What Type of Person is a Landlord?
What do most people think of when they picture the landlord of a single family rental property?
A faceless corporation with complete detachment from the property?
A wealthy individual or family who own multiple different types of real estate?
A middle-aged investor who needed somewhere to invest some extra cash and so they decided to purchase a single family home and turn it into a rental?
What most people don’t picture and yet what is often times most common, is a middle-class family or individual who used to live in the rental property themselves.
Most people picture landlords as well-to-do investors who purchased the home as a rental property and have never lived in it and never intended to live in it. It was a financial investment plain and simple and they have no emotional attachment whatsoever to the home. In the same way that they aren’t emotionally invested in their stock portfolio, they aren’t personally invested in the home.
They don’t picture the landlord as the previous occupants of the home who originally purchased the home as their own personal home without ever intending to rent it out. Now, life circumstances have changed and they had to move and for whatever reason so they have decided to rent out the home on a long-term basis instead of selling it.
This is becoming more common in the current high interest rate environment we find ourselves in. Homeowners are locked into sub 3% 30-year fixed mortgages. When the time comes to move, they are looking at trading that record low rate for a 7 or 8% rate if they were to do what most people who own a home do when it’s time to move—sell the home and by a new one wherever they are moving to.
The problem is, this means losing a key asset—the record low interest rate on the loan for the most expensive asset they will ever own.
So, many people are exploring other options for what to do with the family home, which often means renting it out on a long-term lease. Suddenly they find themselves with a title they never thought they would hold—landlord.
My Own Experience
I recently did this myself. It was time for our family to move but we didn’t want to sell our home with our low interest rate. So, we decided to rent it out.
Rental properties are my bread and butter. This is what Mesa Properties does dozens of times a month. We take homes, usually single family homes, and turn them into long-term rentals. This wasn’t my first experience as a landlord. I have rented out my own investment property before. But this was my first time renting out my personal home.
The first home I bought with my wife a few months after we got married. The home we customized and upgraded to our exact liking. The home that we brought three children home to and the only home those three children have ever known. The home we celebrated holidays in and created memories in and grieved losses in and hosted friends and family in.
I thought this would be just like the other investment properties we have rented out before. But I was wrong. This was a completely different experience for me. A much more emotional experience.
At Mesa Properties, we place a high emphasis on educating our owners. Not just on laws and best practices but on how to be landlords. How to take on this new identity of housing provider. One of the ways we do that is by consistently encouraging them to think like investors. Even if you are what we would call an “accidental landlord”, we want you to think like an investor and remove the emotional attachment from the equation when it comes to renting out your personal home.
But I learned through personal experience that this is easier said than done.
I’ve learned a lot through this process and now I want to share that with you, the emotionally attached landlord that is in the process of renting out your home. This isn’t theoretical knowledge. These are tips given through my own learned experience and I hope I can help you get through the difficult part of renting out your personal home so you can experience all the wonderful benefits that come with it.
This type of landlord profile is a very common client type of ours. Multiple owners that work with us used to live in the home that we now manage for them. If this profile describes you, whether you work with us or not, then the tips below should help you be a more successful landlord.
Tip #1 - Establish Objective Rental Criteria and Stick to It
You have to start with objective rental criteria that clearly define what must be met in order to rent the home. This can be credit, income, and rental history based. It must be in compliance with Fair Housing laws.
When dealing with your own home, you are much more likely to make emotional decisions about it. This is how most self-managing landlords get in trouble. You hear a plausible sob-story from a potential tenant and are likely to believe it. You are emotionally invested in the home and therefore much more likely to make emotional decisions regarding it.
This can mean lowering your standard for the potential tenant in a tough position that convinces you that they really need the home and will be able to pay the rent, even though the recent eviction on their record says otherwise.
You want to be able to help someone in need so you ignore the objective data that indicates they will be a nightmare tenant and make a gut emotional decision to rent to them anyway.
This type of tenant is much more likely to neglect to take care of your home and end up forcing you to evict them.
The opposite scenario can also be true where you get an applicant that meets your objective criteria but they don’t meet whatever expectations you had in your head for the type of person who would live in your home, so you deny them. Now you are opening yourself up to legal liability and a potential Fair Housing discrimination complaint.
Both of these scenarios are bad, which is why you must establish objective criteria and stick to it before you start screening potential applicants. This is not a job interview where you are looking of the best fit for the home. If you are renting out a property in California, your best bet is to go with the first qualified method which means you will accept the first applicant that meets your criteria.
