants they are late on rent?
There has been a lot written about how you have to rule with an iron fist to keep your tenants in line. That may or may not be true; however, I have found that every property is different, as is the tenant.
Most first real estate investment property owners buy something that they would move into themselves as their main factor in the decision process aspect .There's many decisions along the way, and being a potential tenant yourself makes those decisions much clearer.
First off, when it comes time to market your place, you are part of the target audience, so it is easy to find the right place to advertise. Just ask yourself... how would we go about looking for a place? Most mistakenly put costly ads in the real estate section of the newspaper initially, bringing in the completely wrong renters who are completely not interested. If you switch to advertising in places where you would look, 90% of the people who come will be actually interested, the place will rent faster, and the tenants will be happy to be in your place.
That leads to the next reason why buying something you would live in as your first rental property makes the landlord learning process so much easier. The tenants! These will be people that you basically get along with because they like what you like and if you meet them, they will most likely like you, or they would not be renting it. You will make sense to them, and they will make sense to you. When you are at odds with your tenants, the whole interaction and experience can be painful, so getting along helps tremendously.
Why, you say, should I care if my tenants are happy? Everything is easier. They will more likely pay rent on time, respect & keep your place in shape, and stay longer. Believe me, there is nothing like a completely wrecked apartment by a short-term tenant. Sure, you can charge money for damages, but it will still take time and be a hassle to get it back up to a rent-able state. In addition, dealing the whole time with a bitter, angry tenant is no fun either.
How do you make your tenants happy? There are a couple things you can do. One is to allow tenants some flexibility with painting and decorating. 95% of the time, tenants actually do wonders with apartments and leave them with a better style than you could have done yourself.
Many times, you can even get good ideas to carry over to the other apartments to make them more marketable, like some basic drapes & mounted wine racks. You could even have a tenant call us to ask if they could plant some flowers by the porch. Welcome it. It is an indication that they feel invested in the place and feel at home. Of course, you do not let someone remodel your kitchens... It is small things that are easily undone, but make the tenant feel invested and at home.
Another thing to do to have happy tenants is to give them a sizable re-signing bonus when their leases end. And unless it is painfully needed, do not raise the rent, especially if the tenant is someone who pays on time and is easy to deal with. You can offer a $500 re-signing bonus each year with rents at $800. It is almost a free month but the cost of a tenant turnover between lost rent and the make ready is usually around $1200, so it is good for them and you.
Most landlords try to rent out places at the maximum. When you make them a somewhat good deal so that many people will inquire, you will have a better chance of a good fit and that they will be happy and stay long. Do not overcharge because feeling ripped off is one main reason a tenant will leave.
Try to treat your tenants with a lot of respect. Obviously, unless it is an emergency, give them 24 hours notice before you enter their units, and if repairs take an extensive amount of time or hassle on their behalf, give them some rent back. Always answer their issues within a day, at least with a phone call.
Becoming a landlord is definitely a learning experience. Everyone has their own style, and even different properties may prescribe a different style. Just be open to handling your rental property business (which is basically your tenants) with respect rather than the stereotypical overbearing attitude.
I have clients who have very few vacancies if at all, this stuff works!
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