What Qualities do I Need to be a Successful Landlord?
Becoming a landlord is not difficult for most people, but you do need some personal qualities and skills, or you need to pay others to do things for you.
Starting off can be a bit daunting but it need not be if you do your homework first and hire assistance when and where needed.
Two decision you need to make first: (1) can you do a lot of DIY and perpetration work yourself or will you use others to do this for you, and (2) can you market and manage the tenancy yourself, or again will you get an agent to do this for you.
You may want to use others to do work for you in the early stages until you gain confidence, but in the long run you can save an awful lot of money by being a hands on landlord.
If you want others to help, you may need the services of a letting agent, a plumber, an electrician, a handyman, a painter, a interior designer, cleaning services, and, if you get really into landlording, a bookkeeper, an accountant, a solicitor, and some cases, a debt collection agency.
How motivated and committed do you feel about becoming a landlord? If you are excited about the prospect and willing to do some homework you’ll be able to sustain interest in your work.
Read the sections that follow and be totally honest with yourself about whether you have the qualities necessary to be a successful landlord.
If you still think becoming a landlord is for you, go ahead and do it.
If it’s to be hands-on it’s important to be committed and motivated.
It helps a lot if you like people and treat them with fairness, honesty, and respect — you want to be friendly with your tenants, but not too friendly. You are running a business not a charity, which means it’s harder to maintain discipline if relations get too friendly. That’s why letting to friends and family can often be difficult – it puts a strain on relationships.
A good landlord can flexible and can stay calm under extreme provocation, even when you might be angry or upset by how people behave.
A sense of proportion and a sense of humour helps. If you can see the funny side of things and put mishaps and mistakes down to experience, and learn from it, you should be able to cope with all kinds of tenants.
You need good communication skills and a lot of patience. You should treat tenants as customers, so anyone that has had a career handling customers will be a natural.
Can you be assertive and make a point without becoming aggressive or belligerent?
Can you stay calm, optimistic and enthusiastic even when tired after a long day’s work and you’re out late at night dealing with a tenant’s problem?
Your Management Skills
It helps to have management skills. If you have had experience managing people then landlording should be a “piece of cake”. You need to be able to plan ahead and to organise and prioritise all sorts of tasks and goals. You may also need to juggle all of this with a hectic day job, but this is perfectly feasible if you have these qualities.
Before you jump in, try to honestly assess your strengths and weaknesses in this regard. Be realistic with yourself. Also, be aware that this extra work can put a strain on relationships at home, so your partner and family need to be fully supportive and prepared for the occasional hassle.
If you don’t like doing paperwork, you don’t like dealing with tenants and you don’t want to mess around with a leaky taps, it may not be long before you start losing money on the rental because you paying too much out in fees.
Your Business Skills
You are running a business as a landlord, not a charity. Landlords need to be business like: assertive when, for example, a tenant is behind with the rent or is causing noise problems for neighbours.
You have to make common sense decisions based good business practice. Need to be firm but fair; treating tenants with respected at all times but following strict rules. If a tenant is not paying rent you need to serve notices and be prepared to start eviction proceedings without delay.
With evictions and any other tenancy disputes you should act professionally at all times, staying calm and avoiding getting into arguments. There’s nothing to be gained by shouting at tenants and you could risk being accused of harassment.
For those with the motivation and willingness to learn from experience, picking the skills necessary for running your landlording business is relatively easy.
Your DIY Skills
Many landlords will take on simple DIY jobs. They know how to do small repairs and decorating to make the property as attractive to tenants as possible. They will do the outside painting and cleaning to keep expenses low.
Your Bookkeeping Skills
Paperwork is important when letting property. You need to be organised and keep all receipts and invoices connected with your property for at least six years. Experienced landlords, especially if they have several properties, use property management software to help them organise their paperwork, but if you only have one or two properties it’s quite easy to do the accounts with a paper based system or a simple spread-sheet.
Every year you will need to do a self-assessment tax return once you have income from a rental property. You don’t need a book keeper or accountant to do it for you be you do need to do some homework on this. There are plenty of tax guides available for landlords.
