If you’re looking for a job that’s stress-free, your best bet might be to find a gig where you crunch numbers in a cubicle and don’t have to deal with people. But heads up, jobs like that can get old quickly.
Landlording is pretty far on the other end of the spectrum. It’s definitely not a stress-free job, but it doesn’t have to be overwhelming.
If you understand what stresses you out and develop a plan for mitigating those factors, you can carve out a successful career as a real estate investor/landlord—and genuinely love what you do!
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Major Causes of Stress
Your personality and other situational factors will dictate the level of stress you experience as a landlord. If you’re anything like most people, you’re likely to be impacted by the following:
- Poor cash flow. Nothing is more stressful than dealing with cash flow problems and wondering if you’ll be able to pay the mortgage, taxes, and bills to keep the property above water.
- Late payments. One of the biggest frustrations landlords have with tenants is late and/or irregular payments. Not only does it impact cash flow, but it also causes the landlord to waste time and energy tracking the money down.
- Legal issues. Real estate can be complicated. If you aren’t careful, you could end up in legal trouble for even the simplest of mistakes or oversights.
- Careless tenants. Bad tenants have a tendency to be irresponsible with a property, causing damage or problems that stick around long after they’re gone.
These are the hot button issues for most landlords. Being able to pinpoint them and wrap your mind around why they stress you out is a good starting point toward resolution.
4 Tips for Overcoming Stress
Once you know what stresses you out, you can develop a proactive plan for overcoming these issues and finding peace.
Here are some suggestions:
1. Hire a Property Manager
“There are certain relationships in life that function best when there is a third party go-between to separate the emotions and eliminate the pitfalls that can occur when two parties work directly with one another,” explains Green Residential, a Houston-based property management company. “The relationship between a landlord and a tenant is one of these relationships.”
If you want to avoid some of the friction that comes with interacting directly with tenants, hire a property manager. It’s usually worth every penny.
2. Carefully Screen Tenants
Good tenants equal stress-free landlording. If you want the rest of your experience to go well, it all starts with the screening process.
“Screening your tenant means looking into the information they provided, as well as analyzing outside information you can discover, and coming to a reasonable estimate on the kind of tenant they will be,” veteran RE investor Brandon Turner explained in his step-by-step tenant screening guide. “I say ‘reasonable estimate’ because there are no surefire ways to know the future quality of a tenant. As a landlord—it is our job to simply screen effectively and choose the best possible applicant for the property.”
Turner looks for six specific qualities in a tenant: ability to afford the rent payment, willingness to pay on time, job stability, cleanliness and housekeeping skills, aversion to drugs and criminal activity, and a low stress quotient (how much stress they’ll cause you).
3. Automate Rent Collection
Manually collecting rent—either face-to-face or through the mail—is slow, inefficient, and cumbersome. If you want to limit the amount of effort it takes (and lower the stress quotient) try automating rent collection through an online platform. Better yet, require your tenants to set up direct deposit.
4. Keep an Emergency Fund
In an effort to prevent cash flow and money-related stress, you should create an emergency fund for each rental property you own. The fund should essentially be a dedicated cash savings account that has enough money to bankroll your property for three to six months. This will give you something to fall back on in the event of a worst-case scenario.
Above All, Enjoy What You Do
The role of landlord doesn’t have to be daunting. When done right, it can be exciting!
But in order to enjoy the perks of the job, you have to address the pain points that so often frustrate people in your position. Implementing the strategies above will hopefully pave the way for greater freedom and enjoyment during your tenure as a landlord.
Do you have experience landlording? How have you dealt with the stress? Are you apprehensive about landlording-related stress? What are your major concerns?
I’d love to learn from your experience. Comment below!