As an individual landlord, as opposed to a property owner with apartment buildings and an on-site manger, you have unique challenges in maximizing the money you earn on your rental property. I work with and teach many small-scale landlords — plus I am one myself — and some common themes come up about how to make the most money with the least hassle. And all real estate has issues and hassles, so reducing them should be your top priority.
Aim for long-term tenants
First, treat your tenants like they are the most important people in your life. In fact, since they are likely paying for your retirement, they really are the most important people in your life. Acting and conducting yourself in a respectful manner will usually make your life a lot easier and your properties more profitable. It doesn’t work every time, but hopefully if you choose this strategy it will be successful.
Treating your tenants well helps you keep them in your property longer. Every time your rental unit turns over, even if you have a new tenant ready to move in the next day, you will probably spend a month’s worth of rent fixing and repairing normal wear-and-tear items, not to mention countless hours completing the whole leasing process — advertising, taking phone calls, interviewing, showing the property, getting credit reports, drafting the leases, discussing the lease, move in day, etc. It’s a lot of work.
So why not just try to keep your tenants as long as possible by treating them really well? And that starts by acting toward them the way you would like to be treated.
Remember the basics
Additionally, in order to keep tenants a long time, maintain your cash flow and avoid angry tenants or having to re-lease the unit:
- Keep your properties well maintained and fix any issues in a reasonable period of time.
- Don’t try to charge your tenants for items like plumbing or repairs — I’ve never had a tenant intentionally damage one of my properties — just pay for it.
- Ask reasonable rents, maybe even a bit under market, so that you have a large pool of applicants and can select the best credit quality group that you think will be good tenants.
- If there are problems, like a broken water pipe, deal fairly with your tenants and compensate them a reasonable amount if it ends up being a big hassle for them. That way they are happy, they stay and they keep paying rent.
- If they pay on time, take care of your property and are good tenants, reward them with minimal rent increases.
Keeping these tips in mind should help you minimize vacancy and costs, plus have reasonable people in your property who will take care of it. And you’ll learn over time why treating your tenants well — the ones who are paying for your golden years — is just a good idea!