Because you are taking rent which is untaxed, you need to budget and put money aside for taxes when they are due. Are you good at budgeting and making sure you have enough saved up to pay bills when they arrive?
Tenants move around quite a lot. On average in the UK assured shorthold tenancies (ASTs) last around one year to 18 months.
Are You Financially Responsible?
How are you at dealing with your own finances? Do you currently have a good credit history. Do you have some money set aside for emergencies? Would you be able to get a short-term loan or use credit cards to cover bills if you need to?
Are you in a position to cover the mortgage and running expenses for the property if you had an extended void (vacant) period?
Can you afford to hire a builder or engineer to do unexpected repairs, such as a leaking roof or a central heating boiler that needs replacing?
Why do Some Landlords Fail?
These are the most common reasons why landlords fail:
- Jumping in without the necessary preparation – you need to do your homework
- Not doing your finance sums beforehand – doing a cash flow forecast with projected income and expenses is a great way to save trouble later
- Having a property of the wrong type on in the wrong location for the tenant market you are going for – without good tenant demand a property can be a liability, not an asset
- Paying too much for your initial investment, so your running costs (mortgage payments) are too high for the rent. You make your money on property when you buy it by getting it for a good price. It’s too late when you’ve overpaid – don’t get carried away
- Not taking the care needed to select good tenants. It can take up to 9 months to remove a really bad tenant – do you have the resources to see you through without income and a property that is being damaged? Consider rent guarantee insurance
- Going over the top on refurbishment by spending too much on top end appliances. Remember, this is a rental, not your own home
Summary of the Personal Qualities Needed
- You like dealing with people – as a landlord you provide a service to your customers (tenants) It’s vital you have an affinity with and can deal with people problems.
- You have good judgement where people are concerned – it’s vital that you are able to assess individuals for suitability for a tenants – some of this comes down to “gut instinct”, but you also need a systematic section process.
- You willing to learn and develop your skills through experience – rules and regulations change frequently, so you need to keep abreast of developments.
- You can handle a certain amount of pressure and stress, particularly if you borrowed money, which most landlords do. You need to be able to sleep at nights.
- You have good management skills. There’s no such thing as passive investment in property. Even when you use an agent to manage for you there’s still a lot of tasks and responsibilities put on the landlord.
- You can remain detached and unemotional when situations get stressful, especially when tenants or agents play up. How would you react if you find a tenant trashed your property or your agent failed to serve a correct notice?
- You are quick at learing from mistakes. It’s inevitable as a new landlord you will make mistakes and errors of judgement, but there’s no excuse for doing it twice.
How much Time will it Take?
Being a landlord need not be too time consuming. If you get organised and you are managing properties near to home, you can easily manage several properties whilst holding down a full time job.
You need to be willing to do some out of hours work, evenings and weekends, especially when tenants leave and you need to market the property again.
On the other hand, this hassle should be more than made up for with the income you get from your rental – landlords earn money whilst they sleep, 24/7. It’s a great feeling to build up an income stream that’s not dependent on your working for every penny.
Above all be very careful when selecting your tenants. Selecting only good tenants is perhaps the most important thing a landlord does. Get saddled with a bad tenant you will realise just how important.
New Landlords – More Articles in this Section:
- Letting for the first time
- Am I suited to becoming a landlord?
- Preparing the Property
- Marketing the Rental Property
- Sealing the Deal – Offers and Deposits
- Check-In and Check-Out
- The Tenancy Documentation
- Dealing with Agents – Fees and Costs
- The Tenancy Documentation
- The Main Landlord’s and Tenant’s Responsibilities
- Useful Links and Contacts
By Tom Entwistle LandlordZONE® ID2005
©LandlordZONE All Rights Reserved – never rely totally on these general guidelines which apply primarily to England and Wales. They are not definitive statements of the law. Before taking action or not, always do your own research and/or seek professional advice with the full facts of your case and all documents to hand.