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7 Business Traits Of Successful Landlords
If you think that all you need to retire with a continuous stream of rental income is to buy a few properties, you have some waking up to do.
Time and again, successful landlords have demonstrated that in order to truly succeed in real estate, you need to run your operations like how you would run a business.
You might be able to get by with minimum management for small side projects. But to really make real estate a full time income generator and reap the full benefits into retirement, there’s really no other way than to treat it as a business.
Some investors get confused when this concept of treating real estate as a business is brought up because they have always classified real estate as passive investments rather than active live businesses.
Wells that’s totally fine if real estate is just a means of side income. A little pocket money, if you like.
In order to take things to the next level and make it into your main source of income, start looking at it as a business. And here are 7 key traits to embrace.
1) Always look to build and improve systems
The only way a business can run without your full supervision is if there are systems in place for your staff to follow.
Brainstorming ideas and process flows can be a tedious task to undertake indeed. But the time and effort spent into doing it will definitely pay off in the long term.
The sticky point that new landlords usually face is that they expect creating such systems take very little time to draft and implement. They then fall flat on their face when the undertaking takes too much time to conceptualise and enforce.
Make it a point to understand that creating systems takes time. Putting protocols into practice also takes time time to adopt.
In fact, you will probably never stop improving and streamlining your systems to optimize operations.
Once you acknowledge and accept that, it could make a huge difference in your motivation towards building systems to run the business.
2) Never stop learning
No matter how much you know about investing and flipping real estate, there will always be areas that you don’t know about.
And no matter how great a negotiator or sales person you think you are, there will always be areas in your game which you can improve upon.
Make it a point to network with other real estate players and learn from each other. An opportunity might be right in front of your eye. Just that you didn’t have the information to identify it. Don’t forget that you could very well be 1 home-run away from retirement.
That’s how powerful real estate can be financially.
Other than that, make self-improvement a habit. Soft skills are essential for one to perform well in landlording.
3) Don’t be a pushover
If you think managing tenants will be a walk in the park as you are basically the owner of the home they are renting, you’ve got a real reality check coming your way.
People are unpredictable. And this unpredictability can send you crazy sometimes.
Tenants will always try to get one over you no matter how fair you play. And the more you relent and compromise, the bigger their next bites will be since you have validated yourself as a pushover.
You will be tempted to please your tenants by going above and beyond when you are new at landlording. And you will regret later about how you have bent over for tenants.
Or you can decide now to be firm and fair in your dealings with tenants so that you will never suffer from sleepless night from taking on extra duties due to odd request from tenants.
The thing is that tenants will always test you to see how much of the rules they can bend. And if they run into an immovable object (you) from the first attempt, the are more likely to respect the terms in the tenancy agreement by the letter.
Don’t be nice. Be bold if you have to.
4) Hire help
If you are managing you property portfolio yourself, you are defeating the very purpose of getting into the game of real estate.
Remember that the goal of getting into this business is to:
- Do as little as possible
- Collect as much income as possible
Why forfeit the first commandment so readily?
Hiring expenses might eat into your profits. But it allows you more free time. Time that you can indulge yourself in leisure… and time that can be spent looking for more undervalued houses to buy.
This is the only way to scale up your business and revenue… which translate to profits.
Outsource and delegate work to third parties like property management companies. Or even hire your cousin to manage it for you.
You will never be able to achieve great success without help.
5) Proper accounting
Can you believe that there are companies that are profitable… yet they have to close down due to financial problems?
Where is the sense in that? If the purpose of a company is to make money, and it is doing it, why does it face liquidation?
The answer usually lies in financial controls. Maybe they:
- book their profits too early
- delay accounting for expenses
- offer very generous payment terms
- did not get credit facilities from the bank when they could
- little effort put into collecting receivables
These are common business problems that you would face one day. And if you don’t nip problems at the bud early, small issues can explode into catastrophic problems.
On the topic of finances, this is an area where if there is a devil in you, it’s the place to release it.
The objective is to get faster cash inflow and delay cash outflow.
6) Be responsible
Most people will implicitly feel that they’d be a responsible landlord. But you’d be surprised at how big a number of landlords don’t treat their tenants like customers.
- They avoid taking their calls
- Delay repair works
- Increase rental by unreasonable sums
- Ban activities for no legitimate reason at all
It not that difficult. All you really need to do as a responsible landlord is to:
- Give your tenants the respect they deserve as clients
- Be responsive to feedback that they provide
- And hold up your end of the deal stated in the lease agreement.
7) Understand the laws you are operating under
Understanding regulations has 2 main benefits. The obvious one is that you don’t get into trouble with disputes with tenants. The other concerns opportunities.
As a business owner, negligence is no excuse when you run afoul with the law. If you think you “didn’t know” should give a pass when you get into trouble, maybe real estate is not the thing for you.
Because law is a dominant force in real estate.
You need to get not just familiar, but also updated with:
- housing laws
- eviction laws
- zoning codes
You don’t want a simple safety issue put forward as a complaint be a disgruntled tenant put your business into jeopardy.