Being a successful rental property landlord can be rewarding but is not always easy. Unfortunately, for every great landlord, there are a few bad ones. Do you know what kind of landlord you are? Becoming successful in such a competitive industry demands landlords be at the top of their game with a commitment to maintaining a safe and quality property along with building a solid landlord-tenant relationship. Today’s blog examines the three main classes of landlords along with tips on how to improve landlord-tenant relationships by providing top-notch service.
What Type of Rental Property Landlord Are You?
It is important to determine where you stand before discussing what landlords can do to improve the landlord-tenant relationship. Landlords, like properties or tenants, fall into different classes. For landlords, there are three classes, A, B, or C, and they are described perfectly by Holton-Wise’s James Wise and founder of Rentwerx, Brad Larsen. It is easy for both new and experienced landlords to make mistakes that harm profits and tenant retention. While some view Wise and Larsen’s classifications as controversial, it is worth considering. So, let’s take a look and see which class best suits your style as an owner.
The Best of the Best – The Class A Rental Property Landlord
Class A landlords offer top-notch service and convenience for their tenants. Often, Class A describes the best and most sought-after property management firms in the industry. However, whether it is a big firm or an independent owner managing their properties successfully, what sets them apart is a variety of factors.
What Makes “Class A” Landlords the Best?
- They Know it is a Business – Investment properties are a business and therefore must be treated as such. This means setting emotions aside to handle matters with a fair yet calm and clear mind.
- Solid Investment in Professionals – The savviest independent landlords understand that partnering with professionals can take their business to the next level. Therefore, they do their research, invest in the best, and most importantly – trust their expertise.
- Minimal Interference – Hiring a professional property management company means private landlords can confidently take a step back. After all, an expert firm will have far more experience and be able to look out for the owner’s best interest effectively.
- Celebrate Being Passive – One of the main reasons to hire a property manager is because the day-to-day minutia has become too much to handle. A successful rental property landlord embraces this newfound freedom and allows their manager to do their job with little to no involvement.
Middle of the Road – The Class B Rental Property Landlord
If you score a “B” on a school report card, that is a good job. The same applies to this class of landlords; they are doing okay. However, there is always room for improvement. That said, some small mistakes could make a significant difference to a landlord’s overall success. Is this you? Let’s review some of the common characteristics of a Class B landlord below.
The Characteristics of a Class B Landlord
- Looking for a Bargain – Whoever said “you get what you pay for” was right. There are many places where finding a deal is a good thing, but not when searching for a property management company. In fact, going with the company that has the lowest price may just cost you more in the end. Class B landlords not only bargain hunt, but they also hop from company to company based on special deals or discounts. This is a mistake!
- Engaging in Micromanagement – Class B landlords have difficulty letting go and handing decision-making to the professionals. Whether this stems from a lack of confidence in their company choice or a personality trait, it is detrimental to their success. Thus, the landlords still have many daily stresses of owning their property, and the manager cannot do their job effectively.
- Stressing Over Nickel and Dimes – As we mentioned, a bargain does not equal better service. In fact, it is usually just the opposite. That said, Class B landlords sweat every penny and settle for mediocre service as a result.
- Failing to Save for Maintenance – Repairs are inevitable, and they rely on owners putting enough savings aside to complete timely maintenance. However, Class B landlords often hound their managers trying to delay or avoid maintenance costs.
Giving the Industry a Bad Name – The Class C Rental Property Landlord
Bringing up the rear of the industry is the dreaded Class C landlord. Individuals in this category are difficult to work with and have difficulty maintaining a positive landlord-tenant relationship. Additionally, they likely have trouble maintaining professional relationships with qualified vendors or management companies.
That said, Class C landlords rightfully earn a bad reputation through consistently hassling their property manager, failing to maintain a safe of habitable property, or hindering every part of a successful landlord-tenant relationship. So, if the circumstances below describe your approach, it may be time to rethink your methods. After all, missed opportunities mean missed profit potential.
What Makes a Class C Landlord So Bad?
- Nobody Responds Well to a Bully – Nothing ruins a landlord-tenant relationship or other professional endeavors faster than being a bully. Moreover, landlords in this category often think they have the right to treat tenants or property managers in a domineering manner. However, this not only makes you an unlikeable person, but it is also counterproductive to the goal of boosting profits.
