Every Landlord's Guide to Managing Property
Every Landlord's Guide to Managing Property
Michael Boyer, Attorney
October 2015, 1st Edition
The Ultimate Property Management Guide for the Do-It-Yourself Landlord
Written for the millions of landlords who own a single-family home, condo, or small (less than four unit) multiplex, Every Landlord's Guide to Managing Property helps them learn how to keep their day job and manage their properties (and tenants) on the side. It provides the best practical and legal compliance advice for small-time landlords who want to manage and grow a successful rental property business with a personalized approach and minimal hassle and cost.
Every Landlord's Guide to Managing Property focuses on everyday skills the do-it-yourself landlord needs, including property oversight and maintenance, effective communication with tenants, and general management. It covers a wide range of topics, such as how to:
- market and differentiate your rental units from the competition
- handle nitty-gritty maintenance - from snow removal to toilet clogs to painting
- screen and deal with tenant issues like late rent payments, pet problems, clutter, unauthorized occupants, and other conflicts
- track income and expenses for filing taxes and completing Schedule E
- hire and work with contractors, lawyers, and other outside help,
- and much more.
"A must-have survival guide for small landlords with just one or two properties."- Alan J. Heavens, Residential Real Estate Columnist/the Philadelphia Inquirer
“The ultimate property management guide for do-it-yourself landlords who own a single-family house, condo, or duplex. The best do-it-yourself landlording book on the market, packed with tips every DIY'er will love." -DoItYourself.com
"If you are or will be a landlord, you simply need this book!" -Gary Ransone, Author of the Contractor's Legal Kit
Part-Time Resitential Landlords: The Superheroes of Rental Housing
- Filling a Gap in the Landlord Literature
- The Long-Term Landlord
- How Skills You Currently Have (or Can Easily Acquire) Will Contribute to Your Success
- Why I Like Being a Landlord
- What Your Won't Find in This Book
1. What's Your Competitive Edge?
- Get to Know Your Market and Where Your Rental Fits Within It
- Differentiate Your Units From the Competition
- Offer Lower-Priced Units by Focusing on Keeping Long-Term Tenants
- Make Strategic Decisions About Your Own Approach to Renting Property
- What's Next?
2. Selecting Rental Properties
- Location, Location, Location
- What Type of Rental Property is Best for You?
- Single-Family House
- Duplex, Triplex, and Fourplex
- Accessory Apartment (or In-Law)
- The Rental Market and Your Target Tenant
- Choosing the Right Property: Don't Leave it to Chance
- How to Make Sure the Rental Property Pencils Out
- Finding Out All You Can About a Prospective Property
- Arranging a Professional Inspection
- Making an Informed Decision When Choosing a Rental Property
- What's Next?
3. Discovering Your Inner Handyperson: Tips and Tricks
- Your Basic Skills, Toolkit, and Supplies
- Washing Painted Walls
- Refinishing Wooden Cabinets
- Using a Drill
- Dealing With Drains
- Toilet Troubleshooting
- Dealing With Moisture and Mold
- Ways to Boost Your Repair and Maintenance IQ and Effectiveness
- What's Next?
4. Preparing Your Rental Unit for Tenants
- Understanding Fair Rental Condition for Your Market
- To Furnish or Not to Furnish
- Preparing for New Tenants
- Establishing a Cleaning and Repair Routine
- Walls and Ceilings
- Floors and Floor Coverings
- Pet, Tobacco, and Other Odors
- Kitchen and Appliances
- Light Fixtures and Outlets
- Doors and Windows
- Smoke Detectors, Fire Extinguishers, and Carbon Monoxide Detectors
- Perimeter and Outside
- Marshalling Your Materials and Supplies
- The Minor Remodel: Doing It on the Cheap
- Handing Off the Turnaround Work: Hiring Help
- What's Next?
5. The Art of Rental Maintenance
- Maintenance - It's About Tenant Satisfaction, Too!
