Real estate investing 101 : Keys to being a landlord

Other than "how do you find properties?," the most common questions I get revolve around dealing with tenants. Here are the bullet points:

• Hire a GOOD property manager.
  Yes, it's tempting to manage it yourself & save the management fee (which is typically around 10%). I am here to tell you that is a mistake. Your time is best spent elsewhere. A good property manager takes about 90% of the hassle of owning rental property out of the equation. The key is finding a good one, and sometimes it's not easy. During the real estate downturn, a lot of garden-variety real estate agents decided to go into property management to supplement their income. Generally speaking, good property managers only do management. A real estate agent who wants to sell properties is not going to want to focus on your rental property if there's a big commission out there. Focus on firms that only do property management and interview several before committing. Trust me -- a bad property manager is worse than no property manager at all. Take your time & find a good one. Ask them who, specifically, you will deal with at their firm if you become a client, and spend some time on the phone with that person. You'll be able to tell pretty quickly if they're on the ball.
• When screening tenants, do due diligence and be PICKY.
  When your property is vacant, it's normal to get anxious, not wanting to make payments out of your own pocket. Be patient. The absolute worst thing that could ever happen to a landlord is giving keys to your property to a bad tenant. When someone applies, run all available checks: credit, eviction, etc. Stuff like medical collections is no big deal, but if you see previous evictions, it's best to move on. Again: the absolute worst thing you can do is give a set of keys to someone who intends to move into your property and not pay rent. Depending on your local laws, eviction can be a big and expensive ordeal. BE PICKY!
• Be tough, but fair.
  When I first became a landlord, I wanted to be friends with my tenants. I wanted to be a suuuuper nice guy, thinking they'd reward me by being good tenants and always paying on time. I quickly found out this (typically) doesn't work. Stick to the terms in the lease. Go by the book. Use common sense. If it's a long-term tenant who has always paid on time, and they ask you to replace a ceiling fan, be cool. If it's a new tenant who already has been late twice, tap the brakes. Over the years, I've adopted the motto "you take care of me, and I'll take care of you." But until a tenant proves to me they're solid, I am very cautious. I've been burned too many times.
• Don't be a jerk about pets.
  I'm always amazed how intractable many landlords are over pets. Not all pet owners are created equal, and I've found that by being open-minded, I've landed some really good tenants who appreciated it. I allow pets (with a partially refundable deposit) with proof that the dog/cat has been fixed and is current on vaccines. Generally, good pet owners treat their pets like family and take them to the Vet every year. I have rarely had problems with those types of pet owners. By saying NO PETS EVER in your rental listing, you might be turning away a potentially really good tenant.
• Don't be cheap.
  One of the worst traits I've seen in other landlords is what I'd describe as "dollar chasing a dime." Yes, owning rental property is a business, and you're in business to make money. But at a certain point, less hassle is more valuable than more money. Don't waste your time quibbling over 30 bucks. If you have a good tenant, treat them well, and if that means spending a couple extra bucks, spend the couple extra bucks.

About me

When in doubt...

1. Be patient
2. Don't be [excessively] greedy
3. You can't win 'em all