On becoming a Slumlord, Part 1

In a recent conversation, a friend revealed a desire to become a slumlord as a means to make more money and to have something to do. After much thought, I decided to write more about what I know about landlording...perhaps educating those who are indeed thinking of getting into this crazy business.

My background: I hold a doctorate in child psychology, but am currently staying at home with my toddler. So, since I'm not "working at a job" (I think being a mom is a 24/7 job, even if you go on frickin' vacation), it is logical between myself and Mr. Landlord (the breadwinner) that I be the one to manage the rental properties we own. We own three rent houses. The first is our previous residence and a very nice house in a very nice neighborhood. The other two are new homes located in up and coming areas of the burbs around our town. We purchased the latter two because the areas they are in are currently being developed into mega shopping areas, more schools, etc. etc. so we know their value will certainly increase over time, and perhaps increase the quickest over the next few years as the development continues.

Now, being a landlord is time CONSUMING. You think that you get a property, get some folks in it, and you're all set until the end of their lease. WRONG. If you really want to maintain your property and make sure it isn't being torn to pieces, you must do biweekly or at least monthly inspections. Remember: it is an investment so the better care it receives the better your return will be. It should be written in your lease that you are allowed to enter the property at any reasonable time you choose, unannounced, for inspection. This helps ensure that you have control over what happens to your property. Tenants will NEVER report repair needs unless it inconveniences them in some way. I had some tenants who had a leaky shower and they never reported it. Didn't inconvenience them. However, when they moved out I found the leak and ended up having to hire a guy to break into the wall, fix the leak, put the wall back together, paint, etc. This was more costly than their deposit, but the leak wasn't found until too late. Shame on me for not doing proper inspections. Proper, unannounced inspections will ensure your property is appropriately maintained, and will alert you to problem tenants...to be covered later. However, it is...again...time consuming.

Now, if you get a high maintenance tenant in the property, that eats up more of your time. They report EVERYTHING, which requires several visits a week as well as many phone calls OR they are the type of tenant that you suspect has the potential to really do some damage so you have to conduct inspections at the very least once per week or more. This eats a lot of time, especially when you are trying to manage your own home and your own family. Why not hire a management company? Good question...we'll cover that later as well.

Finally, if you go on vacation, be prepared to have your vacation interrupted by an emergency phone call from a tenant. On our last beach vacation, I spent one day trying to find someone to fix the fridge in one of the houses. A storm blew threw, shorted the outlet, and fried the fridge. Then there were several followup calls to ensure the repairs were done and to pay the repair people, as well as hear more from our tenant about how we should pay for their lost groceries. Sorry, if a storm blew threw at my house and my fridge fried, I wouldn't have anyone to cover my lost groceries. I'm not mother frickin' nature.

Overall, our rental properties consume about 40% of my time per week. That leaves 60% for my own family and my own home. Seems like enough, but it really isn't. Things always come up and my own home and family fall by the wayside. The requirements of being a landlord also fluctuate...a lot. One week I may have to focus on all three rental properties the entire week, thereby letting my own home responsibilities pile up until I can get to them, and then another week I may hear nothing from our tenants. But on those weeks, I'm catching up from the previous week so I can't focus on what needs to be currently done. It is a constant game of catching up. This is something to think about...

So, next time I'll talk about what type of property to buy - a new or older home.