Owning rental properties is an excellent way to reach financial independence. It is generally passive income, but it won’t always start out that way. There’s a learning curve when it comes to becoming a new landlord.
In our first 5 months of owning a rental property, we’ve had our fair share of learning experiences. Here is my advice to you in preparing to become a new landlord.
1. KNOW THE LAW
One of the most important things you can do as a new landlord is read up on the landlord-tenant laws in your area. You might be surprised by some of the restrictions in your area and the laws aren’t always intuitive, so it’s a good idea to build up your knowledge base before you install your first tenant. The laws are usually available online (I know for sure New Jersey is), it just might take some digging to pull up the full statutes for your state and not a summary from another website. This directory at Landlordology is a good place to start.
2. HAVE EVERYTHING IN WRITING
From the lease to rent receipts, having a written record will make your life so much easier. If it’s in writing, there’s no debate over what was said or done. Having that proof will not only help if things go south, but also helps to set clear expectations in the first place. Preventing many issues before they even happen.
3. BE RESPONSIVE
Real estate investments, especially rental properties can be quite passive, even if you self-manage. However, regardless of whether you have a property management company or are managing your properties yourself, your tenants or your team will need to contact you. Whether the issue is simple or complex, at least acknowledge that you received the message. Your responsiveness can greatly improve your relationship with your tenants and/or team members.
4. BE GRACIOUS, BUT STRICT
Being a landlord, especially an owner-occupant landlord, can be a tricky line to walk. You want to have a good relationship with your tenants, but you need to stand firm in the decisions you make. I find that it is important to define your own limits, even as a new landlord and stand by them. They can adapt with you from tenant to tenant and as you gain more experience. Within those limits, it is also important to listen to your tenants and understand their position. It’s all a balance. In the end this is your investment, but at the same time we are all human.
5. ALWAYS BE PROFESSIONAL
Managing rental properties comes with it’s stressors. In the midst of all the ups and downs, it is important to maintain a professional attitude. It can be difficult to separate out personal feelings, especially if tensions run high. In the end, remaining professional will keep you out of trouble should those difficulties lead to legal action. If a particularly difficult situation comes up, I actively remind myself to take the time to think things through rationally. I always give myself that time before I respond to make sure that I am not taking it personally. Having someone else to talk it out with as well helps enormously.
There is still so much more to learn, but we’re off to a good start and I’m excited for the road ahead. Do you have any tips for being a new landlord? Let me know in the comments below!
