What do you wish you knew before becoming a landlord?

March 26, 2008 11:25 AM

I've been thinking a lot about buying a property and renting it out. I have a good grasp on a lot of the essentials, but I was hoping for some input from hive mind as to what I should be prepared for, what I should have ready, and how best to handle being a landlord.

I have already coverred a lot of the basics. I'll be doing this in the southern Ontario region, where I live. I have been spending hours upon hours on the CMHC website, and they have a ton of information, statistics, and more.
I am not worried about the mortgage, as I am involved with mortgages in my career and am very familiar.

What I'd love to hear is what sort of things you wish someone had told you before you bought a rental property.
I'd love to know what you wish you'd had ready ahead of time?

Thanks!

posted by smitt to work & money (20 comments total)

As a (former) tenant, things I wish some of my landlordladypersons had known:

* Rules about when it's okay to go into a tenant's apartment with no notice or permission (basically, in my former jurisdiction, never, unless it was an emergency).

* That fixing something the right way the first time, even if it takes a little longer and/or costs more, is way better than a cheap quick-fix that breaks a week later, causes more problems, and ends up costing a lot more money in the long run to correct.

* That it's important to hire good handymen/plumbers/electricians (if you don't know how to do it yourself), and not just the cheapest guy.

* If you're going to install a new countertop in a tenant's apartment, for godssakes use a level. Also, caulk is your friend.

* If you screen your tenants and stay on top of fixing the little stuff as it happens, your property will stay nicer longer. If you have good tenants, treat them well so they stick around - longterm tenants who are handy, friendly, nondestructive, and timely in their payments are a good thing.
posted by rtha at 12:09 PM on March 26, 2008 [3 favorites has favorites]

As someone who has been both a landlord and a renter, I think the most important thing a landlord can do is visit his/her properties on a regular basis; including actually going inside to see how things are going. Where I live, the landlord has to give advance notice of any intention to enter the building. But just driving by the place or waiting at the door every month for rent does not give an accurate picture.
posted by toomuch at 12:14 PM on March 26, 2008

oh and everything rtha said. Happy tenants = happy landlords. I did not mean to say that you should enter the place without notice. It is someone's home after all. I just meant that you need to see inside to have a clear picture of your property. For example, some tenants hate to "bother" the landlord with minor problems. The problem is it might not really be a minor problem to begin with or it might quickly turn into a major issue. On the flip side, someone who leaves food in the ground for a week could cause a roach infestation that could drive your other tenants out.
posted by toomuch at 12:20 PM on March 26, 2008

I've been both too. Respect the tenants. And also, be comfortable with a variety of handyman skills. It's best if you know how to make minor rewirings, paint, pull a toilet and rent a power-snake, spackle correctly, take apart and fix a P-trap and a faucet, and intervene with knowledge of how to stop a water break. Also, knife out a section of drywall and patch a piece back in and tape and spackle it. Also maintenance: clean gutters, etc. Willingness to do those things avoids big bills from electricians and plumbers, and it makes you really invested in the property. I once was sort of OK with that stuff. But not any more. If I were to rent out my house now, I'd turn it entirely over to a mgt. co. BTW: knowing those skills makes you a less-reactive, and calmer, landlord. You know what's a tiny problem and what's a big one.
posted by yazi at 12:24 PM on March 26, 2008

The only thing I could add to this is that I would have liked to have been more prepared for the actual process of finding a tenant. It involved a lot of being on call all day long to show the property at the drop of a hat, a lot of talking to strangers both on the phone and in person, a lot of repetitive answering of questions that were clearly stated in the ad, etc. and I found it stressful. But ultimately worth the stress, because the right tenants found us.
posted by padraigin at 12:35 PM on March 26, 2008

As a landlord, make sure you either cut the grass, or you compensate your tenants for cutting the grass and gardening.

It always annoyed me as a renter that the landlord would expect me to mow the lawn ("there's the lawnmower in the shed!") but never gave me a break on the rent for it.
posted by KokuRyu at 12:36 PM on March 26, 2008

My folks have two houses they rent right now and I've watched them learn some things. Most importantly is not to just your tenants by their covers. One of their properties is rented out to an older, seemingly respectable, couple and they drive Mom and Dad nuts with their demands (they won't even change the lightbulbs) and their difficulty paying their rent. The other house is rented to a heavily tattooed and pierced couple with two kids and despite my Dad's misgivings, these renters have turned out to be the best he's had. They fix little problems, they pay their bills on time, they even volunteer to do things to improve the house and the yard.

