A landlord pursues passive income while patiently waiting for the underlying asset (condo, townhouse, detached home) to appreciate. That’s the model. Pretty simple. You want to get paid to wait and not allow asset ownership to consume much of your time. The more time the investment property consumes, the less passive it is, and the less profitable you, the landlord, will be.
Therefore, landlords need protocols in place for when things inevitably go wrong…
If a toilet leaks, the tenant has been shown how to use the shut-off valve, and Billy the plumber has a policy that he shows up within 12 hours to fix the issue.
Furnace goes out in the middle of winter; the tenant uses the two space heaters on the property, while Don, your HVAC expert/installer, has an agreement with you to show up and fix things within 24 hours of a call.
Such protocols only work well if the landlord has strong relationships with key individuals.
Landlords need strong business relationships with their tenants (I’ve written about that here and here) and contractors/trades, especially as they accumulate multiple investment properties and their portfolio expands. These relationships are the only way landlording passively can scale.
You have things to do — a business to build, family to spend time with and so forth. Investment properties can not consume much of your time; otherwise, they’re not passive. So, with multiple properties in your portfolio, you’ll need great relationships with a handyman (most vital connection as they will be able to handle 75% of all problems, and the ones they can’t, they’ll ‘know a guy’ who can), plumber, painter, and general contractor.
How do you forge strong relationships with these essential partners?
Pay a little more in the good times, and always pay early!
Ask any tradesperson or contractor what annoys them most about their profession… it will almost always be the same answer: Chasing down clients for money.
Often, contractors and trades are out of pocket on a job as they have to buy parts for an emergency fix where time is the enemy (such as a leak). And, like all of us, they want to get paid for their efforts. However, many go weeks, sometimes months, before getting paid for a completed job. It’s crazy.
Blow their minds by proactively asking for the invoice and paying it the same day. They will never forget you for it; and the next time you’re on vacation, and there is an emergency at a rental property, guess who is showing up with bells on, ready to fix the issue so you can go back to enjoying that piña colada?
Remember, being a landlord is about generating PASSIVE income. Your time is better spent elsewhere. Always pay contractors and trades promptly, and pay them a little more in the good times. It’s the successful landlord’s credo.