"How to be a Landlord for Multifamily Rental Properties"

I'm sure it won't be difficult for you to learn how to be a landlord. What's difficult is answering the question: do you want to be a landlord? It's a tough question, no doubt. Maybe a better question is: are you willing to be a landlord? The answer better be 'yes.'

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THE NECESSITY OF BEING A LANDLORD

You will need to learn how to be a landlord because you'll be holding your properties for several years. During this time, you must abide by all applicable state laws while at the same time efficiently manage all of your landlord responsibilities.

Repairs will have to be made, common maintenance tasks will have to get done, tenant complaints will have to be addressed, and rent will have to be collected.

And those are just the regular, ongoing issues. From time to time you may also have to deal with crime, vandalism, evictions, abandonment, sabotage, or natural disasters.

You may think that hiring a property management company is the answer. Well, it's not. It's just too expensive for small multifamily properties.

Yes, some real estate strategies like flipping may avoid tenant management, but that's too risky for my blood. I would guesstimate that at least 80% of us "small time" real estate investors face the reality of becoming a landlord. Sure, you may buck the trend on this, but I wouldn't count on it.

INHERITING TENANTS

One aspect of learning how to be a landlord involves buying a currently occupied rental property. In this scenario, you inherit the previous owner's tenants and leases. Importantly, once these inherited leases expire you should renew with your own version of the lease.

The first step is to get to know your new tenants. Personally, I like to meet with all the tenants on a face-to-face basis as soon as possible after closing (make sure you get all the tenant info from the seller at closing). I call them up and schedule 30-minute meetings with them at their apartments.

At the meeting I provide each tenant with a welcome letter that contains, among other things, my name, phone number and address; a reiteration of the monthly rent amount and due date; and my own rules and regulations. In general, this meeting serves several purposes:

• It lets tenants know where to send the rent, which is critical to actually getting paid.
• It allows you to get to know each tenant. Believe it or not, you will have a pretty good idea after the meeting of what you can expect from each tenant, including which ones may cause headaches. Armed with this knowledge, you can manage each as appropriate.
• It allows your policies and landlord rights to be heard. Sure, you could simply mail the welcome letter and take your chances that the tenant will read and comprehend the information, or you could show up and verbally walk them through all the key points and then have them signoff on the document. So you tell me, which method do you think is best to allow the info to "sink in"?
• It gives you an opportunity to directly ask the tenants what they like or don’t like about their apartment, or what repairs are needed.
• It shows them you mean business – critical, because the cold hard truth is that a small percentage of inherited tenants will do everything they can to take advantage of a new landlord.

Inheriting tenants is a necessary evil, and will likely be your first foray into learning how to be a landlord. Sometimes, you will be inheriting someone else's headaches (you'll learn how to be landlord real quick in this scenario!). But again, the initial meeting with your new tenants is a good opportunity to hopefully deter at least some of their potential bad behavior.

And if not, then the welcome letter can ultimately serve as the first piece of documentation on the path to eviction.

GETTING NEW TENANTS

The most critical part of learning how to be a landlord is learning how to acquire quality tenants. Anyone can learn how to be a landlord, but the quality of your tenants will most definitely make or break your experience.

For the most part, I attract new tenants via "for rent" signs. This works well in my densely populated target area, but if your rental property is located in a more rural area, then you will have to pay for classified advertising to get the word out. I also post "for rent" notices at the local Section 8 office.

Once the marketing is out there, the calls will come. If you are unavailable when a prospective tenant calls and he/she leaves a message, call back as soon as you can (same day is best). When speaking with prospective tenants, I first describe the apartment to make sure it meets their needs, and then I communicate the rent amount.

If the prospect is still interested, I'll ask some preliminary questions such as where they work and how much they make, when they are looking to move in, and why they are moving. I also let them know that pets are not allowed. If after all of this there is still mutual interest, I'll set up an appointment to show the apartment.

I try to group showings into 3-4 at a time, because inevitably at least 25-30% will fail to show up. Once there, I have the prospective tenant complete a rental application, and I charge a $25 application fee to help cover the cost of the screening process.

THE MOVE-IN PROCESS

After you've screened and selected a new tenant, the next phase of how to be a landlord involves moving them in. You will want to meet with your new tenant at the apartment to sign the lease (12-month is preferred). NEVER allow any tenant to move any items into the apartment prior to signing the lease and collecting all monies owed.

When you meet with your new tenant to sign the lease, make sure you:

• Collect the security deposit and first month's rent.
• Review the key provisions of the lease with the tenant.
• Sign the lease along with the tenant.
• Provide contact numbers for the local utilities so that your new tenant can transfer services.
• Give the keys.
• Conduct a pre-move-in inspection

Click here for a little more detail on the landlord / tenant lease.

LANDLORD TIPS AND BEST PRACTICES

You will also want to make sure that you are running your investing activity like a business to minimize litigation risk. As such, view yourself as being the managing director of your LLC as opposed to an individual landlord.

Finally, click here for some additional words of wisdom related to how to be a landlord, landlord rights, etc. Follow these tips as closely as possible. Everything you need to know is right here. Yes, YOU can do this!

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