- Learning What Level of Maintenance and Repairs the Law Requires
- Developing a Maintenance Mentality
- Do-It-Yourself Maintenance Helps You Keep an Eye on the Property
- Establishing the Maintenance Habit
- Common Maintenance Cues: A Seasonal Routine
- Making a Maintenance Record and Keeping It Up
- What's Next?
6. Working With Service Contractors
- Who's a Contractor?
- When It Makes Sense to Hire Contractors
- Choosing Contractors
- Hiring a Handyperson
- Making Sure the Worker is an Independent Contractor (Not an Employee)
- Getting Bids and Estimates From Contractors
- Signing a Contract
- Your Role While the Work is Being Done
- Keep the Big Picture in Mind
- What's Next?
7. Getting Great Tenants
- Developing a Tenant Screening and Selection Plan
- Complying With Antidiscrimination Laws
- Managing Prospective Tenants' First Impressions
- Crafting Your Advertisement or Posting
- Sample Rental Ad
- Should Your Ad Include Exact Street Addresses and Photos?
- Making Initial Contact With Prospective Tenants
- Emailing Rental Applications to Interested Parties
- Final Steps in Preparing Your Rental for Showing to Prospects
- Setting Up and Staggering Your Showings
- Closing the Door on Traditional Open Houses
- Your "Sales Pitch" During Showings
- When to Start Screening Prospective Tenants
- Developing Your Screening Criteria and Procedures
- Great Screening Begins With a Thorough Rental Application
- Top Criteria for Choosing Good Tenants
- Screening for Pets
- Pros and Cons of Credit Checks
- Guidelines for Evaluating Rental Applications and Credit Reports
- Choosing a Tenant
- Rejecting Applicants
- What's Next?
8. Starting the Tenancy Right: Lease Terms and Onboarding Process
- Key Terms to Include in Your Lease or Rental Agreement
- Where to Find Lease and Rental Agreement Forms
- Signing the Lease or Rental Agreement
- Making Cosigner Situations Work
- Tenant Onboarding Process
- Creating Tenant Files
- What's Next?
9. Effective Landlord Communications
- Best Practices for Landlord Communications
- Handling Common Tenant Communications
- Communicating About Delays in Rent Payment
- More Strategies for Serous Late-Rent Situations
- Communicating About Unauthorized Occupants
- Responding to Requests to Add a Roommate
- Communicating With Tenants Who Break the Lease
- Communicating With Tenants About Other Common Issues
- Cummunicating About Tenants' Pets
- Handling Conflicts Large and Small
- Formal Conflict Resolution for the Landlord
- Who Should Handle Evictions: You, or an Attorney?
- What's Next?
10. Moving Tenants Out
- How a Tenancy Ends
- Four Major Move-Out Pitfalls to Avoid
- Preparing a Move-Out Letter
- Reviewing Your Security Deposit Return Rules
- Green Tips for Moving Out With Minimal Waste
- The Landlord Cycle: Preparing for the Next Move In
- What's Next?
11. Understanding and Using Professional Services
- Lawyers and Legal Help for the Small-Time Landlord
- Accountants and Tax Help for the Small-Time Landlord
- Insurance Professionals and Coverage for Your Rental Property
- Other Helpful Professionals
- Property Managers
- What's Next?
12. Tracking Landlord Income and Expenses for Tax Time
- Where You'll Report Income and Deductions: Schedule E
- Looking at Schedule E
- Don't Sweat a Tax Loss (Especially in Your Early Years)
- Keeping Records of Your Income and Expenses
- What's Next?
Part-Time Residential Landlords: The Superheroes of Rental Housing
Whether you’re simply exploring the idea of being a landlord or are already renting out property, you’re in good company. Small-time landlords—real people like you—house much of the United States’ tenant population, in single-family homes, condos, or multiplexes (such as a duplex, triplex, or fourplex).
What Type of Property Do Most Renters Live In?
Residential properties (defined as one to four units), the staple of small-time landlords, provide much of the rental housing in the U.S. Recent Census data located 40 million renter-occupied housing units, of which well over half are small residential properties:
single-family detached homes: 11.6 million
single-family attached homes: 2.6 million
two- to-four units (duplex, triplex, or fourplex, also known as quads): 7.7 million, and
condominiums: 3.7 million.
