Do You Really Want to be a Landlord?

Every now and then, one of my homeowner clients will say to me “You know, instead of selling my house in Beverly Hills, I think I am going to hold on to it and rent it out”. Of course, the idea of holding on to real estate can be very  tempting and it is not a bad idea, as long as you clearly understand what it means to become a landlord. A lot of people think that being a landlord is as easy as finding a tenant and collecting rent; but unfortunately it is never that simple!

First, finding a tenant takes time and experience. You need to place ads in Craigslist, local papers, or in front of the property. Then you will interview prospective tenants, you will need to check them out with their previous landlord, verify employment and their credit score. You will then go with your best gut feeling, while making sure that you are in line with the Equal Opportunity Housing Act.

Once your tenants are all moved in, that’s when the “real fun” begins! Within approximately 3 days, they will most likely give you a list of the issues they found with the property and they will ask you to either fix them or keep a record of them so that you do not “ding” them for the repairs against their deposit when they move out.

A few weeks or months will go by and you can inevitably expect to start getting calls that either the tenants that just moved across the street are playing the drums in the middle of the night or the next door neighbor who parked their car in your driveway. That’s if you are not the one getting the calls from your neighbors complaining that your new tenants are the noisy ones or that their dog bit their child!

Of course, you will also start getting calls about the clogged toilets, the broken dishwasher or the leaky roof in the middle of the night! And of course, you will have to deal with that whether you are in LA or if you are out of town or out of the country. You will have to find a plumber or a roofer and meet them at the property to get the repairs done. Of course, if you are out of town you will need to send someone you trust to handle it for you.

Then will come the time when your tenants are ready to move out. You will do an inspection of the property and of course depending on the “quality” of the tenants, you will find your property in decent condition or you may find it in total despair with lots of damage, such as soiled carpets, bruised walls and scratched hardwood floors, If it is a house, don’t expect your lawn to be lush and green and your flowers to be beautiful and blooming. Tenants generally will never take care of your property as good as you do!

I know that my description of being a landlord may sound a little bit grim, but I just want to make sure that homeowners understand that it is not as simple as it might seem. Now, as I said earlier, owning income properties is probably one of the best investments you can make for yourself and for your family as long as you understand what is ahead of you and that you are ready to handle the job, you screen your tenants very well and you maintain your property regularly and thoroughly.