to popular belief, being a landlord is no longer considered a luxury
where one purchases a property and waits for the rental income to pile
up. This may have been possible in the past, but times and the industry
has certainly evolved since.
property owners can now testify that compared to “flipping” property in
the short run, purchasing property for long-term rental income is in
fact equivalent to a full-tile job that requires long-term commitment
with substantial demands on the landlord’s time and effort.
course, being a landlord can be – and should be – a wonderful and
profitable experience. Becoming a landlord may well be one of the main
reasons why properties are still considered the best form of
investments. To be such a landlord, there are several considerations to
be given serious thought before one embarks on this journey. Examine
your capabilities and desires, and make sure that it is truly the road
you wish you take. Everything else will fall into place.
Are you cut out to be a landlord?
is the most valuable skill to have when selecting, buying and selling
real estate. However, when it comes to being a landlord, other than
looking at the transaction in a purely quantitative perspective, your
soft skills, or to be more specific, your people skills may prove to be
the more valuable skills.
If you intend to be one of those landlords who benefits from your investment, ask yourself these questions:
• Are you willing to work with people?
• Do you have the patience and discipline to stick to a long-term plan?
• Are you a good communicator?
• Can you diffuse potentially volatile situations?
• Can you deal with uncertainty?
• Are you decisive?
no mistake – as a landlord, there will be occasions when you will find
yourself needing to handle some issues such as dealing with a tenant,
or make a decision on a repair or an upgrade. Your response in a
professional and friendly manner to these issues will ensure that the
profit potential of your investment remains maximised, and this is
crucial to keep you in the game for the long term.
people do not really think of real estate investors as being in the
service business, but in reality you are. Your tenants are your
clients. They are your source of income and the key to keeping your
investments profitable. With the correct people skills, you will be
more adept to manage your tenants correctly.
time as a landlord will be mostly uneventful (in a good way). Perhaps
the only thing you have to do for a given property is to go online
every month and make sure that the rental is deposited into your bank
account. Dealing with your tenants will be relatively pain-free if you
stick to a few principles:
• Invest in the right market segment (for you)
Do you like dealing with higher-end clients? Will you get annoyed by
the rich college/university students moving into your townhouse? Would
you be more comfortable dealing with working class tenants? There are
all sorts of communities out there to invest in, so think about what
type of people you are comfortable dealing with and invest accordingly
to avoid frustration and mismanagement down the road.
• Create a relationship based on mutual respect and courtesy
Return phone calls from your tenants promptly. Be responsible with
repairs. Show concern for your tenants and they will respect your time
and your property.
• Communicate clearly, openly and early
Surprises lead to misunderstandings and misunderstanding lead to
conflict. You control a very important element in the lives of your
tenants – in most instances it is their home. Communicate early if you
have plans to work on the property, to increase the rent, or to make
any other changes that are important elements in their lives.
Don’t let your investment manage you – avoid landlord burnout
maintain your life's balance, it is important to plan your investment
management activities to maintain profitability of your rental
properties, and not let your investments manage you.
owners have positive experiences as investors, but not all of them. You
cannot decide to have multiple properties based on your positive
experiences, and assume that all your experiences will be equally
positive. Almost a third of property owners report that they would not
buy property again. Real estate, as it turns out, may not be for
are a number of right ways to be a landlord and a lot of wrong ways to
be one too. Choose a wrong path and your investments will rule your
life. Choose the right path and you’ll be able to manage your
investments and use real estate to help build you a secure and solid
financial future. Generating security through real estate is all about
using leverage to build a portfolio over time. You won’t have the
endurance to accomplish this if your landlord duties are driving you up
the wall. Know what you are getting into.
number of real estate courses on the market are motivational seminars
with a thin coating of real estate education. These seminars and
courses may be useful if they cause you to take charge of your
financial destiny, but don’t go charging into your first deal without
the right tools, goals and most important the right mindset and
worst mistake you can commit as a landlord and as an investor is to
underestimate the amount of work that it takes to remodel and manage a
property. As a result, investors tend to bite off more than they can
good opportunity comes by, your first instinct would be to seize it.
But, even under a deadline, there is still time to run a basic
financial evaluation. Do you expect the property’s revenue to cover
expenses? Have you made allocations for future repairs? What rate of
return do you expect for the property? Having a realistic view of the
economics is a crucial first step before you start investing. Remember
that you hold the power as an investor. Do not let yourself to be
rushed into any deals without a thorough understanding of what you are
getting into. The best way to keep your peace of mind is to make
investments that offer an adequate return, so looking before you leap
is probably the most important element in keeping your stride as an
Ai Cheng is general manager of S.K. Brothers Realty (M) Sdn Bhd and a
registered real estate agent with the Board of Valuers, Appraisers and
Estate Agents Malaysia; a member of the Malaysian Institute of Estate
Agents (MIEA); a member of the Institution of Surveyors Malaysia (ISM),
and a registered Financial Consultant with the International
Association of Registered Financial Consultants (IARFC). If you have a
question or suggestion on property investment, or feedback on this
article, please write to firstname.lastname@example.org