One way to make sure you do this is to work with a property management company. They will be able handle everything for you and remove the stress of choosing someone to live in your home. You can delegate that responsibility to them and rest easy knowing that the decision doesn’t lie with you, but with them.
Tip #2 - Remove Anything With Personal Significance
This is a rather common sense tip but if there are any personal effects left in the home that would devastate you if they were damaged by a tenant, remove them!
Whether this is a picture on the wall, the swing in the back yard, or a piece of furniture, remove it if damage to it will be difficult for you to sustain. You can’t expect a tenant to take the same care of something that you would, so you have to have that expectation going into it.
It’s a best practice to remove all furniture and personal items anyway, but not every landlord does. If you remove anything that you are personally or emotionally attached to, you will be much more successful as a landlord by making the rental as least complicated as possible.
Tip #3 - Take Photos and a Walkthrough Video to Preserve Memories
This is different from the documentation photos and video you might take to show the condition of the home before the tenant moves in.
There are certain things you can’t take with you when you move, like the tree in the front yard that you planted or the exact way the yard looks through the living room window at a certain time of day.
When your tenant moves out and that tree doesn’t look the same, or worse, is no longer alive, you will have a strong reaction because of the memories and personal significance it had for you. Having photos of it will help preserve the memories that were tied to it without placing that burden on your tenants to preserve things exactly as they were when you lived there.
That doesn’t mean you shouldn’t hold your tenants responsible for maintaining the property, but that you should have realistic expectations in that it will look different when they eventually move out. Don’t expect to have all of your memories preserved in the home the way it is now. Take photos and videos to memorialize it for yourself and avoid having a negative reaction against your tenants when it looks a bit different after they leave.
Tip #4 - Take Pride in Providing a Home for Someone Else
Instead of focusing on all the negative things that could happen in renting out your home, focus on the fact that you are able to take your home that you have loved and rent it out to another individual or family that is able to make their own memories there.
You aren’t just providing four walls and a roof. You are providing a home, that likely had deep personal significance in your life, and now you get to provide that for someone else.
This can be incredibly satisfying if you allow it to. Or, you can wring your hands and fret that they will trash your home or not take the same level of care of it as you did and have a stressful experience.
As a landlord, you aren’t by definition the bad guy. You are providing a much needed service and giving the opportunity for someone else to have a home by renting yours. This can be a very rewarding experience and is intensified when you have your own personal attachment to the home, unlike a home that you bought specifically as an investment. You can experience this at a level that most intentional investors never can.
Tip #5 - Leave Your Tenants Alone and Relax
This is an important one! Just because you used to live there and still own the home doesn’t mean you have the right to violate the tenant’s right to quiet enjoyment. In renting out the home, you have given up your right to have possession of it. That has been legally transferred to your tenants. So don’t be that landlord that is overly annoying in expectations or unnecessarily contacts the tenants.
Don’t do inspections more than are necessary or ask your neighbors to spy on the tenants or worse, show up unexpectedly at the home. Let the tenants enjoy the property in peace and as long as they are abiding by the lease agreement, leave them alone.
This will allow for a better experience for both you and them. You won’t need to be continuously thinking about the home and obsessing about what the tenants are doing there and they won’t feel harassed, which means they will probably stay longer and enjoy it more which is more financially beneficial for you in the long run.
Tip #6 - If You Can’t Handle it, Don’t Rent it Out
This final tip is unfortunately true for some. Maybe you have read this post and disagreed with a lot of it. You think you can expect your tenants to take the exact level of care of the home that you did and that they will cherish it as much as you did and that you can stop by whenever you want. It’s your home after all.
If the thought of someone else living in your home while you still own it is an impossible pill to swallow, then don’t rent it out! Sell it or don’t move. But if you can’t handle the transition from homeowner to landlord, don’t do it.
You are going to make it a terrible experience for yourself and your tenants. You will be constantly stressed out and your tenants will feel harassed. Or you will have a change of mind part way through and try to kick them out which introduces chaos into their lives.
You have to be mentally prepared for what it takes to become a landlord. It is a new job. A new identity. And you have to be willing to learn how to take it on. You can’t just put your house up on the market without preparing and educating yourself.
There’s tons of other things you need to think about like budgeting, holding money in reserve, insurance, tax liabilities and so much more. This post was just to address the emotional side of renting out your personal home.
If you aren’t sure if renting out your home is for you or if you want to learn more about what it takes to become a landlord, then just reach out to us. We can personally relate and we love talking to current and potential clients about the challenges and successes that come with owning rental property. We would love to discuss the possibilities with you and help you achieve a more prosperous future.