Managing property in Houston can be a great way to build wealth, or balance your investment portfolio. With a handful of rental properties in your name, you can likely collect a significant stream of income from tenant rental payments, exceeding your ongoing expenses while your assets appreciate in value.
That said, being a landlord isn’t a get-rich-quick scheme, and it’s never a guarantee of financial success. If you’re going to be an effective landlord in Houston, you’ll need several important traits to get the best results.
What Makes an Effective Landlord?
First, we need to define what we mean by the term “effective.” What is an effective landlord, compared to an ineffective one?
We can boil this down to a few main types of results:
- Short-term financial stability. Effective landlords are able to maintain a somewhat stable property portfolio. They don’t have to struggle with excessive tenant vacancies, and they’re able to generate consistent cash flow.
- Long-term financial success. Short-term finances are only part of the equation, however. Effective landlords are also able to find and scoop up properties most likely to offer them a long-term return on investment (ROI).
- Effort minimization. Effective landlords are also good at making things easier on themselves in terms of total effort expenditure. Being a landlord is never easy, but there’s a big difference between a landlord who invests 50 hours a week for $12,000 of monthly cash flow and one who invests 10 hours a week for $11,000 of monthly cash flow.
The Most Important Traits for a Houston Landlord
With those dimensions of “effectiveness” in mind, what are the most important traits for a Houston landlord to have?
- Decisive. Good landlords are decisive. They’re capable of making intelligent decisions once they have all the right information, without delaying the choice or taking too much time. This helps them in several ways. For starters, it allows them to quickly pick up good deals on local properties, outcompeting buyers who take too long putting together an offer. It also allows them to solve problems faster, keeping tenants happier.
- Scrutinizing. That said, effective landlords are also very scrutinizing. They’re not willing to take on risks without understanding those risks, and they’re always eager to ask more questions. Again, this is valuable when searching for properties; good landlords run thorough inspections and think critically about the value of each property. They also screen tenants to the best of their ability, and only take on the best candidates for each unit.
- Future focused. While there’s nothing wrong with a financial strategy that optimizes for cash flow over long-term appreciation, the most effective landlords in Houston tend to make decisions with the long-term future in mind. That often means waiting for the perfect property rather than settling for an inferior one, and trying hard to find great tenants, rather than taking the first person to submit an application.
- Accommodating. While landlords need to be strict when it comes to enforcing rules like rent payment due dates, good landlords are also willing to be accommodating. They’re forgiving of small mistakes made by tenants, and are willing to bend rules in extenuating circumstances. These small actions make tenants far more likely to stick around for the long haul.
- Responsive. Similarly, tenants love Houston landlords who are responsive to their questions and concerns. When tenants send you messages about problems with the property, or if they need assistance, try to respond in a timely manner—ideally within hours. You don’t have to stop whatever you’re doing to solve every problem that comes up, but you should at least stay communicative and set expectations for when you’re going to take action.
- Proactive. Speaking of taking action, it’s far better to prevent a problem from ever occurring than it is to respond to a problem after it’s already unfolded. That’s why the most effective landlords tend to be proactive ones. They regularly inspect their properties, they fix small issues before they become bigger, and they’re willing to discuss problems with tenants to resolve them expediently.
- Willing to delegate. That said, not all landlords take it upon themselves to do all the work of a landlord and property manager. Managing a property is effort-intensive, and if you’re not careful, it can interfere with your other life priorities. Effective landlords are willing to delegate at least some of their responsibilities to other professionals. They’re willing to work with property management firms to screen tenants, collect rent, and handle evictions. And they’re willing to hire contractors for repairs and renovations.
- Organized. As a landlord, your taxes can get complex fast. You’ll have to pay taxes on your rental income, and there are a variety of different tax deductions to keep in mind. On top of that, you’ll need to keep track of paperwork related to multiple properties and tenants. Effective landlords are able to stay organized, despite this chaos; they always know where to find the information they need, when they need it.
- Friendly. Don’t underestimate the power that a friendly conversation can have in improving tenant morale and satisfaction. If you greet your tenants with a warm demeanor and are calm and polite when handling issues, people will be much more likely to stay at your property—and they’ll make sure their rent is always paid on time.
- Professional. Unfortunately, it doesn’t pay to be your tenant’s friend in all situations. You also have to be professional at all times. You need to be firm on certain rules, and explain things as formally and professionally as possible. Otherwise, you may not cultivate the respect you deserve.
One of the best secrets of effective landlords is that they’re eager to offload many of their responsibilities. If you’re going to do this in Houston, you need to work with a property management firm you can trust. Contact Green Residential today to learn more about how we serve property owners in Houston, and how we can make your rental properties more affordable.