Source: U.S. Census Bureau, General Housing Data—Renter-Occupied Units, 2013 American Housing Survey)
As one of these small-time residential landlords, I’ve learned a lot in my ten years of owning and managing residential rental property. I started out in this business when, rather than selling a condo that our family outgrew, I simply rented it out. I soon repeated the process so that I had four condo rentals, and then added a fourplex.
Like many residential rental property owners, I have a day job. Many times on my way to or from work, I do a quick change of clothes (and change of roles), from college professor to landlord. As a small operator without a staff, I am a hands-on property manager.
I’ve never changed clothes in a phone booth or leapt a tall building in a single bound, but with some exceptions (such as when I need to hire a contractor) I do everything myself—from choosing tenants to unclogging toilets. This book is about this endeavor, a guide specifically for the part-time landlord balancing a rental property with work and life. It is written for the mild mannered office worker by day, who may change into work clothes by night in order to clean and paint walls, just in time to show a rental unit that weekend. And while there are no diabolical villains (though I once inherited a tenant who was close) or trains heading off a cliff, this book is about managing regular people and keeping a residential property from going off the tracks—making it clean, safe, and well maintained.
Filling a Gap in the Landlord Literature
While I read everything I can on real estate and residential rental properties, the primary guide I used in writing this book was my own experience as a part-time landlord. For example, the chapter on turnarounds (in which you get a unit ready for the next tenant) was from my years of notes on streamlining the process, and the tenant-selection and lease-signing practices described in this book are all largely my own practices, as well. That said, not every tip will work for every landlord or property, and I’m sure you will develop a few of your own tricks of the trade.
When I began, there was no detailed guide for what I would be doing. While there were some great books out there for professional landlords with apartment buildings and other major holdings, none really spoke directly to the part-time landlord with just a few residential rentals. And many books were short on details, just giving general landlording advice that, while sound, was quite vague: select great tenants, maintain your property, move tenants in, move them out, and so on. So the crucial granular detail of how to do all this was lacking. My goal in writing this book was to show exactly how I choose a rental property, create an ad, screen tenants, prep a unit, and even move out a tenant—everything I learned along the way.
Many books are also geared to larger operations. Some just tell property managers to have their staff or hired help handle all the details while they work the phone. But as a small-scale landlord, you won’t have a staff, and you can afford to hire out only occasional jobs that you can’t do better yourself. This book does cover hiring service contractors (Chapter 6) and using professional services (Chapter 11). But for the day-to-day work, the person assigned to handle all the details will be the one in the mirror (you).
The day-to-day work will contribute to your success and help you attract and retain good long-term tenants. I wrote this book to share the how and to cover the details. We will survey the skills, strategies, and general philosophy that can help the part-time landlord—from choosing the type of rental property that works for you (whether it’s a single-family house, a condo, or a multiplex) to keeping every part of your rental units working smoothly; from communicating clearly and often with tenants to providing great service from move in through move out.
Each chapter covers a new area and is designed for part-time landlords—the people housing others in their spare time—the schoolteacher renting out a condo, the government worker with a duplex, or the semiretired person with several single-family homes. I feel these part-time landlords are modern superheroes of the U.S. rental housing market. They may not wear a cape or mask (speaking of detail, we’ll even cover what a landlord can and should wear!), but they do amazing things—from refinishing dull cabinets to handling complex tax deductions. And the public benefits from their efforts to house others in their spare time.
The Long-Term Landlord
Being a landlord is not about overnight success, but instead the ultimate long game. My approach is the exact opposite of the real estate shenanigans depicted on late-night, get rich-quick infomercials or reality television shows. Those may provide good entertainment or clever marketing. But slow and steady—mowing lawns, painting walls, shoveling snow, screening and communicating with tenants—week in and week out, year after year, wins the race for part-time landlords. The real gains will come over the very long term (think years, not months).