Other than being willing to dash out in the middle of the night because your tenant flooded the bathroom, there's not much else to consider. It can be not that much work, or it can seem like another job altogether. It just depends on the tenants.

Good Luck.
posted by teleri025 at 12:49 PM on March 26, 2008

As someone has said before, Fatwallet Finance Forum is like the ask.metafilter of financial and business questions. I have seen this subject come up quite a bit over there, might want to go gleam some info.
posted by ShootTheMoon at 1:04 PM on March 26, 2008 [1 favorite has favorites]

Due on the third. Late fee = $20 per day x (date of month on which cheque is received - 3). No cheque by the 10th = written notice for first time offense, notice to either move or pay up for second time offense, 3-day notice for third time offense. It is less hassle to find tenants who adhere to this policy than it is to deal with ones who don't.

When you're trying to rent the place, do the following. 1. Put an ad in the paper saying Open House and put up signs around the neighborhood. 2. Set up a table and park yourself in the building all day long on Saturday. 3. When people call, tell them to come by on Saturday. 4. Talk to people who come by, in person, and a give them application to fill out. 5. Tell them to bring it back later that day, along with a cheque for a credit check. 6. Only run the credit check for the people who you really are interested in. Give the other people their cheque back- don't be an asshole.

Visit the property regularly. Answer their maintenance requests promptly. Regularly make improvements. Don't be too friendly with the tenants. Keep written records of everything. Get a PO box. Let the tenants do one small thing to the apartment when they move in- people need to mark their territory :)
posted by proj08 at 1:21 PM on March 26, 2008 [1 favorite has favorites]

People do strange and gross stuff to rentals that many of us might not expect or understand. Such as punch holes in walls, steal appliances, invite 3 more roommates to move in, store shit on the front porch, let kitchens pile up with festering, bug-summoning dishes and open food containers, etc.

The nastier the property to begin with, the more this will be encouraged. Buy a building of depressing studio apartments in a sketchy neighborhood, and you may see things you never even dreamed of. Have rubber gloves handy.
posted by M.C. Lo-Carb! at 1:47 PM on March 26, 2008

Oh yeah, and seconding the recommendation to keep your social distance from tenants. These types of friendships can end badly.
posted by M.C. Lo-Carb! at 1:48 PM on March 26, 2008 [1 favorite has favorites]

I share your interest but I don't have much experience about land-lording. However, I've bought a few books about real-estate from this author and I trust his advice: John T Reed . He, in turn, recommends this book on land-lording from Leigh Robinson. I have this book and IMHO, it's a good book:
Landlording
posted by curiousZ at 1:56 PM on March 26, 2008 [1 favorite has favorites]

Interview tenants carefully. Write an application suited to the sort of tenants you want. I have a 2 family house; the tenants are my neighbors, so I ask if they recycle, if they own guns, musical instruments, etc. I tell them we're occasionally loud, and assume they will be, too, but that constant loud noise/tv/music is unpleasant. Once had a tenant who played electric guitar very badly. Ughhhh. Get references and check them.

Make the apartment as nice and as easy to maintain as possible. Fresh eggshell enamel paint is easy to clean. Matte paint on kitchen cupboards is a disaster. Let them paint, but insist on buying the high-quality paint. Insist on bright white semi-gloss or gloss enamel on woodwork, so you can redo the baseboards if needed, but you can skip the window trim, and it will generally match. Especially in the kitchen. The walls are easiest to re-paint, so let people be creative w/ wall paint. Tenants will always get paint on the floors.

Learn to do basic repairs; you'll get plenty of painting practice; learn to do it well. You need reliable, competent plumber/furnace repair and electrician.

Look carefully in craigslist. What are comparable apartments renting for? Are there a lot of free 1st month offers? That means it's a crappy rental market for landlords.

Tenants will never, ever, take care of a place as if it were their own. Don't let people pay late; it will become a habit. Be a decent, competent landlord, charge a fair rent, and check references.
posted by theora55 at 2:17 PM on March 26, 2008 [1 favorite has favorites]

If you have a long-term reliable tenant, and you eventually decide you want to sell the place, give them a heads-up about it well before the legal requirements of notice and ask them if they want to consider making an offer themselves. This is by far easiest for all concerned; even assuming you get the same price you otherwise would, you'll have saved real estate fees, cleaning, and masses of hassle.
posted by aeschenkarnos at 4:20 PM on March 26, 2008

Credit check, credit check, credit check. I almost rented to a career flim flammer. Once they are in they are difficult to remove.

