OK, I know “Landlording” is not a word but it makes a great verb for what people who rent homes do. I’ll define it for you:
Landlording [land-lawrd-ing] verb
- An owner of real estate leasing, renting or otherwise providing housing for tenants
- An owner of real estate and/or their agent performing the duties associated with leasing, renting or otherwise providing housing for tenants.
Landlording is much more than just investing in a house and renting it. There are many things that go into the day to day activities of owning real estate. First, there is the actual purchase. There are over 200 processes that go into a real estate closing from appraisals to underwriting. With that many cogs in the works, something is probably going to go wrong. You (or your agent) must keep a close eye on the transaction as it moves forward.
Once you own the house the real work begins. Now you have to find a tenant to occupy it. There are dozens of marketing methods to find residents but none will matter until you accommodate the market’s needs. There are four things that make a property rent, price, terms, condition and location. All four must be correct in order to get the property filled.
Now that you have found a prospective tenant you need to screen them. There is nothing more important in landlording that proper screening. Screening can prevent most of the problems involved in this business and ultimately earn you more money. You want to know about their history, where have they lived, have they paid their rent, do they have a history of damaging property, are they on the sex offenders registry, etc.
While your customer resides in the property, you must take care of them. Customers that do not feel that their needs are met do not remain customers very long. When maintenance requests come in, they need to be taken care of right away. The most expensive thing in landlording is turnover. You want to prevent that as much as possible.
Turnover will eventually happen and you need to be prepared for it. Most of the time it is voluntary, the lease has terminated and the tenant moves on. Other times it is involuntary and you are forcing your tenants out of the house. You need to understand that process in case it happens to you.
I have only hit on the high points of landlording. There are too many things to do to go into great detail on any of them here. Over time this blog will go into things you need to know such as the Tennessee Residential Landlord Tenant Act, things you need to do such as preventive maintenance, and ways to earn money such as cash flow or appreciation.
Until next time, thanks for reading.
Scott Abernathy, MPM, RMP, GTI