What Role Do Landlords Play?
The role of the landlord is to provide accommodation of a decent standard that is ‘fit for purpose’. The landlord is responsible for ensuring their property’s safety and maintaining it well. This applies to the entire structural part of the property and furnishings, interior fittings, and appliances. The landlord must also ensure the tenant knows their duties and responsibilities while addressing any issues they have before and during their tenancy. Landlords must, by law, protect the tenant’s deposit in a government-approved tenancy deposit service.
Landlords have a wide range of responsibilities, wider reaching than collecting rent. Landlords are conflict solvers, repairers, salespeople, and effective negotiators. They need to know how to handle tenants and deal with angry neighbours and property inspectors.
Being a landlord also involves abiding by the law. There are national and statewide landlord-tenant rules that every landlord must follow, including regulations for collecting bonds, following health and safety standards, being a live-in landlord, and evicting tenants. Here is what you need to know about being a landlord:
Landlords invest in real estate to create a financial profit. Monetary benefits of being a landlord include the steady stream of monthly tenant income, as well as ownership of property that has the potential to appreciate. Landlords have rights and responsibilities that vary by state; however, there are overarching laws common to all states.
Landlords have the right to collect rent and any stipulated late fees and also have the right to raise the rent per the lease agreement. When tenants fail to pay rent, their landlords have the right to proceed with eviction. This process also varies by state; however, most jurisdictions allow landlords to collect back rent and legal costs.
A lease is a legally binding contract. It outlines the terms under which one party agrees to rent property owned by another. It guarantees the tenant the use of an asset and the property owner or regular landlord payments for a specified period in exchange. Landlords are also responsible for maintaining their rental properties in habitable condition, managing bonds, and ensuring that their property is clean and empty when a new tenant moves in. The landlord must also perform timely repairs, follow local building codes, and keep all vital services in working order. This includes plumbing, electricity, and heat.
Pros and Cons of Being a Landlord
Financial advantages and disadvantages exist when investing in a rental property and becoming a landlord. One benefit is that a landlord may leverage borrowed funds to purchase a rental property. Therefore, they would only need a smaller portion of the total property cost to gain rental income from the construction itself. The rental property can secure this debt, thus freeing up other assets belonging to the landlord.
Also, most costs associated with rental properties are tax-deductible. Rental income is essentially untaxed if there is no net profit after expenses. As they pay down a rental property mortgage, landlords will increase the ownership percentage of their property and gain access to the appreciation in value.
When a landlord sells a property, they will pay taxes on any capital gains unless rolling the money into another rental property.
The Role of a Leasing Agent
As a landlord, you are responsible for renting your properties. When filling a vacancy, you will often play the role of a leasing agent. You will have to advertise your rentals and set appointments with prospective tenants to view the property. You will also be available to show the property and determine the pros and cons of renting to certain individuals.
Landlord as Salesperson
While attempting to get tenants to move into your units, you will also play the role of a salesperson. You will have to explain why your property is more desirable than any other unit on the market and convince prospective tenants to rent from you.
Landlord as Detective
When choosing the right tenant for your rental property, you will play the role of detective. You will have to gather information about the tenant by speaking to their former landlords and employers and by running a credit check. Once you have this information, you’ll analyse the data you gather and rely on instinct to determine if the applicant will be the right fit. Things to look for include someone who will pay their rent on time, sign and abide by a long lease of at least a year, be respectful of their neighbours, and be clean and non-combative.
The role will also come into play when searching for the root cause of a maintenance problem and handling tenant disputes. This will be a time to investigate to find the truth about the conflict.
The Role of a Negotiator
A landlord’s next role is that of a negotiator. When hiring outside contractors or maintenance specialists, the landlord must negotiate to get the best price and get the person to come to the property as quickly as possible.
If a landlord owns more than one unit, they must negotiate when buying materials to get the best price for buying in bulk. For example, if a landlord is going to buy four stoves from a store, it is reasonable to ask for a discount.
A landlord must also negotiate every contract: the lease with a tenant, a mortgage with a bank or a contract with an electrician.
The Role of Debt Collector
A landlord will be a debt collector when they collect rent from their tenants monthly. This role will intensify if a tenant is late on their rent or does not pay at all. The landlord must then enforce late fees or file to evict the tenant.
Landlord as Repairman
Even if a landlord does not have extensive construction knowledge, they will be called on for maintenance requests in a timely manner. They’ll be expected to fix broken doorknobs, blown-out light bulbs, malfunctioning smoke detectors, or to turn on the boiler pilot light.
Educating yourself on some maintenance basics is a good idea. This will help avoid spending a lot of money to hire plumbers or other repairers for a job that you may be able to easily fix yourself, such as a leaky faucet or toilet that will not stop running.
Landlord as Therapist/Counselor
Your tenants will often confide in you about very personal issues. They may call you hysterically, saying they can’t pay their rent because their roommate moved out or they broke up with their girlfriend. They may contact you at 2 am in a state of panic because they leak their bathroom. In these situations, you might play the role of therapist or counsellor as you try to calm the tenant down and work out a solution that benefits you both.
The Role of Supervisor/Watchdog
As a landlord, you may be the supervisor of your units and your tenants. You must provide a clean, quiet, safe, and fully functioning environment for all to enjoy. You will need to perform preventative maintenance to keep your property in good condition and your tenants happy.
Bond management is also a critical obligation for any landlord. While landlords have the right to charge tenants a bond to cover both property damage as well as unpaid rent, the deposit does not ever actually belong to the landlord. Rules and laws governing bond amounts and how they must be maintained vary from state to state. Landlords who breach these laws could face legal consequences.
A way to know if your landlord is legitimate is if you seek information from past tenants. Tenant reviews provide prospective tenants with a different point of view on the property than the one advertised by the landlord or rental agency.