The life of a landlord: acquiring the building is just the beginning. Maintaining tenant relations is critical to becoming a successful property manager

Black Enterprise, August, 2004 by Donald Jay Korn

If you think that landlords have little to do after the first of each month, when they make their rounds to collect rent checks, think again. Harry Norton II, 39, of Pembroke Pines, Florida, says that he always sits down with prospective tenants before offering a lease. "I explain what I expect from them and what they can expect from me. That gets the relationship started on the right foot."

Tenants can expect Norton, an entrepreneur and professional real estate investor who puts on "boot camp" seminars for landlords, to come by every month or two, in order to see if the property is being maintained. In exchange, Norton expects tenants to tell him about little problems, such as faulty electrical sockets, before they become big problems.

"I live by the cell phone," says Victor Gulley, 34, who owns three rental properties in Illinois and one in Indiana. Gulley also has a full-time job at Blue Cross and Blue Shield. "I try to do what I have to do right away. Otherwise, I might get busy with some other urgent problem and the first call gets overlooked."

Gulley, whose day job is in technology support, has learned to adapt to the needs of individual tenants. "One of my tenants called recently to report a problem with the gutters on the side of the house," he says. "This tenant is a contractor who is willing to do some home repair himself, so I told him to go ahead. He'll provide me with receipts for the materials he needs to buy, which he'll deduct from his rent."

Being a landlord is definitely an ongoing commitment, but it does not have to be another full-time job. "If you have the right systems in place and you have only one or two rental properties, it shouldn't take more than five to 10 hours a month," says Pierre Dunagan, president of the Dunagan Group, a financial services firm in Chicago. Putting the right systems in place is key to living the life of a landlord--and having a life, too.

Build a firm foundation. The earlier you put this system in place, the better. "It's worth paying for a home inspection before you buy a property," says Bob Cain, publisher of Rental Property Reporter newsletter. "Know what you're buying and how it fits into your plans. If you expect to keep the property for, say, five years, don't buy a house that will need a new roof, a heating system, of work on the foundation. Those can be very expensive." On the other hand, says Cain, who runs the www.rentalprop.com Website, if you have long-term plans for the property, expect that you may need to replace the roof, the furnace, water healers of repaint at some point.

"If you purchase a place as a fixer-upper," says Donagan, "get it fixed up all at once, even if you have to take out an acquisition and rehab loan. You don't want to rent out a property that still needs a great deal of work."

Communicating with tenants is essential. "I encourage tenants to tell me when a faucet is leaking," says Willie Sullivan, 50, a public employee who lives in Pearland, Texas, and owns two rental houses in nearby Houston. "I can get over there and see if it just needs a new washer. Fixing a small leak soon can prevent a big plumbing bill later."

Sullivan screens prospective tenants to get an idea of how diligent they will be about maintenance. "Before I start with a new tenant, I find a reason to see where they're living now," he says. "I may come by to pick up a security deposit. When I go in there, I'm not looking for cleanliness as much as I'm looking for damages. Are the ceiling fans broken? Are the doorknobs all in place?" The condition of the tenant's current quarters will be a preview of how they will treat your place.

Send the right message. When dealing with applicants, spell out your requirements up front. "If tenants have cats, for example, insist that they keep the litter pan in only one area of the house," says Gulley. "Once a cat smell is all over the house, it can take quite a while to get it out."

Some conditions should be put in writing. "When I offer leases to tenants," says Sullivan, "I have the tenants initial another sheet as well. They sign off that they'll be responsible for the yard and that their cars will be kept in running condition, among other provisions." This lets tenant, I know that they may not litter the property with old vehicles that are being worked on.

Tenants may be required to bear other obligations, too. "Always make the tenant buy the store," says Gulley. "If a child burns [his of her] hand on a stove that you bought, you could be liable. When they leave, they will take the stove with them, so the new tenants can provide their own stove." It should be kept clean, Sullivan tells tenants, if they want to avoid having unwanted house males. Requiring a tenant to buy his of her own stove, however, is not legal in all states.

In return for requesting that tenants take on such responsibilities, a landlord should make certain commitments. "I promise them that they will get a response to any calls within 24 hours," says Sullivan. "If it's just a faucet leak, the work might wait until the weekend. If the commode is stopped up, I'll be there that night. And if I can't fix it. I'll have someone who can do the repair working on it the next day."