Intentional Success - So you say you want to be a landlord?

Whatever your situation is, you may have interest in creating a passive income for yourself via property management. I personally completed a frustrating eviction that overall has cost my family $6,200, not considering future lost revenue until our unit is re-rented or sold. The most important message of this article is that winning or losing isn’t what’s important, it’s about what you learn and leverage in the future. If you’re going to be a landlord, you want insight from all angles:

Pros: Backed by the advice of Robert Kiosaki, renting our property allowed my wife and me an entry into entrepreneurship, managing multiple bank accounts, and learning on-the-fly. Here is a short list of other positives from our experience:

• Monthly income that builds equity in your property
• Additional profit to improve the property or make additional mortgage principal payments
• Provide someone a basic need- a place to call home
• Learn how to interview, accept and decline applicants, and provide a great tenant experience
• Gain skills and insight that you only earn from being ultimately responsible for a service being provided.
• Tax write-offs

Cons: There are several common challenges to having renters; this is a short list of things to prepare for:

• Fielding common sense questions things like how to change the battery in the smoke detector
• Unexpectedly replacing appliances like a dryer or dishwasher
• Calls from the HOA (Home Owner’s Association) or the police about property violations or noise complaints.
• Late rent or skipping on rent
• Damage to your property by tenants
• Significant or permanent damage by pets
• Multiple months of rent lost due to incorrect eviction processes
• Additional costs incurred in hiring Sheriff, legal, moving, and storage services (If tenant abandons unit)

There are other risks, which although less common, are much more impactful to your financial and emotional life:

All of these items come from my own vantage point: 3 years of renting, $6,200 in lost rent, incurred legal costs, and strangers building equity in my family’s asset. Although the sting of financial loss is fresh, there is no way I can talk trash about property management. Our property has 2.5 more years of equity that we didn’t pay for. We are at a breakeven point with cash, falling from a position that was profitable 6 months ago, and I have learned an enormous amount about which styles, approaches, and firmness people do and do not respond to me using.

Since I stated that it’s not about win or lose, but what you learn, I want to share what I’ve learned from my land-lording experience. Some of these I abided by, some I realized I should be doing along the way.

• Background check. Living in your property puts their fingers around your asset
• References. Many applicants won’t take the time to put references on their resume. Will they take the time to send your rent?
• Post your property months before the target lease date. 90 days prior to when you want someone to start renting is a good target for getting the word out. (Craigslist, Facebook, etc.)
• Animals = Risk. If you are going to allow pets, charge a monthly premium. New floors will almost certainly cost more than however much you collect.
• Send a notice of eviction immediately after rent is missed. Sounds harsh, but the eviction process is not quick. The notice sets the precedent that you expect tenants to hold up their end of the bargain. If they won’t, then you’re 1/3 of the way through the process.
• Follow your Gut. If you get a bad vibe from someone, pass on them.

Being a landlord is neither hard nor taxing day-to-day. As long as you can collect from tenants 12 out of 12 months a year, you’re looking at a profitable and enjoyable passive income stream. Renting does carry an imbalanced amount of risk to reward if your unit doesn’t produce rent monthly. Poor advertising of upcoming unit availability and/or poor speed and execution of evictions can turn a dream investment into a financial nightmare in as little as 90 days.

You can make great money by providing a safe and secure home for someone else. Please consider the pros and cons equally, leverage best practices to position yourself for success, and take risks that get you better results. Whatever your goals, land-lording to volunteering, please reach out to Elevated Insurance and let us use our connections to get you where you’re going, faster.

We encourage you to insure differently. We are driven to serve.

Elevated Insurance is located at N19 W24400 Riverwood Drive, Suite 350, Waukesha, WI 53188. For more information on Elevated Insurance and owner Jackson Bubolz, please call 262.424.0420 or Jackson@elevatedins.com. www.elevatedins.com