Becoming a landlord is a tough, full-time job. If you want a passive investment, you’re much better off putting your money in the index mutual funds. Being a landlord can make a lot of money, but it requires real effort. In an article on Popular Mechanics, Tom Chiarella warns prospective landlords:
People will flush anything down a toilet. Curlers. Popsicle wrappers. Combs. I’m not saying they do it on purpose. Maybe they didn’t notice the jet-black comb on the blazingly contrasting white porcelain floor of the toilet bowl. Maybe they just flicked the handle and down it went. Accidents happen. But when you’re the one kneeling on a damp bath towel on a Wednesday afternoon, fishing around in a toilet with a thirty-foot snake, I’m telling you: You see some stuff. Poker chips. Warning labels. Handfuls of expired vitamins.
There was an afternoon when I, the landlord, stood with a plumber as he ground around for about fifteen minutes until he broke through the offending blockage. Moments later, an artichoke leaf floated up, then another, and another. Seriously: artichoke leaves.
Chiarella then offers some advice for prospective landlords.
You have to have rules. Don’t let them smoke. No candles. No parking in the alley. No oil changes in the alley. Forget animals—no dogs. No cats. Birds, lizards, and reptiles too. No signs in the window. No mattresses in the dumpster.
Don’t use the word rules. Say policy. A policy is not meant to be broken.
You are the landlord. Remember that. The lease is your best tool. At the outset of every agreement, customize the lease. Know every clause. How it works. What it means. Rewrite them regularly, even if a lawyer tells you not to. Then sit with the tenant at a bar or coffee shop and read through the whole of it before the signing. Attach addendums for clarity. State the policy. Make notes. Cross things out. Then make them initial every single thing. None of this makes the lease more binding, but it does make things clear. Clarity, I found, is a better motivator than the threat of small claims court. Clarity, plus a good security deposit.
No stories. My dad was right. Stories are trouble. Nothing good ever follows the words “I was cooking bacon under the broiler . . .” For a landlord, all stories end on a broken aquarium. Or maggots in the unplugged refrigerator. That double-pane window that “fell out” during some Halloween party. The climax of a story belongs to the tenant. The denouement is the landlord’s burden alone. And it generally involves a mop.
Drive by your property every day. Every day. Pick up stray soda bottles. There are always stray soda bottles. Come back tomorrow. You’ll see.
Lastly, Chiarella gave an important landlord advice that he received from his father. “You never let the tenant start telling a story,” he said. “That never ends well. A story always leads to an excuse or to an explanation, some reason you should give them a break.”