You’ve probably heard the phrase “buy and hold”—that is, to make money, a landlord should just purchase property, rent it out, and hold it a decade or two before selling at a profit. It is a common mantra in real estate investment. You’ve probably even seen it work, as real estate appreciates and rents rise over time.
But what’s left out of the simple buy-and-hold equation, are the details of what you do in the meantime (the day-to-day property management) during the years that you try and hold onto the property. And the proverbial devil is in the details, because it’s tough to engage in an activity for many years that you do not understand or find meaningful in some way. Fortunately, beyond financial gain, there are less talked about benefits of being a landlord (see my list of why I like being a landlord, below). And you’ll find many of the other details in the best practices laid out within this book.
One of the top tips for holding a property long term is to select and retain long-term tenants. Most of a landlord’s labor will be in this turnaround and rerenting process. But a tenant with a one-year lease may even renew a time or two, so your work (and money) can pay off in the following landlord’s magic formula :
you will have fewer costly turnovers and no or low vacancies
over time, rents will rise but your mortgage will stay the same
the value of your rental property will gradually appreciate, and
tenants will pay down your mortgage with their rents, reducing your debt and increasing your equity in the property.
These four factors, combined with the power of financial leverage (most landlords put down 10%–20% of the purchase price but retain 100% of the upside appreciation), make a winning combination for long-term wealth building.
This sounds like a fail-proof proposition, but bear in mind that the appreciation in property markets can be sporadic (real estate moves in cycles). It may take decades for major profits to emerge. That’s why landlords should focus on the long term, allowing appreciation to march slowly upwards—even if in fits and starts. Inflation will naturally drive up the rents in most markets, increasing your cash flow.
Another key advantage of owning residential rental properties is that they fit into many 30-year fixed-rate loan programs (ideal for a long-term approach) with more favorable terms than properties with five or more units. These larger apartment complexes typically require commercial financing, with higher down payments and interest rates as well as shorter repayment terms.
How Skills You Currently Have
(or Can Easily Acquire)
Will Contribute to Your Success
Aside from the purchase price of the rental property, the biggest investment you will make in your rental business will be your time and skills spent improving your units and interacting with tenants. Part of the appeal of being a landlord is that you don’t have to have any specialized skills: The endeavor best fits a generalist, or someone who can do many things fairly well. The things that landlords need to be proficient in fall roughly into three categories: technical skills involving the property, people skills involving the tenants, and general management skills, involving everything from planning to financial management. This book provides advice on how to become proficient in these areas and how doing so will enhance the desirability of your property and the success of your business.
Whatever your current skills level, you can continue to practice and develop them. In fact, every tenant will provide a new situation and a lesson or refresher course that never ends.
Property Oversight and Maintenance Skills
A big draw of being a residential landlord is the average landlord’s familiarity with the underlying property—or at least the type of property. Most people have lived in some type of residential property, and many have performed maintenance on a single-family house. So there is not a lot of mystery. Even residential multiplexes are generally quite similar to houses we live in, with all the same features. Condominiums are a unique form of ownership and are often part of larger buildings or properties. But since owners are generally prohibited from working outside or in common areas, you really need to know only how the inside works.
My general assumption is that you have the technical skills of an average homeowner. That should be enough to get most landlords through the maintenance and turnaround procedures in this book. There are a group of related skills any landlord can and should try to master because they are so central to the practice of landlording—cleaning, painting, and exterior maintenance—and I’ll explain how to develop or improve these skills.
Interpersonal (People) Skills
Almost all personalities can be good property managers with the right skills and some basic self-awareness when it comes to dealing with tenants and handling conflicts. Whether written, spoken, or even nonverbal, good communication is the glue that holds the landlord-tenant relationship together. How you respond and communicate with tenants can help make sure your rent checks come in on time and keep problems at a minimum. I’ll give you many ideas in this book for establishing productive communications with tenants, such as verbal scripts, as well as strategies on things like establishing a high-trust environment and avoiding overemotional responses to typical tenant issues (from late rent to messy pets).
