Anyone with the right amount of money, a healthy credit score, and access to resources can purchase investment properties and become a landlord. However, there’s a huge difference between being a landlord and being a successful landlord.
The latter requires patience, foresight, intelligence, and strategic action. Just because the barriers to entry are relatively low when it comes to real estate investing, doesn’t mean anyone can do it and be profitable. Do you have what it takes?
Here’s What Successful Landlords Do Differently
According to real estate mogul Stephen Ross, investing in real estate requires a couple of things: time and patience. “There’s no one way to succeed. There are many doors of entry,” Ross once said. “It’s a question of finding something you really excel in and then continuing to grow as a person. You find something you have a passion for, and do it well. It’s nothing that happens overnight.”
While there may not be one single avenue to success, it’s pretty clear that the most profitable and successful landlords tend to do what others don’t. They take things one step further and put in an extra ounce of energy when others take it easy. Specifically, successful landlords:
1. Invest in Research
Successful landlords are very analytical. They are committed to researching everything and never make decisions simply for the sake of action.
Research starts with the properties you’re interested in purchasing. Before ever even putting an offer on a property, you need to do your due diligence and understand every last detail. How old is the roof? Have their ever been foundation problems? Is there a clear title? Is the neighborhood improving or declining? What’s the average rent for comps in the area? Successful landlords never purchase unfamiliar properties.
But research extends far beyond the property itself. You also need to carefully vet potential tenants, general contractors, lenders, and any partner you choose to work with. Knowledge is quite literally power in this business.
2. Never Let Emotions Drive Decisions
Emotions are part of being a human – and there are plenty of times when emotions are totally healthy – but you can’t let them drive your decision-making in real estate.
Successful landlords are able to separate emotion from action. They know how to approach sticky situations. For example, a tenant comes to the landlord and says they can’t pay the rent because they had to help a cousin who recently lost their job. The landlord is able to show compassion while still demanding rent in full. It’s not always easy to do this, but it’s a necessary aspect of being a successful landlord.
3. Are Super Responsive
The best landlords are those who are responsive to the needs of their tenants. This means answering the phone when they call, quickly responding to messages, and listening to all requests. While it takes a little extra time to be responsive, it ultimately leads to happier tenants who are less likely to take advantage of their landlords.
“You want to achieve a balance between interacting with your tenants and giving them their privacy,” Landlord Station explains. “You want your tenants to be comfortable enough to bring up problems long before they would get frustrated, but not so comfortable that they forget you share a professional relationship.”
While there isn’t any data to prove this theory, most landlords would tell you that the tenants they build relationships with are the tenants who are less likely to complain about small problems, pay rent late, or suddenly leave. It’s the tenants who you don’t know very well who cause the problems.
4. Keep Meticulous Records
Successful landlords understand the value of getting everything in writing. They also know how important it is to carefully organize everything, so that it’s readily accessible at any given moment.
In real estate, it’s often possible to enter into verbal agreements that are legally sound, but you don’t ever want something coming to a “he-said-she-said” situation. The only way to fully protect yourself and stay on top of things is by keeping meticulous records.
The best option is to actually keep both digital and physical files. Any time an important email or file is sent to you online, print it out and put it in a filing cabinet. Any time an important document is signed in person, make a copy and store it on a cloud solution.
5. Always Maintain a Financial Cushion
Living rent payment to rent payment is a dangerous game that has sunk many landlords and real estate investors in the past. That’s why successful investors are hyper-focused on always maintaining a financial cushion at all times.
As a rule of thumb, you should have enough money in an account to cover three months of expenses, should you experience sustained vacancy. You also need an account for handling repairs – especially major ones. While nobody likes to think about the possibility of foundation issues, roof problems, or major appliances breaking down, you have to be ready. Otherwise, you experience one small problem and your property could be going back to the bank.
6. Hire Property Managers
Successful landlords know that they can’t handle everything on their own. While one property may be doable for a period of time, it’s certainly a challenge to handle multiple rentals. As a result, they turn to property managers.
A professional property management service is worth its weight in gold. From property marketing and tenant screening to contract drafting, rent collection, and even evictions, they handle it all. This lets you focus on the things that really matter – like working another full-time job, finding new properties, or increasing cash flow.
Let Green Residential Help
At Green Residential, we are proud to be the top real estate management company in the Houston area. If you’re looking for responsive, professional service that’s backed by more than a quarter of a century of experience, then you’ve come to the right place.
Contact us today and we’d be happy to discuss our comprehensive services in more detail!