How To Be A Landlord

How To Be A Landlord

Hey, gang. Kris Krohn here with Limitless
wealth TV. Today, I’m going to be answering the question on how to be a landlord and
make sure you hang out for the end of the video because I’m going to actually do
a little litmus test on whether you should or shouldn’t be a landlord and no
worries, if it’s right up your alley you’re set but if it’s not, I’m going to
give you two alternatives one of them being my ultimate favorite. Alright, so today we’re going to be
jumping into this conversation of how to be a landlord and before I jump into
this, I just want to invite you to start thinking now, should I be a landlord?
Because I’m going to share with you two different alternatives if landlording is
not for you so here’s just a couple of the rules. If you’re insisting or
thinking I am going to be a landlord, here’s a couple of things that you need to know
right out of the gate. Rule number one, you have to put the right tenant in the
home now you might be thinking well how do you do that and how do you know who
the right tenant is Ultimately, it’s going to come down to the fact that if
you’ve done a background check and if the people can put up their first and
last month’s deposit or whatever their lease option down payment is, they need
to be able to comfortably afford the place that they’re renting and so you
might get someone for example, let’s say you’re renting out a place its 1,200 a
month and the previous place they were renting was 700 a month and you call
that previous landlord and the landlord’s like, “Oh yeah, they struggled
to pay their rent they were late every other month.” Guess what’s
going to happen when they have a $500 increase with your rent? Even if they got
a job and there’s a reason why they think they can make it on time, people
are usually creatures of habit, it’s not necessarily a creature of finance, some
people pay the rent first and some people that’s the last bill that they
pay which is why they’re sometimes perpetually late so I think the first
thing for you to do is just recognize that rule number one is put the right
person in and the best way to know that is number one to look at the debt to
income ratio, look at how much they make versus what the rent is and then just
use some common sense, right. If it looks like they’re making plenty of money then
that’s one way of knowing they should be able to pay their rent but then number
two, call some references. Now I tend to be personally a little bit lazy and not
like to jump through all those hoops that’s why I have property managers and
people that will do some of those things for me but one way or the other, it’s
really important that they do get done so remember if you want to be a landlord,
number one, put the right people in the house. Okay, rule number two, how lenient
of a landlord are you, okay? Because when you’re brand new to the
business, there are some people that are like built for landlording, they tend to
be bulldogs, they tend to be by-the-book and keeping the rules and justice but if
you’re one of those really tender heart softened individuals that likes to hear
the story of how they lost their job or their paycheck got lost or
you know they went to their grandma’s funeral and that’s why they’re late for
their rent and if you just have that heart-wrenching disposition then lording
is very likely not for you because you’re the problem, you’re actually going
to help perpetuate the fact that they’re like oh yeah so-and-so is a pushover so
I’m going to pay them after we pay these less important bills, right. And so you’ve
got to, you’ve got to have a strong stomach and you’ve got to be willing to
meet her out the contract and the information the way that it is
ultimately set up and designed. The moment you start creating a room for any
kind of leniency, I promise you, in 99% of situations, they’re going to come back and
they’re going to start taking advantage of that, they’re going to start leveraging that
against their own game because when you’re tied on money and by the way,
understand that most people are so what that means at the end of the day is
they’re trying to figure out who can I push. They know what their cell phone, if
they’re late and they don’t pay it, guess what happens. Their cell
phone gets turned off. Guess what happens if they don’t pay their electricity bill,
it gets shut off but guess what happens when they’re late on their rent? No big
deal, they’re going to give me five extra days, they’re not even going to impose the
late fees. Listen, this is a business and if you don’t treat it like one, I’m just
telling you, there’s people out there they’re going to mess with you and it’s not
even because they’re trying to, it’s not because they’re bad natured, it’s just
that when things are tight they want to know when push comes to shove who’s
firm and who’s soft. Rule number two, do not be a soft property manager, it will
establish a habit and I promise you in most cases you’re going to start seeing a
repeat problem show up and I want you to understand in that situation, if you’re
watching this in you’re a landlord, you’re like, I’m kind of guilty of that, you
are the problem in this, it’s not the fact that they’re asking for leniency,
it’s that you’re dishing it out, okay. Those are the two rules. First of all,
that you want to be aware of when it comes to landlord. The next thing that I
want to share with you is that there’s a professional approach to landlording, you
need to be familiar with the local state laws that you have because some states
are super friendly towards landlords and some states are super friendly towards
tenants, like there are some parts of the country that if you’re late on your rent,
you have these massive amounts of redemption periods to kind of get caught
up and you can basically squat in the house for quite a buried a period of
time without actually you know paying your rent, there are other areas where
you’re late, I can give you three day notice and you have to vacate