With well-screened tenants, you may not have to face many heated personal conflicts. But a good many minor issues can crop up with even the best tenants. I’ll explain effective strategies for avoiding common conflicts in the first place, as well as how to handle those that do come up, by providing general scripted responses that have worked for me in various types of conflicts—whether a tenant’s general dissatisfaction with the unit or an interpersonal issue with another tenant.
My simple philosophy is to get good tenants and leave them alone. That means I emphasize selecting the right people (those inclined to be long-term, respectful tenants). And then—other than routine maintenance or reminders—I leave them to live peacefully in the unit. Of course, if a tenant calls or contacts me about an issue, I respond right away. I aim to be a background presence in tenants’ lives, helpful when needed, but not in the way.
General Management Skills
Good managers, whether they’re landlords or small business owners, share many traits. Here are some of the key skills that will contribute to your success.
Delegating. While this book has a strong do-it-yourself mentality, I don’t recommend a “do everything yourself” approach. Knowing when and how to hand off tasks is important to running an efficient and profitable business—whether it’s hiring a plumber for a tricky shower repair job or an accountant to do your taxes. Two of the chapters (6 and 11) include extensive coverage of how and when to delegate tasks, be it to blue collar or white-collar helpers. Sometimes you will be more like the maestro of the symphony than a one-man-band trying to play every instrument.
Flexibility. Rigidity can be a real liability for landlords. When you deal with people, you sometimes have to be able to absorb small imperfections for the sake of the larger task. For example, a little “wear and tear” is something you have to expect when you do the walkthrough that’s a customary part of the tenant move-out procedure. No tenant is perfect, and there are tips (in Chapter 9) on handling your response patterns when tenants do make minor errors.
Being firm but fair. Try to treat all tenants as fairly as possible and also strike a balance between your interests and theirs. Whenever possible, split the difference or meet the tenant halfway. For example, I might let a tenant hang or put out potted plants, but only in areas where the moisture won’t damage decks or building and the hanging plants can’t fall on a car or passerby. Making such accommodations can show that you are open to compromise and tenants’ needs but have to look out for your own interests, as well. Also, avoid being judgmental or imposing your values on tenants.
Managing stress. Choosing the right rental property and carefully selecting and managing your tenants can greatly reduce a landlord’s stress. But added tension is an inevitable occupational hazard, because tenants can be unpredictable at times, and buildings seem to have a mind of their own; you can’t control when a pipe will burst or another such problem will develop (midnight seems to be the most likely hour). Of course, you will always have total control over how you react or face such situations. Ideally, you can take a positive approach, using a tenant phone call as an opportunity to improve a unit or increase tenant satisfaction rather than viewing it as a stressful nuisance. Developing strategies for stress management, such as exercise, a good social network, and a spiritual practice can help.
Cut down the stress. Why Zebras Don’t Get Ulcers: The Acclaimed Guide To Stress, Stress-Related Diseases, and Coping, by Robert Sapolsky (Holt Paperbacks), discusses the health links to stress as well as some major issues related to stress, especially related to control and predictability in our lives—key challenges for many landlords
Staying organized. You can never close a deal if you can’t find your lease form. So a central theme in this book is putting simple systems in place to help you be effective, whether it involves organizing maintenance supplies or receipts and tax records. The secret for the part-time landlord is to integrate rental property systems with household systems (as it is a home-based business in many respects, as discussed later).
Be a list maker. An amazingly simple (but crucial) organizational strategy for landlords is making lists. The average turnaround (when you spruce up a rental unit between tenants) may include dozens of small, separate tasks. You often need a product or tool for each one, plus a clear order to tackle the tasks. Getting your to-do list out of your mind and onto paper or your computer can help you stay sane and save gas (so you don’t have to backtrack for forgotten items). Some sample checklists for common landlord duties—like turning units around and periodic maintenance—are included throughout the book.
