Reducing the stress of landlord responsibilities
How do you make your life easy as a landlord?
Real estate investing is an amazing way to generate a return far exceeding the stock market. The tax friendly leverage afforded by the 30 year mortgage makes it easy for nearly anyone with a decent amount of income to access the relatively stable and consistent housing market.
But… there are responsibilities that come with being a landlord. Like anyone would naturally want to do, I have tried to reduce the challenges and responsibilities of being a landlord in the most responsible way possible. These are my tricks.
First of all, what are a landlords responsibilities?
Although the legal responsibilities of a landlord vary from state to state and country to country, there are some general guidelines that you can expect to have to follow wherever you are renting out your property.
It’s important to follow these guidelines (in addition to any others specific to your locale)… and not just because you could get sued if you don’t It’s good business to be a good landlord. You want to attract great tenants, and keep them in your property for as long as possible.
Maintaining the property to a standard of habitability (incl. heat, hot and cold water, etc)
Completing repairs on the property (and in a timely fashion)
Keeping the property free from pests
Keeping the property free from hazards and other dangers
Inspecting the property on a periodic basis to make sure it is safe and habitable
Giving notice before changes are made to a month-to-month arrangement
Allowing and giving proper notice before entering the property (varies by state)
Following all laws if eviction is necessary
Reducing the stress of landlord responsibilities
So now that we’ve taken a look at the responsibilities a landlord has, here are my methods for ensuring that you can reduce the stress of landlording while closely following the legal responsibilities you have to your tenant.
Now, I am assuming here that you don’t want to hire a property manager to handle your units for you. That would definitely reduce your stress as a landlord, but it also significantly reduces your profits. This list is intended for those who are doing the work themselves.
1. Make sure you start with a quality property
Reading the list above, you can see that almost all of the responsibilities a landlord has are around making sure the property is habitable and maintained. For me, there is no easier way to do that than by starting with a new house, remodeling an old house, or purchasing a high quality property from the start.
Maintaining a house is hard, so it only makes sense to start off with a new water heater, a roof that will last, and floors that don't have nails sticking up from them. Right off the bat, if you are dealing with a quality property, you significantly reduce the pain of a number of landlord responsibilities.
2. Invest in properties that don’t require as much maintenance
I talk about condo investing quite a bit, and there’s a good reason for it. They require so much less effort! Yes, it’s true, you have an HOA to pay, but you are actually getting something for your payment which is why I like to call HOA fees “maintenance and management payments”. With a condo that has a well funded and responsible HOA you are no longer going to have to worry about:
Most of the pipes, water and electrical
Security and building access
The things I listed above probably account for over 50% of most landlord “work”. To put it simply, the outside of a building is where most of the effort is. Why not outsource that pain to someone else by buying a condo? I go into way more detail on this in my “are condos worth it” post. Spoiler: they are.
Note that duplexes and fourplexes are also a great way to reduce the impact of yards and roofs and siding by spreading them out over more tenants.
3. Be a decent human being so you can attract decent tenants
A lot of tenants will want to get as much out of you and your property as possible. But, if you can attract great tenants and you treat them like human beings, a lot of those problems will never materialize. I have a relatively short and easy list of things that I believe will help you keep your tenants happy and attract great tenants.
When you raise rents, do so slowly over time and provide an explanation (this can be as simple as “here are comparable properties”).
Try to meet people halfway. Don’t give away the farm, but have some empathy with your tenant when things go wrong. Remember, you have a responsibility to them.
Be prompt and always respond as quickly as possible, particularly to inquiries about renting
Some will disagree with this list, and that is fine. But, by following my own advice I have managed to attract excellent tenants who give me zero trouble of any kind, and always pay promptly. Plus… it feels much better to be a decent person to them than not.
Be responsible… but don’t make it hard on yourself
In summary, it really isn’t too hard to reduce the stress of being a landlord. Really it’s common sense. Start with a great property (or make it great yourself). Choose a housing type that requires less maintenance and effort, like a condo or fourplex.
Is landlording worth the responsibilities?
Being a landlord is well worth the trouble, and I feel qualified to say so having seen over 30% appreciation in just two years on my investment in my own condo. My rental is also cash flow positive, and my tenants have been a dream. The best part is definitely watching my Zillow z-estimate move up in Personal Capital!
The real question is, what do you think? What ways have you found to reduce the stress of landlording?