These thoughts are for freshly-minted landlords and those sitting on the fence about becoming one. Renting property in major US cities has never been a more lucrative business. Experts at Pew Research Center published data suggesting that more US households are renting now than any point in the last 50 years. The figures showcased indicate that the trend is unlikely to decelerate, let alone reverse. They aren’t the only ones drawing attention to the craze, either. Richard Florida at CityLab also shared his thoughts on the subject. While referring to a report released by the NYU Furman Center, he declared, “What these numbers ultimately show is that contrary to convention, renting is gaining popularity among people who are seemingly well-positioned to buy a home.”
That could mean big business for those willing to rent property out to others. Unfortunately, landlords and property managers are rarely seen too favorably by their tenants, which can be very bad for business. Some of that has to do with the unique histories and attitudes brought to the table by the tenants themselves. On the other hand, however, landlords and property managers can also contribute to the antagonistic relationship. People should realize that doesn’t necessarily mean intentional hostility or blatant neglect. There’s a lot of complexity inherent to property management, which means a novice landlord can very easily make an innocent mistake with serious repercussions for everyone involved.
Fortunately, Erin Eberlin at The Balance Small Business highlighted five important things to know about becoming a landlord. She first discusses how demanding the role is and how a landlord typically wears many hats (i.e., realtor, detective, negotiator, supervisor, etc.). According to her, novices should also anticipate a learning curve regardless of how intelligent they might be. Another major takeaway is the fact that landlords are expected to comply with a variety of legal rules. For all those reasons, landlords everywhere should strive to streamline as much as they possibly can.
When it comes to business, the more that can be reasonably and responsibly outsourced or automated, the better. Running a rental property is no different. The nature of property management offers ample opportunities for meaningful improvement.The applicant screening and rent collection processes are two obvious candidates given how important they are. The online rental application process is another clear contender. Quite frankly, almost everything is fair game.
While communication is definitely key, it isn’t some universal panacea. In fact, according to the Forbes Real Estate Council, over-communication can undermine tenant relations. Landlords should avoid disruptive communication. The authors encourage a wide range of best practices but nothing could be as helpful as hiring a property manager. New landlords can certainly learn the ropes and thrive but the question might be whether or not they want to? Aside from being a potentially lucrative endeavor, the job can be personally rewarding and extremely challenging. That isn’t for everyone. Relying on property managers reduces net profits but lets landlords eschew most of the responsibilities otherwise reserved exclusively for them.
Dave Van Horn at BiggerPockets openly advocated for hiring property managers based on his own experience as a landlord. He cited affordability and legal compliance as two crucial advantages. Property managers can often bring years of relevant industry experience, too, which can have a disproportionate impact on business performance. They might offer to tenants with vehicles discounted overspray removal services through a third party during the winter months. Those tenants without vehicles might instead receive promotions for local or regional winter sporting activities. Either way, the landlord is no longer responsible for brainstorming those ideas and then implementing them. That can have some serious appeal.