Setting priorities. One critical skill for every landlord is prioritizing what to do and, in turn, what to leave undone. For example, when you budget for projects on your units, you’ll need a sharp eye to separate budget wants (your ideals for the property) from budget needs, and to decide between urgent short-term projects and longer-range plans. Prioritizing tenant safety first, then property protection and preventive maintenance, will help keep you on course and prevent injuries and liabilities. Also, it is key to think about resource allocation not only in terms of money, but with regard to your scarce time.
Financial skills. This one may be the “x” factor some people lack, and it is key in landlording. Along with handling the people and the property, you have to handle the money. As an example, a successful contractor (with strengths in both carpentry and remodeling) and his spouse, who managed both people and property (as a property manager), were looking at buying one of my properties—and I thought we had a match made in heaven. They could be an ideal landlording team for my tenants (and I could exit stage left with a large check).
But there was one key ingredient lacking: They could not get the financing due to credit issues, so it was not to be. I realized it’s doubtful that even those with great people and property skills can be successful landlords without strong financial management skills. They will have trouble buying the property and probably couldn’t keep up with all the added bills if they struggled to handle their own personal finances.
Why I Like Being a Landlord
Like any other landlord, financial rewards are a central motivation for me. No one’s in this business to lose money. But I find if you do the job well and enjoy it, the money will follow: it is a byproduct of being a good landlord. Yet the positive factors about being a landlord go far beyond money. In fact if you are just in it for the money, it may not be sustainable long term. Here’s what I like about owning and managing rental property—beyond the financial rewards:
I’m my own boss. The pride of ownership and sense of accomplishment in running my own rental business is a major reward. I like being CEO and 100% in control. The absence of oversight, staff meetings, time clocks, office politics, and bureaucracy is liberating. It can be a nice contrast to many day jobs in that respect.
It’s work I can do on the side (and keep my job!). Like many rental property owners, I hold down a busy day job and do landlording work in my free time. Most part-time landlords will need a day job just to get financing for rental properties; you can’t really start or expand your business without some source of steady income (largely because bankers dislike giving loans to the unemployed). So keep your day job (this is not a quit-work book). Even the best cash-flowing properties don’t tend to generate enough income to live on right away (and they never offer benefits like health insurance). I like having the safety net of a day job, but also knowing that no matter what happens to it, I have the security of controlling my destiny with this side business. I offer tips for the best of both worlds—retaining the security of your job and engaging in the excitement of your own entrepreneurial pursuits.
I make use of my existing skills and knowledge. As discussed above, being a small-time landlord is an area that rewards people who can wear several hats. It involves many of the same chores I do at home: cleaning, maintenance, painting, repairs, gardening, and lawn care. (Thank your parents for all the on-the-job training those chores provided!) And whether you’ve practiced on your coworkers, employees, students, or family, you may already have the communication and conflict-management skills needed to work with tenants. Because I bought my own house, I was already familiar with mortgages, purchase contracts, and inspections before buying my first rental property. I’ll target only residential properties, so the buying process is similar to the one any home buyer encounters. Finally, most of us may have been tenants at some time or other, so we have that perspective, too. Part of the allure of landlording is that the average adult homeowner probably already knows enough to be a part-time landlord.
The business model is fairly simple. You don’t need a degree in finance to make money renting out residential property. You own a place, and people pay you money to live there (ideally paying you more than your expenses). Much of what you need to learn can be picked up on your own (and this book is a great way to start). Even endless family games of Monopoly have helped me understand property acquisition, rents, and different price levels in the rental market. As a landlord, just providing well-priced, desirable housing rentals will give you your choice of tenants in most rental markets. Everyone needs a place to live.
Home based. You don’t need a shop, a storefront, or a warehouse in order to be a part time landlord. You can use your own home as a platform for delivering great rental service. Your garage or even an empty closet is your shop and storeroom, holding all your materials and tools. Your own kitchen table is the office. My favorite part: The commute is to your own file cabinet down the hall for a lease or to your garage to get standard white paint (you’ll use the same color in all your units).