- Ignoring Repairs – Also known as “slumlords,” Class C landlords ignore repair requests and do the bare minimum to keep the property standing. Furthermore, if they authorize repairs, there’s always a “friend” who will come and complete it cheaper. The trouble is these fixes often end up costing more in the long run. Failing to complete maintenance promptly can destroy the vital landlord-tenant relationship and lead to higher turnover rates.
- Blindly Increasing Rent – Despite the lack of maintenance and attention to maintaining a quality unit, Class C landlords expect the rent to increase constantly. Moreover, they will ignore the advice of their property manager, citing “they know best.”
- Beyond Haggling – There is a difference between negotiating and haggling. A Class C rental property landlord will harass and haggle a company to get the most for the least amount of financial output possible. Unfortunately, this may lead to diminished services, poor service, or getting dropped from the company altogether.
Why Do Some Landlords Fail?
As with any small business, failing as a landlord could be due to several reasons. While it is easy to jump into the industry as an investor, the daily and long-term strain of being a landlord takes a toll. That said, there are several more common reasons landlords are not successful, and they include –
- Lack of Preparation – A landlord’s work does not end once the property is purchased and rented; in fact, it is just beginning. Therefore, careful planning is needed to lay the groundwork for a successful business. This includes surrounding yourself with other professionals who can help.
- Going Too Big, Too Fast – As we mentioned, having a solid infrastructure or business plan is key. Unfortunately, some landlords get overanxious and buy several properties without the proper tools to manage them effectively.
- Ignoring Technology – As a landlord, technology is your best friend. That said, property management software is a considered investment. Often, landlords will decide to skip these fees and “go it alone,” which inevitably contributes to their downfall.
- Overpaying and Under Saving – Maintenance and repairs make up one of the largest expenses for landlords. That said, maintenance also represents one of the most common areas where landlords go wrong. Often, owners overpay for repairs by not thoroughly doing their research or building vendor relationships. In addition, not setting enough funds aside for maintenance hinders the ability to make repairs efficiently, which is essential to tenant satisfaction.
What Makes a Successful Landlord?
Successfully managing rental property takes commitment, knowledge, capital, and planning. Anyone can indeed be a landlord, but that does not mean everyone is meant for such a role. That said, each rental property and landlord-tenant relationship may present unique challenges. So, check out some of the most common traits of a successful landlord below.
Top Habits of Successful Landlords
- Business is Business– Successful landlords do not allow emotion to influence their business decisions. But, especially in the rental industry, treating all tenants the same is critical to comply with Fair Housing Laws. So, always stick to the terms of the lease, including late fees.
- Maintain a Financial Cushion – The one thing rental owners can rely on is to expect the unexpected. Therefore, having a financial cushion to cover any circumstance will help protect themselves and their business. So, plan to stash away enough to cover 3 to 4 months of rent in case of vacancy, unpaid rent, or large emergency repair.
- The More You Know, the Better– Real estate is competitive, no doubt about it. From buying an investment property to analyzing local markets for marketing, knowledge is vital. Landlords must make countless decisions, and the best ones research all angles of each scenario before making a decision.
- Accessibility is Key– Building a great landlord-tenant relationship starts with communication. So, if a tenant has a concern, question, or maintenance request, a landlord’s responsiveness will set them apart.
- Stay Organized– Managing rental properties involves a lot of paperwork, financial documents, and communications. Thus, attention to detail and excellent organizational skills are essential for any successful landlord.
The most important trait of successful landlords is to realize that help is out there and worth the investment. After all, rental property is all about balancing tenant needs while maximizing profit potential – and that is not always easy. So, hiring a local property management firm brings expertise and manpower to handle any task rental owners face.
Trust the Local Experts
Are you a rental property owner looking to maximize your investment? Are you unsure why your business is not producing the outcome you anticipated? While owning a rental property can be a lucrative and rewarding experience, you do not have to do it alone.
Relying on the trusted expertise of the professional property managers at Bay Property Management Group can take your investment to the next level. Our team understands the delicate balance between tenant needs and owner ambitions. So, give us a call today to schedule a no-obligation rental home analysis and learn more about how full-service rental management can help you.