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A Landlord Checklist to Ensure Rental Business Success

July 31, 2017 by Cubert

Landlord 10 commandments

A key part of our strategy to reach an early retirement relies heavily on the income from our four single-family rental homes. We’ve been fortunate to have super low vacancies in a market with very high tenant demand here in Minneapolis. This post highlights a landlord checklist designed to ensure a successful long term rental side business. Read on!

I moved from the suburbs to the city over 12 years ago and since that time, especially as a landlord, I’ve come to know firsthand what living in this city has to offer. That move to the city over a decade ago also marked my first foray into owning a real-deal homestead.

I had no choice but to become acquainted with household and landscape maintenance best practices. I already knew how to cut the grass and shovel the snow. But that was the easy stuff!

I didn’t expect to learn on my own how to install a range vent. I didn’t have a clue about HVAC, washer, or dryer repair. It just so happened that all the useful crap I learned while maintaining our home while building bonds with our neighbors come in handy when we became landlords.

So, readers, if you’re thinking about getting into rental real estate to accelerate your financial goals, look no further than the following tips to inspire you. Now, let’s cue the harps!

 

10. Know your market

Do your research often to know where rents are heading before you purchase a rental, and while you’re managing the property. Craigslist is especially helpful for gauging the market. Use the map feature to isolate pockets of neighborhoods.

Sometimes the rent can vary greatly based on proximity to features good and bad (parks, highways, airports, etc.) In my own experience, rents started around $1,200 for a small single-family home back in 2013. They are now at $1,400 and rising. That’s nearly a 20% increase. If you’re not paying attention, you could be missing out on significant revenue.

 

9. Use the “pay it forward” strategy

Nothing is worse for either you the landlord or your tenants when it’s time to find new tenants at the end of a lease. (Save for evictions, which I’ve been fortunate to avoid, so far.) It’s a royal pain in the ass to arrange showings for prospective tenants since you have to coordinate with the current tenants, and, you likely have a day job cramping your schedule.

To avoid the hassle for both parties, I set the tradition in each rental of having the current tenant show the property to prospective tenants. This creates an incentive whereby the current tenant, wanting this process to be done sooner than later, puts their best foot forward.

They’ll make sure the house is clean and charm the socks off whoever stops by. They’ve even been known to sing their landlord’s praises. This practice keeps me from having to rush over to do showings myself, where oftentimes, people flake out and never show up at all.

 

8. Incentivize the long term lease

Something I’ve been successful at in the last year or so is putting forward an option to sign on to a two year lease, for a slightly reduced rent. For example, a single year might be $1,395 per month, whereas a two-year commitment is discounted to $1,375 per month.

Sure, I lose out on $240 in revenue per year with a two-year deal, but it’s well worth the cost to delay tenant turnover – which is where most of the work occurs as a landlord. Your goal is to make money, but also to make real estate rentals as passive an investment as possible.

 

Successful Landlord
A clean kitchen entices most prospective tenants

 

7. Meet your new tenants before they move in

Of course, you want to meet your tenants before they move in (after you’ve screened them), but there are several less obvious reasons why. The main thing is to establish a foundation of trust. I like to meet my new tenants at a nearby coffee shop to review the lease and get to know them a little. We go over every section of the lease and I’m always sure to point out the big items, to make sure there are no surprises.

Early on, I had tenants who called in a plumber as an “emergency” to repair a clogged bath drain. Never mind the fact they had access to a second bath/shower in the house. That little repair job ran me close to $500. Now, whenever I have new tenants, I relay this story as an example of how not to engage maintenance repairs. PLEASE CALL ME FIRST, YO! Sigh…

 

6. Recognize that leases will be broken

I learned early on how crappy it can be when a tenant wants to break their lease early. It happened twice in the same year, at two different properties. I guess a seven-month lease was all they wanted? Now, I’m a reasonable person. If tenants have a reasonable situation for breaking a lease early, I’m willing to listen.

In both of the two instances that one year, each couple simply wanted to buy their own house and not pay rent anymore. I didn’t hold anything over them, simply because I was able to find new tenants and avoid a vacancy.

But moving forward, I put a clause in all my leases that more or less avoids any loss on my part with a broken lease. The clause allows the tenant to break the lease early, but for a fee of $400 for every month unpaid. You can see how this might incentivize the 24-month lessees to stick around a while?

