What Large, Successful Landlords Do (and you should too!)
This moth’s guest blogger is Ryan Coon. Ryan is a co-founder of Chicago-based startup Rentalutions. Ryan has written a short article on how smaller rental operators can get the same results as larger operations.
What separates large property management companies from do-it-yourself landlords is the way that they anticipate and prepare for various situations. Large owners and managers have spent years developing systems and processes for everything from how and when to find tenants to what to do when a rent payment is late. These processes allow the companies to stay organized and to set expectations with tenants, which in turn leads to fewer vacancies and higher profits. Preparing for events and having checklists for different situations is something that all landlords should do. It’s not just for the “big guys”.
In this post, we’ll cover the various situations that landlords should consider having a process for, we’ll provide tips for developing these systems and finally provide some suggestions for staying on top of things. The material covered here has been learned through years of working closely with thousands of do-it-yourself landlords. I have seen first hand what works and what doesn’t.
The first part of preparing your personal “landlord manual” is to think about the various situations that you’ll likely encounter with your rentals. Whether you own one property, or many, the tasks that you need to prepare for are very similar. Here is a list of things that you need to be prepared to do:
– finding tenants
– screening tenants
– creating and signing the lease
– lease renewals
– collecting rent
– what will I do if rent is paid late
– handling security deposits
– dealing w/ maintenance (both big and small)
For each of these items, I recommend thinking through a hypothetical situation as much as possible and developing a plan for how you will handle it. When thinking through the situation, you’ll want to consider the end goal, the series of tasks leading up to the goal, which 3rd parties you need to contact or hire, the timeline that needs to be followed and, finally, what information needs to be communicated to your tenant.
To help clear up any confusion that may exist, let’s walk through an example together. We’ll focus on the process of finding tenants for your vacant, or soon to be vacant, rental property. As mentioned above, it’s important to first clearly state the objective. In this case, our goal is: to find quality tenants who will pay market rent with a lease beginning on or around a specified date. Great! Once we know what the end goal looks like, we can work backwards and start identifying the tasks that need to be done. In order to find tenants, you’ll need to determine what a fair market rent price is, market the property (either yourself or with a broker) and show the property to prospective tenants. All of these things you can do yourself, if you want to. If you would rather offload this responsibility to someone else, you’ll need to consider giving the listing to one or more real estate brokers. The final piece to be considered in your plan is the timeline that needs to be followed. As with most things in life, the sooner you begin looking for tenants, the better. By maximizing the time you have to make a decision, you’re giving yourself the ability to be patient and selective. From my experience, you will want to start looking for tenants 60 days before the expected lease start date. Once you start receiving interest from tenants, you’ll need to show the property. Showing the property gives you an opportunity to pre-screen tenants and to determine whether there is a mutual connection.
After going through these questions in your head, it is important to put it all in writing. Writing down the steps that you will follow is important because it will help you stay organized and keep you on track for achieving the end goal. You may also want to consider setting automatic calendar alerts or reminders for yourself to keep you on track. For finding tenants, we have created a checklist that you can use and fill in as you go through the steps. For this checklist, we assume that you will be doing the work yourself.
I have provided you a checklist that you can use for finding tenants. The next step is for you to think through the other hypothetical situations that you’ll encounter as a landlord and to create your own checklists for each of these. Whether you type up the checklist or scribble it on a napkin is up to you. The important part is going through the questions, writing down the process and following the steps.
If you are a newer landlord, I recommend talking with other landlords to learn from how they do things. There are also many fantastic resources available online that will help you learn the best practices for handling situations. Some of the most popular resources that people rely on are BiggerPockets, Rental Property Reporter and the Rentalutions Blog.
Preparing for how you will handle situations will give you a better feeling of control when they occur. You’ll find the process easier, less time-consuming and more organized. All of this will equate to a more profitable business, more free time for you and less stress. If you have any questions, or would like advice on handling things, please reach out to me at ryan@rentalutions.com. Good luck!
About Ryan Coon: Ryan Coon is a co-founder of Chicago-based startup Rentalutions. The Company provides do-it-yourself landlords with tools that make it easy to manage their rental properties. With Rentalutions, landlords can find and screen tenants, create electronic lease agreements and collect rent online. Follow Rentalutions on Twitter at @Rentalutions.
The content and opinions expressed by our guest blogger are his alone, do not constitute legal advice, and are not the opinion of Richard Magnone or Reda | Ciprian | Magnone, LLC.