I read all the time about “The Landlord Trap” and how horrible it is. “The Landlord Trap” says that when you invest in an apartment building or rental house, the tenants immediately take over your life. They break things, they whine about things, they call you at 4 AM. Basically, you stop being an investor so that you can be a landlord.
This is a very real concern. If you’re not careful, it is easy for this to happen. The good news is that it doesn’t have to. The solution is really very simple. It just takes a little dedication.
The Solution To The Trap
The solution is in the system. If you can set forward a systematic way of handling your investment and stick to it, you’ll sleep easy and avoid the headaches that so many other investors have. Here are four systems that you should have in place. I’ll leave the “how to” up to your, or at perhaps leave it for another time.
New Renters
You need a system for screening out problem tenants before you rent to them. You need a good rental application form and you need to check up on the references. If the prospective tenant skipped rent at the last three places they lived, they will probably skip rent at your place. If they can’t ever hold down a job, they can’t pay rent. Set guidelines for renting, and have the gumption to stick to them. Every time you have a problem tenant, look back at your application and see if there is something you could add to avoid getting more of the problems.
You also need to make sure that your screening is legal. It cannot be based on race, religion, gender, etc. It is a good idea to write up the requirements you have to rent, and when you reject an application, to record which of the requirements they failed to meet.
Rent Collection
You need a good system for rent collection. Find a way that works for you. If you don’t have a well defined system, you will have money fall through the cracks.
Maintenance
You need an organized way of dealing with maintenance problems. This is where most people get stuck in “The Landlord Trap.” What usually works best is some kind of maintenance ticket system where you can know exactly what needs to be done and check up on it every day.
Evictions
You need to have a system set up for evictions. I’m not saying that you need to be completely ruthless here, but you do need to be consistent. It can end up being expensive to evict, so you may want something built in your system to help tenants make up a missed rent payment. Just keep in mind that if you allow a tenant to miss two payments in a row, they will virtually never make them up.
Conclusion
So if you need to get out of the landlord trap or avoid it altogether, the solution is the same: make a system and stick to it. Start implementing your systems today.
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