 

5. Inspect your properties at least twice a year 

There are several maintenance tasks you should check the box on, both in the late fall, and early spring. In the fall, I’ll throw a ladder in my trusty Honda Fit and clean out gutters on a single Sunday in early November.

While at each house, I’ll turn off the water to the outside and check the furnace filter. Nine times out of ten that thing is filthy. This despite language in the lease requiring a swap out every three months. I’ll also clear out the lint from the dryer vent, check smoke and CO detectors, and do a quick walkthrough.

In the spring, much the same, except you’re turning the water back on. The idea is to give your tenants plenty of space, but don’t assume your rental house is running on autopilot. Things break.

 

table
Note the neutral wall color and hardwood floors – Tenants LOVE hardwood floors

 

4. Know your limitations

I’ve used YouTube several times to make repairs on washers, dryers, etc. It comes in handy. That said, you need to take the time to repair it.

Taking apart a washing machine and replacing a part can generally be done within an hour, but you need to be 90% about the fix. Otherwise, you’re wasting your time and prolonging an inconvenience for the tenant.

If my internet research tells me the problem could be one of three causes (a 33% probability of success does not inspire me), I might just call it into the pros.

 

3. Make your tenants pay for all utilities

Pretty straightforward here. I originally paid for the water and trash removal bills, but after a few years of going “What the F?” with some extravagant water bills, I changed policy.

Having your tenants be responsible gives them the incentive to conserve. It also teaches them a key aspect of homeownership – nothing is for free.

Now, there is one trade-off. In the “What the F?” instance, the high water bill was a clue that the tenants had taken in a third person – which is a no-no without the landlord’s prior consent. This is another reason why 2x per year inspections are important.

 

headboard
More neutral colors – Snazzy!

 

2. No big pets (and zero pets when your property is carpeted)

Another lesson learned from yours truly. Our very first tenants took in a puppy that turned into a bear. I think it was a Newfoundland, or a bear.

They had my permission, but I had no idea what this cute little puppy would turn into. Anyhow, this also happened to be a carpeted rental. Needless to say, carpet and ripped window screens aside, I have a 30 lbs. limit on dog size.

I also get to approve the breed before a pet moves-in. To help pay for the long term impact of Fido and company on my non-carpeted rentals, I charge a $200 pet fee, up-front. I know at some point I’ll need to refinish those scuffed up hardwood floors, among other things.

 

1. Be a super responsive, customer service superstar!

Take pride in the work you do on your rentals. I will not allow a tenant to live in any of our rentals if I wouldn’t be willing to live there myself.

Keep high standards. Return calls and texts from tenants promptly and with courtesy. Help your tenants with home basics. Even if they’re technically responsible for minor repairs under $25, I’ll almost always foot the bill in good faith.

You want to build a good reputation, not only with your tenants but with the city as well. Give a few days on late rent payments.

Be understanding when something does break, and don’t rush to conclusions. Houses require maintenance, and the better trust you build with your tenants, the better you’ll sleep at night knowing those homes are in good hands.

Do you have any landlord checklist commandments of your own to share? Please comment below!

 

Landlord success stories - pin

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Comments

  1. Accidental Rental says

    September 19, 2019 at 6:25 pm

    Totally agree with the customer service super star concept! This greatly reduces tenant turnovers and minimizes issues. No one wants to leave a good rental with a great landlord over little things.

    However, I don’t recommend signing a long-term lease with a new tenant. I won’t do more than a year for a new tenant. If they turn out to be great tenants I will offer long term renewals. You never your tenant until they move in!

    • Cubert says

      September 20, 2019 at 10:51 am

      Hey there AR!
      I’ve been pretty fortunate to have had no issues with my 2-year lease tenants. But knock on wood, right? Good advice though – I may just take that approach as an insurance policy – wait til after year one to offer the two-year option… Thanks for stopping by!

  2. Doug says

    August 13, 2017 at 9:27 am

    Be careful with the $400 per month breakage fee – you do have a duty to mitigate your losses.

    • Cubert says

      August 13, 2017 at 9:44 am

      Hi Doug – can you explain more? I figure the breakage fee offers an incentive for both parties. Rarely can you enforce a lease without going to small claims court, which is a big hassle. Thanks!

