Becoming a great landlord or property manager is fundamental to building a successful property management empire. While the Seven Disciplines of Success guide you, as a person, we will use the Seven Wisdom Keys to Becoming a Successful Landlord to guide us in our business, like our North Star. They are the principles that have helped me learn from failure and become successful not just as a landlord, but as a businessperson. For that’s what you are building, a business.
As you progress in your career, you will deal with some complicated scenarios and the risk involved with investing, as well as the benefits. It can be overwhelming, but remember, your operations guide is designed to serve as a system for you to refer back to.
There is a lot of work to be done, and you have to be willing to get started, and stick with it. Remember, to beat 100% of people, you have to show up, on time, with a plan, execute the plan, and finish what you start! Now, before we get into the nitty gritty details of buying and renting property, let me share with you 7 Wisdom Keys to Becoming a Successful Landlord and the top 10 Pitfalls I see landlords deal with. Be encouraged and learn from these pitfalls. And ask yourself, isn’t success worth the risk of occasional failure?
The Seven Wisdom Keys to Becoming a Successful Landlord:
Get Educated. You are already taking the first step to getting education by reading and taking our courses. But it doesn’t stop here. Always keep learning. I am a recognized trainer and literally “wrote the book” on property management, but every week I continue my education. I keep reading, I keep asking questions, I keep learning. All the wisdom you need to succeed already exists. All you need to do is expose yourself to it.
Always be Professional. You will learn throughout your career how your professionalism has a direct impact on your cash flow. Not being professional hurts your ability to lease a unit and hurts your renewal rate. Learn how to be firm, but professional. Professionalism also extends to your team and you, as the leader, must set the example and the standards for professionalism. This means your team’s personal appearance and attire, to how they answer the phone, to the expected response time to tenant requests.
Systems. The third key to becoming a successful landlord is to put systems in place and follow them. Systems allow things to be done consistently, correctly and take less time. This will increase your profitability and decrease your mistakes. Once you have systems, follow them! One of my all-star students, Michael, now owns a 30 unit apartment complex valued at over $2 million dollars. He is also now an instructor at The Landlord Academy, teaching other students how to achieve the same level of success. He shares with them how he purchased our Operations Manual as his management system when he bought his property. But each time a situation would happen, he would put his own spin on how to handle it. For example, when a tenant was late on rent, he decided it would be nicer to send a nice note reminding the tenant to pay rent before issuing a Notice to Pay or Quit which might scare them. He ended up increasing his collection times significantly. He learned that every time he deviated from the system, things went wrong. I’ll share the same systems Michael uses with you later in a future post. They are designed from years of experience managing rental property.
Build a Team. A key to your success will be your team. You will need experts in various fields to help you invest and manage profitably. Look for team members that have the same values, work ethic and goals you do. Remember, as you proceed on your journey to success you can’t take everyone with you. You need team members who will contribute and help you move forward in your journey, not ones who will be like stones in your pockets weighing you down. Each team member should contribute to the team, either in their field of expertise, or by providing encouragement or inspiration. Assemble your team like a “Dream Team”. Anyone who lived in the 1990’s remembers the USA Olympic basketball Dream Team. Michael Jordan, Magic Johnson, Larry Bird, a team of greats, that together were unstoppable. Assemble your Dream Team to be unstoppable. A team that works together wins.
Time Management. Time management is key to any business, but none more so than rental investing. You only have a certain number of hours in any day. It’s what you choose to focus on during those hours that will determine your success. When many of us start our journey, we will still have full time jobs, so our time will be even more precious. Time management doesn’t mean working more and sacrificing your family or your health. That is not a long term strategy for success and won’t get you far. I always organized my time by prioritizing. Cash flow activities come first, actions to minimize my expenses comes a close second. I balance activities that bring in cash flow today and will pay the bills, but also carve out time to work on projects that will increase my wealth down the road. You always want to keep moving forward.
- As the leader of your team, it’s also important to help your team manage their time. I use a Weekly Focuser checklist to list out the top 5 things each team member must accomplish each week for the team to collectively meet their goals. This allows us to all be on the same page and also allows me to check up on each person’s progress.
Maximize Income, Minimize Expenses. You will hear me repeat this mantra again and again on this blog for it is key to your success. Learn how to maximize your income, by setting proper rental amounts and handling late rent decisively. Also learn how to minimize expenses, by reducing turnover, implementing preventative maintenance to avoid avoidable repairs and more.
Set Goals. In property management, goals will provide you benchmarks to achieve, like 97% occupancy or 90% on time rent collections. Setting these goals and using them to measure your performance provides you critical foresight to areas you need to improve before it becomes disastrous. For example, measuring your occupancy rate and seeing it is below your goal lets you know that your cash flow will be lower than expected. Now you know that leasing should be on the top of the priority list, and perhaps that you should hold doing new landscaping that month until occupancy is higher. Goals should be specific and measurable, not vague. Make more money, isn’t a goal. How do you specifically measure that? Increase rents by 10% on your property as leases come up for renewal is specific and measurable.
- Goals also allow us to set our sights on major projects and break them down into smaller steps we can work on each week. They provide us a compass point we can chip away at each week. Goals also allow us to measure our progress and celebrate our successes. Many of us who are ambitious never stop to celebrate our accomplishments. By the time we reach a goal, we have already set our sights on something bigger. Ambition is great. It keeps you moving forward. But don’t overlook the importance of stopping and celebrating your achievements. This helps increase your confidence and you will have more courage to take on bigger goals. It also lets you stop and enjoy your success for a moment, which will make you only more energized to take on the next mountain. Acknowledging goals met is especially important for your team. They need to know they are recognized and rewarded. For instance, when I closed on my first apartment complex I never stopped to celebrate. I was already headlong into the next deal I wanted to close. I never stopped to celebrate with my team our accomplishment. I let a great opportunity to increase all of our confidence and get the most motivation possible from our accomplishment before jumping into the next deal. This doesn’t have to take a long time or be expensive. A dinner together to celebrate can suffice. Think of it like putting money in the bank for the next time you need some encouragement to draw on. Now, I make a habit of stopping and celebrating my team’s and my own success.
Always return to these Seven Wisdom Keys to Becoming a Successful Landlord as you proceed on your journey to wealth. They will serve to keep you on the right path.