Keys to Becoming a Successful Landlord
After a decade in the St. Louis real estate investing and brokerage business, I find the market to be quite interesting and to have some definite idiosyncrasies. I have a slightly different view than many other investors might; I have had the opportunity to work a wide range of markets: buying investment properties to rehab and sell, listing and selling homes in the million dollar range and owning rental properties in the St. Louis area. I own more than 40 rental homes in the area; my experiences as a landlord allow me to share some words of wisdom with you.
Choose Location Wisely
When you see high “cash on cash” returns on a rental property in economically obsolescent areas, understand the amount of work that comes with obtaining those returns. Economically obsolescent areas require a manager who understands the risks that inherently come with a property in an area where the socioeconomics are challenging– not to mention the high police presence in many of these areas. My point is, it’s not all about the high returns; sometimes it’s better to take a lower return and get more sleep at night. You should always invest in areas you feel comfortable visiting in the middle of the day.
Have a Plan
Normally, nothing comes easy. Real estate investing looks great on television; the reality is when you get toward the middle of the month and your rent check has not come in yet and the tenant won’t answer your calls– it’s not a good feeling. This is why you need to have a plan in place before these situations arise. I always try to work with my tenants, reach out to them and communicate. If that communication is not going anywhere you should call an eviction attorney right away. Every new landlord I have worked with tries to handle it themselves and by the second problem tenant scenario they call that eviction attorney immediately– unless of course the tenant is openly communicating with them and is willing to work through the challenge in terms of a repayment plan, for instance.
It’s not all about you. Truly successful landlords engage their tenants and check in with them once every month or two, at least. Check in with them and let them know you are still around and that you care about their residential experience; ask them how everything is going. Don’t fix frivolous things for overly demanding tenants; if there are real issues, you want to make sure they are being addressed promptly. You will be surprised how much this time and attention will improve your profitability and overall happiness with your business model.
I enjoy working with real estate investors and it is something I do every day. If you would like to read about a particular real estate related topic, please send ideas to Info@FlipItFriday.com. Visit FlipItFriday.com for more information on real estate investment.