So you think you want to be a landlord?

Guest Commentary
December 2, 2007

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With today's homes taking a little longer to sell, some homeowners are choosing to keep their home as a rental and move on to the new one. Becoming a landlord requires a few traits that not everyone possesses. Make sure you do, or you'll find yourself pulling your hair out -- or worse yet, in trouble! Here are a few suggestions to consider before you decide to put on the landlord hat:

The first thing you need is some knowledge. There are several good books on the market giving you advice and informing you about what you may encounter. Some even include the necessary forms you will need, such as applications, lease agreements, move-in/move-out checklists, lead-based paint disclosure and others. Learn the local laws and rules governing rental properties. Know the zoning laws limiting how many persons may occupy the home and how many may need to be related to one another.

There also is a local association in Greeley, the Apartment Owners Association, where members help each other, provide advice and commiserate. Tradespeople also can belong to the association as a way of networking and assisting landlords. Develop relationships with these people, as you may need them in a pinch. Oh, and don't forget to call your insurance agent to let them know you turned your home into a rental.

Make sure you have some reserves in savings as you will find yourself paying for things when you least expect it. Furnaces only quit on a Friday night when it's below freezing. Air conditioners only break down on a three-day weekend when it's more than 100 degrees. Sewer backups only happen at 2 a.m. on Sundays. And, some tenants only let you know about a problem they've been aware of for days on a Friday evening as you're heading out for dinner with friends. It's Murphy's Law. Let your tenants know that you want to know about leaks or repairs ASAP, even if they seem minor. Remember -- a slow leak can cause a lot of damage.

Keeping your rental well maintained and generally clean will help you get a good tenant. Screen all tenants through a screening agency. Treat them with respect. If your tenants see that you care about the condition of your home, hopefully they will take some pride in it, too. When collecting the rent make your visits pleasant, call your tenant by name and ask them if any repairs are needed. Be kind, but don't be a doormat. Some tenants will see just how much they can get out of you. Charge the late fees outlined in your lease agreement, serve eviction notices in a timely manner, and encourage them to follow the terms of the lease at all times. After all, it's a contractual agreement everyone consented to. Just like there are good and bad tenants, there also are good and bad landlords. Be one of the good ones.

Try to treat your tenants as you would like to be treated. I was a tenant for many years and I have patterned my landlording after a good one that I had. He was proactive and congenial but firm if I hadn't paid on time. Sometimes, if you have a spouse or partner you can play "good cop, bad cop" to get the rent or get a problem resolved.

Owning a rental can be very profitable, if done correctly. Don't forget to look at the "big picture." Sometimes, a negative cash flow isn't a bad thing when you have the tax breaks and depreciation that go along with owning a rental property. A $100-$200 negative monthly cash flow may work if you're in a real estate market where there's annual appreciation. Remember, your tenant is paying your mortgage down. And, this may be your best option if becoming a landlord gets you into your next home.

Randy Moser is a broker associate with Sears Real Estate and serves on the board of directors of the Greeley Area Realtor Association.