Hire an experienced local management company if you can afford it. Their 10-15% commission will pay itself back many times if they know good tradespeople, screen applicants and handle all the small things. I have used an excellent management company that was also able to offer me counsel on what properties to buy, based on what they thought they could keep rented.

You want as few vacancies or turnovers as possible.

Make sure you can cover the overhead in the case of extended vacancies.

Never rent to druids.
posted by SMELLSLIKEFUN at 4:54 PM on March 26, 2008

Realize that landlording is one of the most difficult of investments. It requires people skills as well as business skills, has limited return on investment, and all the headaches are yours. Stopped up sewer? Fridge doesn't work? Jump! Tenants trash the apartment? It's your problem to deal with.

Plus, it has a huge downside risk -- paying the mortgage while the apartment is empty. In simple terms: Your nice budget that shows you paying the mortgage from rental income? When your apartment is empty, you can take that budget and burn it. The more apartments you own, the bigger the potential liability you face, if, due to a rental-market downturn, you find several of your apartments empty. Your life savings could be gone quickly, and then the bank forecloses.

I don't mean to scare you away from being a landlord. I've rented, and I really appreciate a good landlord. All I'm saying is, if you have money to invest, now's the time to decide whether you want to invest it in something less demanding, such as the stock market, or whether you really want a more difficult investment.
posted by exphysicist345 at 4:57 PM on March 26, 2008

Many have already covered very important points, but I have another suggestion that has worked well for me (as the renter).

If you plan to rent to multiple people not part of the same family (like 3 bachelor roommates), pick one or ask for a volunteer to act as your liaison. Offer to reduce that person's rent by $25 or so per month in exchange for handling little tasks around the property such as changing lightbulbs, mowing or unclogging drains. They will also be the one to contact you should the refrigerator bust or some other large issue occurs.

The benefit for you is that you have one person in particular who will take responsibility around the house instead of everyone thinking the "other guy" will handle it. Also it affords your tenants a certain amount of sovereignty in their home when they can keep you out of small matters. No one likes their landlord to be hovering around all the time. Good luck with everything.
posted by OpinioNate at 5:06 PM on March 26, 2008 [1 favorite has favorites]

I work in a property management office.

There is a reason that people pay us to manage properties--it's a difficult, time-consuming job, and requires a good knowledge of provincial landlord/tenant law. Then there are the people. It would be a much easier job without, you know, people. But the people pay the rent (well, most of the time, they do...) which ultimately pays my salary.

I wouldn't spend so much time on the CMHC website as I would looking at landlord associations. BC's is ROMS (http://www.suites-bc.com) for loads of perspective.
posted by Savannah at 6:07 PM on March 26, 2008

Nthing the recommendations to not be friends with the renters. You need to maintain enough distance that you can keep some businesslike barriers in place. Also agreeing with the fact that you can't judge a renter by their looks--my favorite renters were also tattooed.

Consider saying the rent is $X but is $X-20 if paid by the 1st. This is a more positive way of saying, "There's a $20 penalty if you're late." Also have a real penalty for paying after some other deadline. I think my drop-dead date was the 10th.

Also: When you're busy vomiting from the worst stomach flu of your life, your tenants will call with an emergency plumbing problem of the most disgusting nature possible. Guaranteed. So you might consider having a handy friend available to serve as maintenance backup for you. This will also free to you take vacations without worrying about your property.
posted by PatoPata at 8:35 PM on March 26, 2008

i have short term furnished rental properties. although the vacancy risk is higher, you also tend to get a better type of tenant and can charge much higher rent.

my typical tenant is a busy professional on a 1-6 month work assignment away from their home city. the company pays the rent. they are skilled, in demand workers and lead very busy work lives and just need a clean, nice, furnished pad to come back to at the end of the day.

very often they fly back home for the weekend. instead of living in a hotel for months at a time they rent from people like me.

i provide a fully furnished ( down to the towels, sheets, pots and pans ) stylish centrally located apartment, weekly maid service, cable tv and internet, and all utility bills are paid by me. in return i can charge 2-3 times what the normal rent would be for the apartments.

as i mentioned their is a vacancy risk, but the rent premium more than covers the 1 or 2 months a year between tenants.
posted by dawdle at 10:54 PM on March 26, 2008