Best of all, the overhead will be low, with no franchise fees or extra office space to rent (of course, special rules apply if you are looking to deduct a home office, and some of the references in this book can help you there). An epiphany I had in writing this book was that small-time landlording is a real home-based business (not a gimmick but a real one). Even your business vehicle will be the one in front of your house right now (and a tax deduction). And if you follow the guidance in Chapter 2, your rental property will be conveniently located nearby, too.
Landlording keeps me fit and healthy. While not a substitute for a regular exercise program, one beneficial side effect of being a hands-on landlord is the added physical activity. This can be especially valuable if you have a day job, like mine, that is primarily sedentary. Landlords can expect to be pleasantly surprised by what the scales says after they’ve been working on their units. For example, completing a unit turnaround or doing an exterior paint job can increase activity for a couple of weeks and routinely melts a few pounds off me. The intense bursts of activity may be intermittent, depending on the season, vacancy rate, and building needs, but very real. More importantly, being a landlord has given me a strong incentive to stay fit year round in order to be prepared for a physical task or unit turnaround. All this bending and lifting saves me money on labor, improves my flexibility and balance, and burns off calories. (Of course, I’m careful not to overdo it, and I hand off hazardous tasks or those that are too physically challenging.)
Landlording Can Burn Calories
There may be times when you can skip the gym and hit the rental property. Landlords can burn major calories doing these common tasks:
sweeping: 240 calories per hour
painting: 290 calories per hour
mowing the lawn: 325 calories per hour
shoveling snow: 415 calories per hour
mopping the kitchen floor: 153 calories per hour
vacuuming: 240 calories per hour, and
intense bathtub scrubbing: 90 calories in 15 minutes.
I’m always learning. Owning rental property keeps my mind active as I learn new things about real estate, rental markets, taxes, the law, maintenance and repairs (from painting rental units to buying new appliances), managing people, and more. Learning can be fun, and it’s hard to beat the feeling of solving a complex problem on my own and improving my rental units and tenant experience in the process.
Housing tenants is meaningful and fulfilling. While being a landlord is a for-profit venture, it has clear social benefits. Many areas of the country face dire shortages of affordable rentals, and I firmly believe that small-time landlords like myself are an important part of the solution to housing America. I like the fact that I can impact society in small but meaningful ways, starting by simply having well-maintained, safe, and clean units and encouraging and fostering “green” practices (many are listed in this book). I add to the standard of living and quality of life for my tenants, often in basic ways, such as by allowing pets (on approval), providing secure bicycle parking, and fostering community by encouraging tenants to get to know one another. Unlike stock quotes I watch on a screen, my real estate investment has me interacting with a variety of real people. My role as their housing provider is a pursuit that is active and social.
I’m contributing to my community. Being a landlord is also a great avenue toward civic engagement, as I pick up trash outside my rentals, paint a front porch, plant flowers, or perform some other service for appreciative tenants and neighbors. These tasks may seem small, but lots of people are looking to find volunteer work in their communities because it helps them make a tangible difference. You can also be active beyond your property boundaries in neighborhood associations and local affairs related to utilities, zoning, and urban planning. You will have an added stake in the outcome and can be active in local governmental affairs—whether it’s attending local planning and zoning commission meetings or following city council discussions of services relevant to your rental property.
What You Won’t Find in This Book
The focus of this book is on management practices for the small-scale, part-time landlord. While it covers some financial and legal issues broadly, it does not go into extensive detail regarding real estate investment or landlord-tenant law in your state. Here are some resources for more information on topics this book doesn’t cover.
Large-Scale Property Management Tips or Practices
While many topics and tips in this book can work whether you have one or 100 units, it’s geared specifically for the part-time landlord with a few residential (one- to four-unit) rental properties. Indeed, many of the same policies (be it openness to pets or more thorough communication with tenants) may not work if you had a large-scale operation. Also, you won’t find advice on common apartment topics like swimming pools, managing the front office, hiring on-site apartment managers, or how to get tens of millions in commercial financing. This is about you, in your own vehicle, loading up to work on your own property. So we cover everything from painting your rental units to tackling the depreciation on your taxes. That said, I think many five-, ten-, 20-, or even 50-unit apartment owners can benefit from the ideas in this book. And more resources on larger-scale professional property management can be found at the Institute of Real Estate Management (IREM, atwww.irem.org).