so be familiar with your laws and making sure that you’re enforcing things
legally, making sure that you’re using the proper paperwork, if it does
come unfortunately to something like an eviction and so you need to have that
Oracle mind set up that says I’m going to follow the laws of how this works, like
rent’s due on this day and if I don’t collect it by this day then they get
this paperwork and if they don’t get it by here than I do this and the
landlording business even though often if you put the right person in the home,
it’s going to take so little of your time you’re going to hardly
be aware that it exists but if you have the wrong person or someone that’s come
under kind of hardship or dress or something’s happen in their life then
all of a sudden that can start feeling like a job, you’ve got to make some phone
calls, you’ve got to start showing up on premise, you’ve got to do some different
things and a lot of the new investors that go out there and they make the
mistake for believing that they’re going to be a really good landlord or that
they take that part for granted like that part’s easy or it’s not worth
paying a management company 10% of gross funds to do that for me, in this
energy of trying to save, if you’re not going to do it the right way then you
really shouldn’t consider that and then you probably shouldn’t be doing it
because ultimately, it’s going to hurt you more than anybody else so those are the
three different considerations that I would share with you and now’s a little
bit of a bonus I want to share really the other side of this which is, hey if
you don’t want to be a landlord, you need to consider two different replacement
options. The first one is just higher property management, that one I think is,
that one makes sense, right? It’s not my favorite of the two options but yeah, if
you have a property manager step in, they’re generally going to charge you 10%
of gross rents so if the place is collecting 800 a month, they’re going to
want 80 of it and if it’s 1,200 a month, they’re going to want 120. So 10% of
whatever the gross collection is and you know they’ll be the professionals that
divvy out the paperwork, they’ll send by the the line up the repair people,
they’ll do whatever it takes to get that taken care of and some investors don’t
want to do that because that cuts in if you have a $300 cash flow and that eats
up a hundred and fifty of it you know then there’s less. The other thing that
you do need to be aware of with property managers is because it’s not their
property, they don’t care as much about the rates that they can make on having
things repaired always which means if there’s a repair you might want to go in
and take care of it but if they send their person in, it might cost double or
triple and so you just want to be aware that
there’s a maintenance issue or if there’s a repair issue, who are their
people, you never really know whether there’s kickbacks involved but
they’re not going to penny pinch on the repairs the way you might and so if
you are going to hire someone, be aware of that and then here’s the second option
which ultimately really is my favorite option which is, alright, what about a
lease option? It’s my compassionate financing system,
you can go to my website and actually download the book for free and my team
and I can actually teach and show you how to do that, we can give you the
contracts, we can set that all up for you but what I love about a lease option is
I typically make on average, for a home priced underneath the median, meaning a
house under two hundred and twenty thousand dollars, on average I make forty
thousand more dollars on it than I would doing a rental and the people manage it
and the people take care of it and they give you a down payment so
they’re showing a far higher degree of responsibility and skin in the
game to take care of the property and treat it like it’s their own
versus just a place that they’re temporarily renting. You check out one of
the other videos on the way out so you can actually learn more about this lease
option system, I’ll give you the details on exactly how to do it in these other
videos and that would be a great way for you to have an alternative if
landlording is not for you. Hey, I sure hope you enjoyed that video and I really
hope that it was useful for you. If there’s something that I missed on
landlording that you have questions about, drop them in the comments below. So
make sure you check out my website or the link in the description below this
video and what I’ll do is, I’ll share with you really a lot more of the
details of how Lease Option works, why it’s such a fantastic system or you can
even check out this video right here where I walk you through it.

28 thoughts on “How To Be A Landlord

  1. one other con vs pro for being landlord your self do not go in rental alone for any reason always have two people. who knows what kind of things the tenant could make up .for a law suit. I vote for pro property managment worth every penny . time saving and possible some legal jeopardy

  2. If you're using the lease option and that person bails, is it basically like the concept of renting and you keep all the money they paid when they were there and the "contract" for the lease option is over?

  3. Hey Kris my name is Blake and I'm 21, freshly out of the coast guard. And can you please private message me. I'd really appreciate it bud

  4. Hey Kris could you make a video on how to turn cashflow into buying new real estates . I own like 11 apartments but currently I’m in college and half of my cashflow goes in it . So what’s next ?

  5. What about HUD or government assisted tenants? A buddy of mine has a ton of them and theres always issues with them not paying their tiny portions of rent

  6. Kris I want to get into real estate I just don’t know how to start I’m not scared at all I just don’t know what to do

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