5 Hardest Aspects of Being a Landlord

People love to hate landlords. But the simple fact is that landlords provide a needed service—perhaps the most needed amenity of all.

Landlords face real challenges that most novice investors fail to grasp. If you’re thinking about becoming a landlord, keep the following in mind as the hardest aspects of being a landlord.

TURNOVERS

The overwhelming majority of the work and expenses involved in owning rental properties comes during turnovers.

It starts with walking through the unit with the outgoing tenant to determine if they caused any damage that should be deducted from their security deposit. You have to send them a detailed invoice, breaking down all security deposit deductions.

Then comes repainting, re-carpeting, and other property updates, followed by advertising the vacant unit. Fail to screen applicants well, and you end up with bad tenants.

After going through all that, you have to collect the security deposit and initial rent, sign a lease agreement with all legally required disclosures, and come full circle by walking through the unit with the new tenants for a move-in condition inspection.

CHASING DOWN NON PAYING TENANTS

There’s nothing worse than chasing down deadbeat tenants who haven’t the slightest interest in paying their rent on time. They may eventually pay some back rent to prevent you from completing an eviction. And then you go back to square one, sending notices, calling them, cajoling, bribing, threatening, and eventually filing in court again. Round and round you go. 

Word to the wise: avoid this cycle through aggressive tenant screening. People who regularly miss payments, however, are another breed entirely.

HIGH -MAINTENANCE AND HIGH-IMPACT TENANTS

Some tenants pay their rent on time but treat you, the neighbors, and/or your property badly.

They call at 3 a.m., complaining that a light bulb went out. Or maybe they abuse your property, clogging the plumbing with flushed tampons then demanding that you pay for fixing it, scratching up the hardwood floors, spilling wine on the walls and floors. Others are just downright dirty, letting dishes and crust-strewn pizza boxes pile up.

Some people are just plain disrespectful. Avoid them at all costs as a landlord, but beware that occasionally they may slip through your screening.

MANAGING CONTRACTORS, REPAIRS AND MAINTENANCE

Rental properties are physical, real-world structures, and as such, they require maintenance and repairs. New landlords all too often underestimate these maintenance costs, or even ignore them entirely in their cash-flow forecasts. Then, they wonder why they lose money year after year.

In the real world, managing contractors feels awfully similar to herding cats. To begin with, it’s hard to find reliable, experienced contractors and handymen who charge reasonable pricing. Make no mistake, there are professional contractors who show up on time for appointments and know their work well. And they charge a fortune.

Why? Because they can. Because their competitors show up a half-hour late (if at all), with no phone call to let you know. They fall behind on projects, go over budget, spring surprise expenses on you halfway through projects.

Managing contractors is one of the hardest parts of being a landlord and investor. It takes an enormous amount of time and effort to painstakingly screen, hire, and manage contractors. Over time, through often expensive trial and error, you gradually build a network of good, affordable contractors. 

Given the challenges that landlords face, it’s no wonder so many tired landlords sell off their leased properties and move their money to truly passive investments like stocks, REITs, private notes, and private equity funds.

The ever-increasing regulation will drive away middle-class landlords. I’ve seen it happen in Ontario, where well-meaning investors get burned and sell out to either slumlords or corporate landlords, who know how to squeeze money out of even highly regulated markets.