  3. Kona says

    August 7, 2017 at 11:22 am

    You should not let 1 bad experience with a large dog ruin you. Typically it is the smaller dogs that cause more of a problem. Bigger dogs tend to be quieter and in general easier to deal with, they like to sleep a ton too. You should take each pet on a case-by-case basis.

    • abandoned cubicle says

      August 7, 2017 at 12:57 pm

      Oh but this dog was a real sweetheart! You could tell she wanted to be a rule abiding tenant, but couldn’t get over her size. Good dogs, those newfoundlands, but not ideal for small rental houses. My blinds and carpeting lost a few battles with @Friendly-Cujo.

  4. Rusty says

    August 7, 2017 at 10:22 am

    Great article – thanks for sharing. I have rentals in California and would never allow the current tenants to show the place to prospects. I don’t know what the agency laws in your state are, but I would be asking for trouble to allow someone to make representations on my behalf without having any control over them. Food for thought.

    • abandoned cubicle says

      August 7, 2017 at 11:04 am

      Wow! That’s good to know, Rusty. I’ll definitely check into state rules here in Minnesota.

  5. Lance @ My Strategic Dollar says

    August 7, 2017 at 7:06 am

    Totally awesome article. I’ve learned not to allow smokers or animals in my rentals because you’ll ALWAYS have to replace carpet, repaint and get rid of odor way more so than if you didn’t allow it.

    • abandoned cubicle says

      August 7, 2017 at 8:39 am

      Thanks, Lance! Everything here is real deal stuff I’ve learned going on five years now. Great point about smokers – that smell is not easy to get rid of. I keep a non-smoking line in my leases but enforcement can be tricky.

  6. SJB720 says

    August 3, 2017 at 6:52 pm

    Great information! All landlords should follow this advice.

  7. Dylan | Trail to FI says

    July 31, 2017 at 4:20 pm

    Man, this is thorough! I am considering RE investing, and I find this kind of post very useful.

    One thing that is holding me back: my wife an I live in an affordable Midwestern city, so we would be buying real estate here. Our plan is to move to Colorado in 3 years, so then we would be managing from afar (i.e. managing the property manager). All the things that you (and every other RE investor) recommend, like walking the property, make me reconsider. I don’t want to have to drive/fly back here twice per year just to make sure everything is in working order.

    • abandoned cubicle says

      August 1, 2017 at 5:30 am

      Glad you find it useful, Dylan! You know, there are possible options for managing a property from afar. You can check out Paula Pant’s blog, affordanything.com, to learn how she manages her handful of rentals from two time zones away. The key is to find a reputable property management firm that won’t charge more than 8% of total rent for their services. Keep me posted how your decision making process evolves. Good luck!

  8. Mrs. Picky Pincher says

    July 31, 2017 at 8:10 am

    Ahh, how I wish all of my previous landlords had followed these commandments. 😉 But the thing is that these are all necessary if you want to rent out properties as a long-term way to earn income.

    • abandoned cubicle says

      July 31, 2017 at 8:50 am

      Right on, Mrs. P.! Had I known these when I first started, I’d have missed out on a bunch of head slap learning moments (good thing I didn’t so I could weave in the little anecdotes!)

  9. Gwen @ Fiery Millennials says

    July 31, 2017 at 7:22 am

    Excellent advice! This is super useful as a noob landlord. I just ousted my first tenant (inherited tenant, month to month lease). I was fortunate to avoid eviction, but now I get to clean out the unit and put a new tenant of my choosing in. I have a rough lease started but I need to polish it up for the new tenant!

    • abandoned cubicle says

      July 31, 2017 at 8:42 am

      Thanks, Gwen! Let me know if you’d like a copy of the lease template I use. It covers all the bases. Good luck in your new landlord adventure – stick with it and you’ll be a pro in short order.

      • Hard L says

        August 7, 2017 at 12:27 pm

        Re: Thanks, Gwen! Let me know if you’d like a copy of the lease template I use. It covers all the bases. Good luck in your new landlord adventure – stick with it and you’ll be a pro in short order.

        Please email lease template – thanks. Hard L

      • abandoned cubicle says

        August 7, 2017 at 12:42 pm

        If anyone wants to get a copy of the lease template I use, please reach out to me via the contact me form. Thanks!

      • Jim Garrett says

        March 10, 2019 at 4:15 pm

        I would like to get a copy of your lease template

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