General Real Estate Investment Strategies
You’ll find useful advice in this book on making sure a particular property pencils out in terms of positive cash flow and meets your needs as to location, type of property, and other factors. I recommend taking a long-term approach to owning rental property, but I do not go into all the possible strategies for making real estate investment decisions. For that, you’ll want to check out books such as the classic Buy and Hold, by Dr. David Schumacher (Schumacher Enterprises), How to Get Started in Real Estate Investing, by Robert Irwin (McGraw Hill), or Investing in Fixer-Uppers, by Jay P. DeCima ( McGraw-Hill).
Television shows and investment seminars often promote flipping, a real estate investment strategy where someone buys property that is distressed or underpriced, makes improvements, and then tries to sell at closer to market value, for a quick profit. There is nothing wrong with this strategy for people who specialize in this activity. But flipping is not covered in this book, because it typically doesn’t involve long-term landlording or renting out property, even for a short term.
Renting Your Home Through
Short-Term Vacation Rental Sites
Various online services act as a clearinghouse for short-term (typically less than 30 days) vacation rentals. These types of rentals involve different legal and practical issues concerning taxes, insurance coverage, liability for guest injuries, neighbor complaints, and municipal restrictions. And if your rental property is a condo or co-op, these may prohibit any and all short-term rentals. This emerging area of the residential rental world is not covered in this book, and the legal framework and management practices are still being developed.
Other Helpful Nolo Books and Resources for Landlords
For many readers, this book will provide all the information needed to manage your rental property. But if you want specific legal forms or detailed legal information for your state, check out other Nolo resources.
Start with what’s available for free in the Landlords center on Nolo.com (www.nolo.com/legal-encyclopedia/landlords). There, you will find charts with your state laws, including state security deposit limits, required landlord disclosures, rent rules, tenant privacy, small claims court rules, repair responsibilities, termination rules, and much more. You’ll also find lots of useful articles on topics such as evictions.
Nolo publishes a comprehensive library of books (hard copy and electronic versions) for landlords and rental property owners, including:
Every Landlord’s Legal Guide, by Marcia Stewart, Ralph Warner and Janet Portman.Provides detailed state-by-state legal information on rent and security deposit rules, required disclosures, notice to terminate for nonpayment of rent, and more. Also dozens of legal forms you need from a lease at move-in to a security deposit itemization at move-out, as well as a property manager agreement (should you decide to hand off the day-to-day management duties).
Every Landlord’s Tax Deduction Guide, by Stephen Fishman. Includes all the information you need to take advantage of tax deductions and write-offs available to landlords, such as depreciation, legal services, and insurance, as well as instructions for completing Schedule E.
First-Time Landlord: Your Guide to Renting Out a Single-Family Home, by Janet Portman, Ilona Bray, and Marcia Stewart. Covers the basics that first-time or “accidental” landlords need to rent and manage a single-family home or condo, including renting out a room in a house when owners are still living in it.
If your property is in California, see the two volumes of The California Landlord’s Law Book (Rights and Responsibilities and Evictions).
Nolo also has many single-copy interactive online forms, such as state-specific leases and rental agreements.
For Nolo’s full library, see the Landlord-Tenant and Leases & Rental Agreements sections of the Nolo store on www.nolo.com, or call Nolo at 800-728-3555. Also check your local bookstore or public library.
Your State’s Landlord-Tenant Laws
It’s impossible to write about managing rental property without touching on key laws (primarily state) that affect your actions and policies—whether it be fair housing, limits on security deposits, landlord access to property, or nonpayment of rent notices. This is a management guide, not a legal resource, so I provide an overview of the key laws that affect the various aspects of property management, but leave the specifics to other Nolo titles, particularly Every Landlord’s Legal Guide, and Nolo’s extensive collection of free articles at www.nolo.com. See “Other Helpful Nolo Books and Resources for Landlords,” above, for details.