When many real estate investors hear the word “landlord,” a shiver runs down their spines. After all, there are so many horror stories about owning and managing rental properties that it is amazing that anyone ever decides to undertake the role. However, savvy real estate investors know that in today’s market, more than ever before, owning cash-generating properties that can support themselves is the key to owning a profitable real estate portfolio and succeeding in real estate in both the short- and long terms. So now that we’ve given you a little more incentive to at least consider owning some rental properties, let’s talk about landlording.
A landlord is a person who owns one or more rental properties. Landlords can manage their own rental properties or they may opt to contract that responsibility out to a management company. If you contract your management out, then someone else will be responsible for handling tenant issues ranging from maintenance requests to rent collection. However, in return you will pay them a fee – usually some percentage of the rent collected.
If you choose to manage your own properties, you must make sure that you are very aware of tenant and landlord rights in the states in which these properties are located. There are some requests that you are not obligated to fulfill, while others must be met and addressed immediately. You need to be able to distinguish between the two.
As a landlord or would-be landlord, it is your job not just to keep the property in good shape, but also to keep it occupied with responsible tenants who pay their rent on time and in full. As a landlord, it will behoove you to evaluate potential tenants very carefully before you sign a lease with them because eviction can be a long, arduous process. Some landlords will only purchase rental properties in states that have relatively fast eviction processes so that they do not end up giving a tenant “free rent” while they wait for the eviction to play out.
Ultimately, your goal is not just to cover the expenses of the property, but to generate cash flow through the rental process. You can increase your cash flow by making your property more energy efficient, thereby allowing yourself more margin between the cost of operation and your profit, or by raising the rent by offering attractive terms or amenities that other landlords cannot or do not offer. As with any type of real estate investing, you should handle your landlording responsibilities with the advice of a real estate attorney to make sure that all of your legal documents protect you and your interests in this real estate investment.
