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  • Writer's picturePDuran

Are you ready to be a Landlord?

You’re thinking about buying an RV and hitting the road. You and your hubby have been dreaming about this for decades. Now you’re retired and have the time to do it. You need some help funding this adventure. You can sell your home and park the cash in layered Certificates of Deposit (CDs). Right now, short-term CDs are paying about 2%. Long-term CDs about 2.75%. You’ve done the math and you can net about 6% renting your home. It’s a great neighborhood and you believe that rents will only go up. The home will be worth much more in 20 years. Are you ready to be a landlord?

Take the Landlord Quiz

These questions are based on real-life landlord situations that I have faced.

Scenario #1

Your tenant calls you up and tells you that she and her husband are getting a divorce. She wants to break the lease – a year early. What would you say? If you answered, “I would say okay, because I can totally relate. I went through a divorce, I know how hard it is.” You’re not ready to be a landlord!

How I handled it: “As a woman, I feel for you. But a lease is a contract. You and your husband are both on the lease. So, you are both contractually bound to it.” Ultimately, they divorced and the husband provided documentation so I could legally remove her name from the lease.

Scenario #2

Your tenant moves in and you receive the rent on time for the first 10 months. Then, it’s the 3rd of the month and you have not received the rent. You call the tenant and with some real attitude, he tells you that he only gets paid 10 months out of the year and he can’t come up with the rent right now. How would you respond? If you answered “No worries, I understand. I can wait a couple of months.” You are not ready to be a landlord!

How I handled it: “You did not tell me that on your rental application. If you pay late, you will pay a late fee. I’ll be posting a 3-day notice on your door tomorrow.” My partner’s brother lived in the area and posted the notice. I’m not going to say he was never late again, but he always paid the late fee. He lived in the home for 3 years. He never took that attitude with me again.

Scenario #3

Your tenant has paid on time and never requested a repair for three years. You offer to renew the lease and ask if we can extend past the holidays. He agrees. Do you have someone come in and inspect the property before you finalize the lease renewal? If you answered, “Nah. He’s been a great tenant. The neighbors have never complained. Besides, I’m 2200 miles away in California.” You are not ready to be a landlord!

How I handled it: Boy, did I make a mistake. At that point, I had managed my own properties in three different states for over a decade. I was back in Texas when he moved out, so I viewed the property myself. What a mess! Turned out the man had taken up with a woman half his age (not judging – okay, maybe a bit). He left his two teenaged sons alone to live in the property! They promptly turned it into a frat house. The neighbors, who had my phone number, never told me. They suffered silently for at least a year and a half.

Thousands of dollars-worth of landscaping died due to neglect. The place was so filthy we had to use a brush attached to a drill to get the sinks and tubs cleaned. The girlfriend’s dog had ruined the carpets and damaged molding. I kept his deposit and billed him for everything else that I could reasonably charge him for under the law. Amazingly, he paid. I was mad enough that I would have done everything I could to trash his credit if he had not.

The lesson? You’re going to make mistakes. Stay calm, learn from it, and move on. Or sell if you really can’t handle it. Which reminds me, I’ve got a tenant coming up for renewal...

Hang Tough

Being a landlord means being tough. Not mean. I yelled at a tenant once and have always regretted it. It was unprofessional, unnecessary, and did not help the situation. If you’re not ready to enforce the lease in the face of every sob story, you’re not ready to be a landlord. You won’t make as much money with CDs, but they don’t talk back.


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